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Your rights if there’s a problem with something you buy for your business, including faults, substandard work, or being misled before or during the sales process.

When making purchases, businesses can only rely on the Consumer Guarantees Act (CGA) if something goes wrong with a product, service or vehicle that’s usually for household or personal use, eg stationary or a domestic oven.

Even then, retailers, manufacturers and service providers are not bound by the CGA when:

  • the seller and business buyer agree the CGA does not apply — also known as contracting out of the CGA — and put this in writing 
  • it’s fair and reasonable to both seller and business buyer to contract out.

Even if you don’t sign a sales agreement that contracts out of the CGA, if the sale goes ahead, it’s taken to mean you agree.

Contractual rights

The only rights a business will typically have is what’s written in the warranty, contract or sales agreement. You may still have some rights through common law — rules made by judges when deciding cases — and some specific Acts.

So carefully research any commercial contract before signing it. It’s a good idea to get legal help, especially for expensive items or services.

If something goes wrong once you have bought a product or service for your business, check the contract to see if the fault means:

  • any terms have been broken
  • compensation or another remedy is available. 

If it’s a serious problem — and terms have been broken — you may be able to cancel the contract and get your money back. If the contract doesn’t include a cancellation clause, you can still raise it with your supplier.

Other reasons to cancel a contract include:

  • making a mistake about what’s in it
  • being given false or misleading information
  • it can’t be completed due to events outside anyone’s control, eg an earthquake.

Read more about Contracts and sales agreements

Laws that might apply if something goes wrong

Example — Check sales agreement

An accounting firm buys a photocopier, but after six months it no longer works well. Office manager Sarah contacts the supplier, who services the machine. But it’s still not working as it should. Sarah checks the sales agreement and finds the supplier has contracted out of the Contract and Commercial Law Act. But the terms also state that the sale can be cancelled if the supplier can’t repair a fault. So Sarah cancels the contract and gets the firm’s money back to buy a new photocopier.

How to minimise risks

Since your main source of protection is what’s in the contract or sales/service agreement, make sure these documents are clear and legally safe. Even if you leave this type of document unsigned, if the sale goes ahead, it’s taken to mean you agree to the terms and conditions.

It’s a good idea for these documents to include:

  • buyer’s and seller’s details 
  • brief description of product or service 
  • price and terms of payment
  • any delivery deadlines
  • other timeframes, eg start and end dates for services.

If your supplier contracts out of consumer laws when selling to businesses, this must be in writing. If they only do it verbally — or don’t mention it — the laws apply.

What to put in sales agreements(external link) —

Both sides must also be able to decide:

  • any changes to important terms
  • if terms have been breached
  • if the contract should be cancelled.

Cancelling a contract can be tricky and it’s expensive to get wrong. It’s a good idea to get legal advice before taking this step.

How to approach a supplier about a problem

If you have problems with commercial products or services, you may have rights to:

  • cancel the sale and get a refund
  • get repairs done
  • ask for compensation under the Contract and Commercial Law Act, if the seller has not contracted out of it.

Step 1. Check your contract or sales agreement

Look for any terms that have been broken, and what you may be able to claim. Examples include:

  • Price — were you overcharged?
  • Timeframes — did it take longer than agreed?
  • Is the work complete or are there still tasks left undone?
  • If the supplier promises to repair faults, have they done this?

If the breach is serious, you may be able to cancel the contract and claim your money back.

If you want to cancel a contract, think about getting legal advice first. It can be quite complicated — and expensive if you get it wrong.

Step 2: Contact your supplier

Once you are sure it’s a problem you can rightfully claim for, talk to the supplier about what’s gone wrong. Bring paperwork from the sale, proof of the problem and any other information that might help. Be polite but firm.

If the problem is due to accidental damage, or you tried to repair a fault before approaching the supplier, they do not have to put it right.

Step 3: If you need to take it further

Disputes tribunal or district court

If you can’t reach an agreement with the supplier, you may be able to make a claim to the Disputes Tribunal or District Court for:

  • breach of warranties under the Contract and Commercial Law Act if it’s a faulty product
  • breach of contract for commercial services.

If the ruling goes your way, you’ll be able to get your money back. You can also ask the Tribunal or Court to order the supplier to complete their contract obligations.

The Disputes Tribunal is for claims up to $30,000. The District Court is for claims above $30,000 but less than $350,000.

This is a complicated area. Get legal advice to make a claim.

Read more about Going to the Disputes Tribunal

Read more about Consumer problems caused by suppliers

Commerce Commission

If the problem is due to the supplier’s false or misleading statements, you can make a formal complaint to Commerce Commission. It’s responsible for enforcing the Fair Trading Act and making sure sellers stick within these rules.

The Commission does not investigate every complaint. And the action it takes against sellers who breaks the rules often doesn’t result in financial compensation for buyers. But you can take a claim to court yourself.

Reporting a business or person(external link) — Commerce Commission

If you want your money back, it’s best to take action against the supplier yourself.

Need more help?

Contact our Consumer helpline.