Glossary of Common Consumer Terms

Glossary Terms:

Here is a index of common consumer law terms that you may come across when buying goods and services. Click on the word that interests you to find a quick definition.

Download a glossary of consumer terms in Maori. (75kb Word document)

Accession

Goods installed in or affixed to other goods - eg, a replacement motor installed in a car.

Arrears

Normally refers to payment that is overdue. You will "fall into" arrears if you do not make payment on a loan, bill or hire purchase by the due date.

Attachment

Under the Personal Property Securities Act (link takes you to the government's Legislation website where you can browse through laws at no cost) , a security interest comes into existence upon it attaching to a particular collateral. 

Attachment occurs when the creditor provides finance and the debtor or borrower has rights in the goods ('collateral'). To enforce a security interest in the collateral against a third party (eg, someone who bought the goods from the borrower), attachment also requires the borrower to have signed or assented to a security agreement that contains a description of the collateral.

Chattel mortgage

A chattel mortgage is a type of loan. You borrow money and list chattels that you own as security for the loan. A chattel is anything you own like a TV, car, bed. This is called ‘mortgaging’ things that you own to the person or company who lent it to you. If you do not pay the money back to the person or company who lent you the money as arranged they can take the chattels you listed. See also 'loan' and 'secured loan'.

Collateral

Personal property used as security.

Commercial goods

Goods normally used for commercial purposes - eg, manufacturing equipment, farm machinery, trucks.

Condition

An important term or rule of a contract. If you break (breach) a condition of a contract the contract can be cancelled by the other party. Some contracts are conditional. That means the buyer or the seller is required to do something before the contract will be set - eg, a car sale is conditional on the vehicle passing an independent check - if it doesn’t pass the check the contract is ended.

Consequential loss

An extra loss to the consumer which results from a failure in the goods or services they have bought - eg, you have your carpet cleaned but the cleaner doesn't remove your full length curtains. As a consequence your curtains get stained with cleaning fluid. You now have the cost of getting the curtains drycleaned. This cost is called a consequential loss.

Consumer goods

Goods that are used or acquired for use primarily for personal, domestic or household purposes - eg, clothing, groceries, furnishings, the  family car.

A person who buys these goods is called a 'consumer'.

Consumer Guarantees Act (CGA)

The law which sets out basic guarantees that consumer goods and services must meet and the rights of buyers to remedies if those guarantees are broken.

Contract

An agreement to do something, or set of promises between two or more parties that the law will enforce. Some contracts have to be in writing - eg, the sale of a house, loan and hire purchase contracts, sale of a car by a licensed dealer.

Contracting out

Some laws allow the seller or manufacturer to contract out of their legal obligations. A seller can do this for a sale of consumer goods to a business - eg, a business buys cups and saucers for the office kitchen.

Credit Sale

The new term under the Credit Contracts and Consumer Finance Act for purchasing goods on credit. Previously referred to as hire purchase.

Creditor

Person owed money. The trader (or a finance company) is referred to as the creditor when money is owed for goods or services.

Debtor

Person who owes money for goods and services (link to Consumer Information - Debt Collection) . The buyer (or the guarantor) will be referred to as the debtor when payment is overdue.

Default

Means failing to do something that a contract requires you to do. This term is used the most when someone fails to pay money on a loan or hire purchase. If you fail to pay you are in 'default'.

Disputes Tribunal

The place where you can get a problem with a trader solved. The Disputes Tribunal is not a court. There are no lawyers or judges. A Referee hears about the dispute from you and the person you are claiming against. The Referee then decides what needs to be done to solve the dispute.

Distributor

The person or company who buys the goods from the manufacturer and sells the goods to the trader - may also be called the wholesaler.

Due skill and care

To carry out a service to a reasonable industry standard using the right materials and right methods. This is one of the guarantees under the Consumer Guarantees Act that a service must meet.

Estimate

A price given for services to be provided in the future, which is a guide to the final price. An estimate should still be given with care and skill. If the final price is more than 10% over the estimate the price can be disputed.

Express warranty

A written or spoken promise about the performance of goods you have bought, or about the repairs that will be done free of charge for a certain period of time. Express warranties are usually issued by the manufacturer. There is no law that requires the manufacturer to give a written warranty. Electric goods, new cars, cameras and new commercial goods usually come with a manufacturer’s warranty.

Fair Trading Act

The consumer law that says traders must not mislead, deceive or make false representations to you about the goods and services they offer for sale.

Finance rate

An amount showing the true cost of interest and other finance charges as a percentage of the amount borrowed (for loans) or the price of goods bought (hire purchase).

The finance rate only applies to contracts entered into before 1 April 2005. It was a requirement under the Credit Contracts Act. The new Credit Contracts and Consumer Finance Act requires disclosure of all charges and the interest rate, it no longer requires a finance rate to be stated.

Financing statement

A financing statement contains the information required to register notice of a security interest on the Personal Property Securities Register.

Fit for normal purpose

Means that the goods will do the job they are designed to do.

Fit for particular purpose

Means that not only will the goods do what the reasonable person expects them to do, but that they will also do a specific job you need them to do - eg, a car is fit for its intended use if you can use it to drive people from place to place, but the car also has to be fit for the particular purpose of towing a boat, if that is one of the purposes you bought it for.

Guarantor

A guarantor is a person who signs a loan or hire purchase contract agreeing to be responsible for paying off the amount owing if the borrower does not pay.

Hire purchase

Hire purchase is a method of buying a product where you pay for the goods in small amounts over a period of time. While you are paying for it you can take the goods home and use them.

Usually you pay interest and other charges as well as the price of the goods. Some shops don’t charge interest for the first few months. Always ask about ‘interest-free’ terms.

This term no longer applies to any contract entered into on or after 1 April 2005. Credit sales is the new term for hire purchase contracts under the Credit Contracts and Consumer Finance Act

Interest

Extra money you must usually pay when you take out a loan, hire purchase or credit sale.

Layby

Layby is a method of purchasing goods on instalment where the goods remain in the shop until you pay in full.

Loan

Money which you borrow and you pay back in the future. Usually you have to pay interest on the money you have borrowed. Other forms of credit include home loans (commonly called mortgages), credit cards, store cards.

Manufacturer

The person or company who makes the goods.

Negotiation

To try and reach an agreement or settlement in a dispute.

Personal property

All property other than interests in land.

Purchaser

Buyer of goods, customer.

Quote

A fixed price given for goods or a service to be provided in the future. Often given in writing. A quote (link goes to Consumer Information - Quotes and Estimates) becomes a term of your contract. A higher price can not be charged unless the quote states that it only applies to certain things, or for a certain time, or both you and the trader agree to an increase in price.

Reasonable

What would seem fair to most people. Used in reference to reasonable time, reasonable price.

Redress

To put right a problem, for example, by paying money or repairing a fault. Redress in law means that a specific Act sets out what you are entitled to.

Refund

To return money paid for goods or services. If a trade-in has been provided as part payment the value of the trade-in or the actual goods is also returned.

Repossession

To take goods back, usually because money is owing. This is normally carried out by repossession agents on behalf of a finance company or a trader.

Reserve the right

phrase used in contract terms which allows a company or a person providing goods and services to change the term without the need to get the buyer’s agreement.

Used for long term contracts to change the price - eg, a parking garage which rents out car parks may have a contract term that reserves their right to increase the rental fee with one month’s notice. A travel company may reserve the right to replace one hotel for another on a tour.

Sale of Goods Act

The law that sets out the warranties for what condition commercial goods must be in when they are sold and what should happen if something goes wrong. Note that sellers of commercial goods can contract out of the obligations in this law.

Secured loan

A loan where you have to give some security to the lender (this link goes to Consumer Information - Cash Loans). The most common secured loan is a mortgage over a house. The house is security for the loan. For chattel mortgages security may be a car or household property. If payments are not made then the lender may be allowed to take the goods listed as security.

Secured party

Holder of security interest - eg, lender or finance company.

Security agreement

Agreement that creates or provides for a security interest - eg, secured loan agreements or hire purchase agreements.

Security interest

Interest in personal property that secures payment or performance of an obligation. A security interest gives the secured party rights in the collateral - eg, to seize it if the debtor defaults, to restrict the debtor from selling it.

Terms of a contract

Important information that makes up the contract you have to buy goods and services. Common terms in a contract will include the price, time of delivery, method of payment.

Trader

Someone who sells goods or services - eg, retailer, shopkeeper, business person.

Unilateral

A party to a contract who attempts to change a term of that contract without reserving the right or getting the agreement of the other party is acting unilaterally. If no right to change has been reserved, any attempt to change the contract without the other party's agreement would be a breach of contract.

Vendor

A term used to describe the seller of goods and services. Normally used to refer to the seller of real estate.