2 December, 2021 | Kristal Rogers
Commercial products are normally those goods that a business purchases for its business purposes and consumer products are normally those goods which a consumer purchases for their own personal use. The legal obligations of the seller, and rights of the purchaser and the laws that govern those rights and obligations vary based on whether the product being sold is considered a commercial product or a consumer product.
The Consumer Guarantees Act 1993
The Consumer Guarantees Act 1993 works by implying some basic guarantees into any contract involving the supply of consumer services or goods. The Consumer Guarantees Act normally only applies to businesses who are supplying services or goods to consumers, however it is the nature of the product or service and its end use that is important not the nature of the customer.
The Consumer Guarantees Act protects consumers by allowing them to seek repairs, replacements or refunds when goods are faulty and setting minimum guarantees for all products and services. Products may be covered under the Consumer Guarantees Act if they break too easily, don’t do what they are expected to do or do not work at all (in other words, if they are not fit for purpose).
However, the Consumer Guarantees Act may apply to some commercial products if the goods are purchased by consumers for personal or household use. Similarly, the sale of some goods between commercial parties may also be covered by the Consumer Guarantees Act if the purchaser is using the product for what would be considered personal or household use (for example if a business buys a toaster for use in its lunch room).
Contracting out of the Consumer Guarantees Act
However, retailers, manufacturers and service providers are not bound by the Consumer Guarantees Act when the seller and buyer are both commercial parties, and they agree in writing that it does not apply, and when it is fair and reasonable to both the seller and buyer to contract out of the Consumer Guarantees Act.
Your Rights When Purchasing Commercial Products
Typically, the only rights a business has when purchasing commercial products are those that are stated in the warranty, contract or the sales agreement. It is important to carefully research any commercial contract before signing it, including for clarity around Consumer Guarantees Act matters and seeking legal help is recommended prior to entering into any contract to ensure nothing is missed and that you understand your rights and responsibilities.
If your business has a serious issue with goods that have been sold to it subject to contracting out of the Consumer Guarantees Act then it may be possible to challenge that provision. This is because the Consumer Guarantees Act only allows contracting out if it is “fair and reasonable” to do so, which leaves an opening for businesses to seek the Court’s assistance enforcing the Consumer Guarantees Act’s remedies.
If your business is purchasing goods for its business purposes and something goes wrong, you should seek legal advice because you may be entitled to claim for breach of contract, including under the Contract and Commercial Law Act 2017.
For further advice on your rights and responsibilities as a business when buying or selling goods, to set up an appointment with expert commercial lawyer, Kristal Rogers phone 09 837 6896 or email kristal.rogers@smithpartners.co.nz.
FAQs
Key Takeaways
What is the difference between commercial and consumer? ›
1 - A consumer is any natural person who is acting for purposes which are outside his trade or profession. A commercial customer is a customer who is not a consumer.
What is the difference between a consumer product and a business product? ›
Consumer products are goods and services that are considered final products and are bought and used by consumers, or end-users. They are different from business products because the business products are either part of the final consumer good, or used to produce them.
What is considered a commercial product? ›
Commercial Product means a product in regular production that is sold in substantial quantities to the general public and/or the industry, and the product differs only insignificantly from [organization]'s commercial product.
What is the difference between a commercial market and a consumer market? ›
Business markets often focus more on sales and purchases that are sold directly to other businesses, which may use those products to re-sale directly to the consumer. Consumer markets are markets where the consumer purchases an item to use for their own use.
What is the difference between consumer products and commercial products? ›
Consumer products are items a consumer buys for personal or domestic use. Alternatively, commercial products are goods that a business would buy for trading purposes.
What is an example of a commercial consumer? ›
Commercial consumers means office building, hotel, retail store, clubhouse, warehouse, service station, or other establishment rendering offering a product for sale to the public; apartments; churches; schools; fire department; homeowners associations or property owners associations; esplanade; and any and all ...
What are 4 types of consumer products? ›
Within the category of consumer products, there are four main classifications: convenience goods, shopping goods, specialty goods, and unsought goods.
What is an example of a consumer product? ›
Also called final goods or retail goods, consumer goods are the end result of production and manufacturing. Clothing, food products, and appliances are all common consumer goods.
What consumer product means? ›
Consumer products refer to a variety of manufactured goods used for personal, family, household or non-business purposes. Diverse products such as apparel, textiles, personal care and household products, furniture, consumer electronics, processed foods, toys and sporting equipment, are all included in this sector.
For example, a computer system composed of commercial subsystems would be considered a commercial item. Another example is industrial plant equipment that combines commercial components into a unique item based on customer needs.
What is not a commercial product? ›
Non-Commercial Product means Product which is in developmental/clinical trial phases and has not yet been approved by an applicable Regulatory Authority for commercial distribution.
What are examples of commercial goods? ›
Commercial goods are construed as tangible products that are manufactured and then made available for supply to be used in an industry of commerce. Commercial goods could be tractors, commercial vehicles, mobile structures, airplanes, and even roofing materials.
What is the difference between commercial and consumer business? ›
Consumer business relationships may not be long lasting so businesses may not be concerned with losing a customer that isn't paying on time. Commercial business relationships, however, are hard fought assets so there may be more at stake when dealing with unpaid invoices or defaults on financing.
What is an example of a commercial market? ›
Commercial Marketing
The word marketing often conjures images of the iconic logos of brands like Starbucks, McDonald's, Apple, or Coca-Cola. These are all examples of successful commercial marketing, in which the purpose of advertising campaigns and other marketing strategies is primarily financial gain.
What is the difference between commercial and consumer contracts? ›
In practical terms, it means that the law does not allow a business to include any and all terms in a contract as it wishes where it is dealing with a consumer. It is required by consumer legislation to omit certain types of term, and, if it does not do so, those terms will be void and of no effect in law.
What is the difference between commercial and consumer grade? ›
For starters, commercial grade computers typically come with longer warranties than their consumer-grade counterparts. This is because they are designed to handle more intensive workloads than consumer grade machines, so manufacturers want to ensure that their products will stand up to the strain.
What is the difference between commercial and consumer display? ›
Consumer displays aren't designed for extensive, nonstop usage and are easily damaged if dropped or struck by a hard object. Commercial television monitors are built to operate 16 hours a day, seven days a week. They are also constructed to protect against heat, impact, dust, and other hostile environmental conditions.
What is commercial vs consumer collection? ›
"Commercial collections" focuses upon the collection of outstanding debts owed to a business by another business, or by an individual for a business-related debt. "Consumer collections" focuses upon collecting debts from individuals that were incurred for a personal, family or household purpose.
