What do you do when you have purchased too much stock and you aren’t able to sell it by the best before date? Unless your supply agreement says otherwise, the supplier is unlikely to refund or replace any unsold stock. You are then faced with the choice of either throwing out the wasted goods or discounting the goods to sell them more quickly. This article explores your liability and obligations under the Consumer Guarantees Act 1993 (“the Act”) in relation to selling outdated stock and how to avoid this situation arising too often.
The difference between “Use By” and “Best Before”
First, you need to understand the difference between Use By and Best Before dates. A Use By date or Expiry Date is determined by the manufacturer who must meet New Zealand’s health and safety regulations. If stored correctly, a ‘Use By’ date or ‘Expiry Date’ is the last date by which the goods are considered safe to consume before they pose a potential risk to the health and safety of the consumer. As a vendor, you have an overriding duty to ensure at the time of sale that the goods being sold do not pose a risk to the health and safety of your customers. If a products Use By Date or Expiry Date has passed, it is presumed that the product is no longer fit for consumption and it is unlawful for you to sell these goods to the public. If you do sell expired goods, the consumer has a right under the Consumer Guarantees Act 1993 to require you to either refund the goods or to replace the goods with goods of the same or similar value at their discretion.
Goods which have exceeded their Best Before date, may still be fit for consumption although the quality of the goods may have diminished. You can still sell goods which have surpassed their Best Before date provided the goods meet the definition of ‘acceptable quality’ under the Act.
Goods will be ‘acceptable quality’ if they are:
- fit for purpose;
- acceptable in appearance;
- free from minor defects (other than minor defects you have advertised to the consumer);
- If a reasonable consumer would regard the goods as being of acceptable quality taking into account the: type of goods; price; any statements made about the goods on the packaging; the context in which the goods are supplied; any representations made about the goods; and so forth.
To preserve the reputation of your business and avoid incurring liability under the Act, any goods beyond their Best Before date should be sold at a reduced price in recognition of their condition. If goods have been discounted, make this clear by using words like ‘special’ or by placing the goods on a clearly marked clearance shelf. Any minor defects like damaged packaging or missing items should be advertised to the consumer prior to purchase at the point of display. A consumer will not be entitled to a refund or replacement if the defect was already known to them.
Review your supply agreements
To avoid being stuck with too much short-dated stock, you should ensure your supply contracts include an obligation on your supplier to ensure that any goods supplied to you are no less than [X] months from the Use By Date/ Best Before Date at the time of delivery. An appropriate timeframe should be considered having regard to the type of goods being supplied and the demand for such goods. Your staff should then check the expiry or best before dates at the time of delivery and any goods that do not meet the minimum expiry period should be promptly returned to the supplier for refund or replacement. Be aware however that if you do not return the goods within a reasonable timeframe, you may have waived your right to return them.