However, the acceptable quality of second-hand goods will differ from new goods because of wear and tear. The Consumer Guarantees Act looks at what a 'reasonable consumer' would think was acceptable taking into account everything surrounding the sale - price, information about the goods, wear and tear.

eg, if you bought a secondhand washing machine for $500 and the retailer said that it was a great machine and had been fully overhauled, you could reasonably expect a better lifespan for that machine than if it was a $50 model.

Take time to check goods bought secondhand. Goods that look good but are not expensive may have hidden defects.

Second-hand dealers are required to be licensed and keep a record of the goods they hold.

Second-hand dealers often sell on behalf of a private seller - eg, recycled clothing stores. The secondhand dealers have obligations for these goods under the Consumer Guarantees Act. The dealer cannot tell you to go the private seller if the goods you bought were faulty.

See our page on the Consumer Guarantees Act - Faulty Goods for information on your rights if the goods are defective.

Warranties given by the dealer

When you buy goods from a second-hand dealer, you may be given a warranty or guarantee for a few months or you may be told that there is no warranty or guarantee with the product. But remember, you have rights under the Consumer Guarantees Act if goods are faulty. A second-hand dealer cannot remove those rights by replacing them with a limited warranty. Neither can a second-hand dealer remove or reduce your rights by putting up signs such as 'No refunds' or 'as is where is'.

Buying goods at auction

Auction sales are different from other sales and the legal protection that you get is also different.

How an auction works

You normally have to register if you want to bid, and sign an agreement. Make sure that you check this agreement first. It may contain some of the rules of the auction that you need to know before you buy. Any terms of the sale must be made clear to buyers at the time of the sale or before the auction begins. If the auction house does not make their terms clear or does not make them at all, the buyer cannot be held to those terms. Sometimes auction houses put their terms in the catalogue or on signs in the auction rooms.

The goods are sold by lot number. You bid on the lots that you want to buy. The highest bid is normally accepted. Sometimes goods will be 'passed in'. This means the bids did not meet the sale price or 'reserve' put on the goods by the seller. If your bid was close to the reserve, the auctioneer may approach you to see if you want to make another offer to the seller.

When you make the final bid and that is accepted by the auctioneer, you have entered into a legal agreement to buy the goods. This means that the terms and conditions the auctioneer read out during the sale apply to you.

Examples of general terms and conditions at an auction

Buyer's premium of 10 per cent (plus GST on that 10%) to be added to price
Goods must be collected on the day
Payment will only be accepted in cash or bank cheque
Buyer to arrange own delivery
Goods 'as is where is'.

Laws applying to goods sold at auction

The Fair Trading Act applies to auction sales. Auctioneers must not mislead or deceive bidders as to the service they offer or the goods for sale.

eg, the auctioneer says the fridge you are interested in is 'a newer model frost-free fridge freezer'. When you get it home you find it has to be defrosted manually. The auctioneer breached the Act as the statement made was not true.

The Contractual Remedies Act applies to auction sales. Auctioneers must not mislead bidders about the goods on sale.

The Personal Property Securities Act applies to goods sold at auction. If goods sold at auction were used as security by a previous owner, the goods may be seized by the security interest holder.

eg, the goods were purchased on hire purchase by the previous owner and payments have not been completed.

The Sale of Goods Act applies to auction sales. Under the Act goods are required to be of 'merchantable quality' and the seller must have the right to sell the goods. The Act covers both domestic and commercial goods. Auctioneers can contract out of the Sale of Goods Act. To contract out of the Act the auction house must either have a clear sign at the auction, a statement on the catalogue or make a spoken statement at the auction that the Act will not apply. Any sign needs only be clear enough to let a reasonable person see and understand it.

The Consumer Guarantees Act does not apply to auction sales. This means that you do not get the same level of protection, if the goods are faulty, as you do when buying from a shop or second hand dealer.

Checklist for buying at auction

take the opportunity to examine the goods before you buy them - auctioneers normally hold inspection days before the auction so that you can check through the lots that interest you.
check the Personal Property Securities Register (PPSR) to see whether any money is owed on the goods, especially if high value goods are involved. You may not always be able to check that the goods are subject to a security, as notices of security interests on the PPSR are registered in the name of the debtor. With motor vehicles however, searches of the PPSR can be done by the vehicle's serial number.
make sure that you don't bid more than you can afford - once the hammer hits the table, the goods are yours.
check the terms of sale - can you afford the price when you add on buyer's premium and cost of having the goods delivered?
check the catalogue for terms of sale and be aware of signs stating terms as well.

Private sales

Whether you are buying goods from an ad in the paper, from a garage sale, or from a neighbour, you need to check out what you are buying. Consumer laws such as the Consumer Guarantees Act and the Fair Trading Act do not cover private sales.

Buying a car privately

Although buying a car privately is popular and often cheaper than other methods of buying a car, there are a number of checks to prevent you from buying a 'lemon'. See our Motor Vehicle Section for more information.

Checklist for buying privately

Check out the goods that you are buying. If the goods are electrical – plug them in to see how they run. If the goods are mechanical or technical take someone with you who knows about those products.
If necessary, you can make the sale 'conditional'.

eg, Rod wants to buy a pony from Hemi. He wants to make it a written condition that a vet checks the pony and gives it a favourable report before he goes ahead and buys. Hemi agrees to this condition being written into the agreement.
Ask for a receipt which shows what you have bought, the date, name and address of the seller.
Take note of any statements the seller makes about quality, age, characteristics or fitness for purpose.
If the goods are 'near new' ask if there is a manufacturer's warranty.
If you pay a deposit – get a receipt, and make a note of what agreement you make with the seller about how the remainder will be paid and the goods collected.

Laws covering private sales

Contractual Remedies Act

This Act gives you a right to be compensated where the seller made a representation about the goods to you which you relied on in your decision to enter the contract and the representation turned out to be misleading or false. If the representation is serious, you may have the right to cancel the sale.

eg, Stevie is selling a stereo to Angela. Angela likes the stereo and decides to buy when Stevie tells her it is a new model and only a few months old. Angela buys the stereo but finds out later that this model has not been available in over two years. Angela wants to cancel the contract and get her money back because she was induced into the sale by incorrect information.

Sale of Goods Act

The Sale of Goods Act has limited application to private sales. The Act gives you the right to seek a refund, or claim for damages where, unknown to you, the seller did not have the right to sell the goods, money was still owed on the goods or the goods were used as security.

Be Aware

A seller can choose to contract out of the Sale of Goods Act.

Common law

The common law (a set of rules and remedies that judges have written from deciding contract disputes) has rules about your rights when a contract is broken.

eg, Miki agrees to buy a motor mower from Todd for $200 but doesn' want to collect it until the next day. She pays a $50 deposit. When Miki returns to collect the mower she finds that it has been sold to someone who paid $220 cash. Todd has broken the contract with Miki and agrees to return the deposit Miki paid.

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