Consumers have certain rights when buying goods and services from someone who is ‘in trade’, so it is important to know when you are in trade and to meet your buyers' expectations.
Who is in trade?
Many factors can be relevant to whether a person is in trade, including whether they:
regularly or habitually offer to sell goods or services
make, buy or obtain goods with the intention of selling them
are GST registered
have staff or assistants to help manage their sales
have incorporated a company or set up another type of trading vehicle.
There are other factors that might mean a person is, or is not, in trade. If you are uncertain whether you are in trade, you should obtain legal advice.
You cannot avoid your obligations under the Fair Trading or Consumer Guarantees Act by having someone else make offers or sell on your behalf. In these cases you will still be in trade, and the person selling on your behalf (the agent) may also be liable.
A person selling goods that they bought or acquired for their own personal use is unlikely to be in trade.
Disclosure of trader status online
So that consumers know they are covered by the law, you must make it clear that you are in trade when selling goods or services online. You should disclose trader status clearly and prominently in every place where a customer can complete a purchase online.
Any intermediary that provides a platform for online selling (like an online auction or daily deal website) must take reasonable steps to ensure that traders using their platform disclose their trader status.
Examples of being in trade
While on holiday overseas, Ben buys a pair of shoes for himself and nine other pairs to sell online when he gets home. Ben is in trade when he sells the nine extra pairs, because he bought the shoes with the intention of selling them. Ben’s online listing for the extra shoes must clearly state that he is selling them in trade. Ben must comply with the Fair Trading Act and Consumer Guarantees Act.
Liam sells cars as a registered car dealer. One of his customers trades in an old car when buying a new one. Liam asks his uncle to sell the trade-in car on his behalf to try and avoid the consumer laws. Liam is in trade when his uncle sells the car, because his uncle is his agent under the Fair Trading Act and Liam is responsible for the sale. Liam’s uncle may also be liable for assisting Liam to breach that Act.
Paula regularly buys books, reads them and then sells them online. When selling books like this, Paula is not in trade because she purchased the books for personal use. Paula also makes jewellery from home which she sells through online auctions. When selling her jewellery, Paula is in trade because she made the jewellery items with the intention of selling them. Paula must comply with the Fair Trading Act and Consumer Guarantees Act when selling jewellery.