Commerciallaw

Key Issues

You should be familiar with the following concepts before attempting the questions:

  • Deciding which Act (CGA or SOG) applies by applying the consumer test.
  • The exceptions contained in s 41 of the CGA.
  • The situations in which a supplier can contract out of the CGA.
  • The remedies available for breach of a guarantee under the CGA.

 

Keep in Mind

  • The application of the consumer test to persons in business. The test looks at the total market for the goods and then the business exceptions that are listed in s 2.
  • When considering if a good is a consumer good, be clear about ‘mixed use’ goods. It is not a matter of determining what the majority of people use the goods for (Nesbit v Porter). The test also does not depend on the percentage of buyers purchasing for personal or domestic use. It is common for students to write ‘in Nesbit v Porter there were 20% of personal buyers so anything below 20% will mean the person is not a consumer’. This is incorrect. It is how this percentage of buyers transforms into actual numbers of purchasers that determines whether the purchase is highly unusual. If there is a high volume of total sales even a low percentage of personal buyers could mean the item is a consumer good.

 

Question 1

Brian decides to set up a home-typing business. He buys a number of items for his business, including a personal computer and a printer. Brian also buys ink cartridges and paper for his printer. Brian buys these from a computer and stationery store that sells to both personal (10% of sales) and commercial purchasers (90% of sales). Explain whether he will have rights under the Consumer Guarantees Act 1993 if he has a problem with the computer, printer, ink or paper.

Answer Plan

You will need to consider the following in your answer:

  • Is Brian a ‘consumer’? In particular you will need to look at the definition of a consumer contained in s 2 of the CGA.
  • Whether Brian falls within any of the exceptions in the consumer test. This will require discussing ss 41 and 43 of the CGA.

 

Question 2

James is in the motel business and buys a washing machine for use in the motel. James buys the machine over the Internet using a credit card. Three days after the machine arrives it blows up

and cannot be repaired. James contacts the supplier and states he wants to reject the goods in accordance with the Consumer Guarantees Act 1993. James is told he cannot as the terms and conditions on the website state that the Consumer Guarantees Act will not apply to business consumers. James had read these terms and conditions very quickly but must have missed this part, he had to click that he agreed with the terms and conditions otherwise the site would not allow the sale to proceed.

Advise James whether he has rights under the CGA.

Answer Plan

You will need to consider the following in your answer:

  • Is James a consumer?
  • Do any of the exceptions apply?
  • Can the supplier contract out of the CGA?

 

For the full sample answers and more see Sayles Questions and Answers: Commercial Law (2nd ed, LexisNexis, Wellington, 2014).

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