Consumer Guarantee Act in current circumstances of Covid-19

Consumer Guarantees Act and cancellation of consumer services

The Consumer Guarantees Act generally requires businesses that give services to consumers to remedy any failure to provide the services within a reasonable time – including, sometimes, to cancel the agreement and get a refund.

However, there are some exceptions under the Consumer Guarantees Act that permit businesses to cancel a service because of an act of another entity or a cause independent of human control. In these circumstances, a business’s obligations will rely on the particular situation such as terms and conditions. This is also the case if the event date or completion time for the service is fixed under the relevant agreement – that is, the remedies available will reply on the terms of the agreement and particular circumstances.

There are a many examples of businesses who are responding to the pandemic by relaxing policies, for instance, by permitting customers to change their ticket without a cancellation fee or by providing credit. The options that businesses can provide consumers will of course depend on what is possible and viable in these challenging circumstances, and both customers and businesses will need to show some patience and understanding as issues are resolved.

Delays in delivering consumer goods

Under the Consumer Guarantees Act, where a business is responsible for delivering goods to consumers, there is a guarantee that the customer will get the goods within an agreed time period or, if no time has been agreed, within a reasonable time. A failure to comply with this guarantee gives a consumer specific rights to a remedy – sometimes, a refund. Although there is no specific exception for situations such as the current pandemic, we expect that what is considered a ‘reasonable time’ for delivery of product will differ to ordinary circumstances.

It is recommended that businesses maintain open communication with clients to keep them updated on expected delivery times and the reasons for any late delivery.

Consumer Guarantees Act and current circumstances

Cancelled events and travel, disruption and delayed deliveries to supply chains are just some of the matters that raise potential matters under the Consumer Guarantees Act. Businesses and consumers will likely need to take a pragmatic and patient approach to the matters that arise.

Can businesses increase prices in response to COVID-19?

Businesses may also see high costs during the COVID-19 situation, and may be considering high prices. For consumer services and goods, the Consumer Guarantees Act provides that goods and services will be provided at a reasonable price if the price is not determined by agreement or left to be determined between the parties to the agreement.

Otherwise, in New Zealand businesses are usually free to price goods and services as they see fit, meaning that increasing the prices of goods and services during an emergency situation will often not be illegal. However, businesses need to be careful about the reasons given for a high price. In fact, businesses cannot claim “COVID-19” as a reason for a high price if that is not genuinely the case.