A proposed amendment to the Consumer Guarantees Act 1993 ("CGA") aims to extend the scope of goods and services subject to the rights and remedies contained in the CGA. If passed, the CGA will extend to the supply of computer software and telecommunications services and signals.

What does the CGA do?
The CGA imposes minimum guarantees for the supply of goods and services ordinarily acquired for personal, domestic or household use or consumption. Each guarantee gives consumers statutory rights and remedies against manufacturers and suppliers of goods and services. Suppliers are prohibited from limiting or excluding the rights and remedies set out in the CGA unless the goods or services are being acquired for business purposes.

Why is the CGA being amended?
The proposed amendment is set out in the Consumer Protection (Definitions of Goods and Services) Bill (the "Bill") which is currently before the Commerce Select Committee. The Bill has been prompted by a government concern that all goods and services acquired for personal/domestic purposes have protection under the CGA. In 1998, the High Court found that electricity and the supply of line function services were neither "goods" or "services" for the purposes of the CGA (Electricity Supply Association of New Zealand Incorporated v Commerce Commission (1998) 6 NZBLC 102, 555). This decision throws doubt on whether other utilities such as telecommunications services (including e-mail delivery and Internet connection services) and computer software are covered by the CGA.

What are the proposed amendments?
The Bill proposes an amendment to the definition of "goods" under the CGA to include computer software, electricity, gas, telecommunications signals, and water. It also proposes to amend the definition of "services" to cover electricity, gas, telecommunications, and water supply services.

What are the proposed amendments intended to achieve?
It is intended that consumers who purchase such goods or services are guaranteed the same rights and remedies under the CGA, as are attached to the supply of goods and services generally. So, for example, a purchaser of computer software (whether from a street store or downloaded from a web site) is guaranteed (among other things) that the computer software will be of acceptable quality (i.e. free from defects) and is reasonably fit for any purpose the supplier represents it is or will be fit. An Internet service provider ("ISP") would be subject to a guarantee that its supply to consumers of e-mail delivery and Internet connection services will (among other things) be carried out with reasonable care and skill, completed within a reasonable time and be reasonably fit for the purposes for which such services are required.

Significance for providers of goods and services
The CGA places such obligations on providers of goods and services irrespective of what may be set out in any contract between a supplier and customer. The obligations have effect only if the guarantees provided by providers of goods and services are of a lesser standard than under the CGA. Whether a consumer can recover from, for example, an ISP for loss caused by a late or non-delivered e-mail, or Internet disconnection problems, will depend on what is a reasonable level of service measured against the level of service in the ISP industry in general. Depending upon industry standards, it may be reasonable to expect that a consumer is disconnected from the Internet or that emails are not delivered, from time to time.

The Bill also amends the definition of "supplier" to clarify that a person does not have to supply services under a contract with the consumer in order to be regarded as a "supplier" under the CGA. This means, for example, that telecommunications network operators will owe duties directly to consumers even if they do not have a contract with those consumers. Service provider such as ISPs need to ensure that their contracts with network providers allow them to pass back liability to those network providers for network problems outside of their control which cause delays or failure of service.

Significance for business users
Business users of computer software and telecommunications services are unlikely to be assisted by the Bill. This is because suppliers of goods and services can contract out of the CGA where goods or services are being supplied for business purposes. Business users of computer software and telecommunications should continue to negotiate suitable product and service guarantees in their contracts with suppliers.

Public submissions on the Bill closed earlier this year. The Commerce Select Committee is due to report back to Parliament on 21 May 2002.

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