The Case

The High Court in Preiss v Vermeulen is a good reminder of a familiar lesson: a vendor who consistently offers broad guarantees for certain goods, but sometimes stays silent, may find those guarantees apply across all of their transactions for those goods. 

In this case, the vendor sold stamps to the buyer in two main tranches over thousands of transactions occurring across 15 months. Most of those transactions included a broad guarantee: “No questions refund, and/or take it back. Your satisfaction is what I care about the most.” A small minority of transactions were silent on the guarantees. 

The issue arose when the vendor sent two additional stamp albums to the buyer to consider purchasing a third tranche. Before committing, the buyer obtained expert advice and was told many of the stamps already purchased were likely forged. Rather than proceed with the new sale, the buyer invoked the guarantee on the earlier tranches.

The Court held that this pattern of dealing was enough to incorporate the guarantee across all of vendor’s transactions with the buyer. The sound of the vendor’s silence was a thunderous clap heard in the form of a full refund—over NZ$230,000—awarded to the buyer by the Court, without needing to prove the stamps were fake. 

Key takeaways

Consistent dealing made the guarantee stick: The guarantee appeared in nearly all of the TradeMe listings. That was enough to incorporate it into all stamp sales, including private offline ones. Silence wasn’t enough to exclude the guarantee — review how consistently your terms appear. If you don’t want a term to apply to a particular sale, say so expressly.

No ambiguity, no conditions: The guarantee was enforced on its express language, it was considered so clear, that no additional conditions, exceptions, timeframes, or evidentiary burdens were able to be implied — if you are giving any guarantees, ensure the language only reflects what you can stand fully behind.

Repudiation also available: Under s 136 of the Contract and Commercial Law Act 2017, goods sold by description must match that description, including where genuineness can be inferred from the description. If the goods are fake, this will constitute repudiation — be precise in your description of goods. Loose descriptions may invite contractual remedies, including cancellation.

No obligation to authenticate: The express guarantee was such that the buyer did not need to prove whether stamps were fake — if you want to require proof or process before refunds are available, build that explicitly into your terms.

Only reasonable time limit applied: The seller claimed a 30-day cut-off, supposedly under New Zealand law. No such rule exists. The Court found the buyer acted within a reasonable time, based on when concerns arose — if timing matters, say so in your terms. Relying on informal assumptions or imagined rules won’t hold.

Commercial implications

Where a business often uses refund guarantees to create buyer confidence, particularly online or at scale, those representations may have legal consequences even for sales when they aren’t expressly included.

If your terms are broad, informal, or inconsistently applied across platforms or channels, now is a good time to review them. 

Our experts Hayley Miller, Campbell Featherstone, Güneş Haksever and Ashleigh Ooi can help you align your customer-facing guarantees with your appetite for commercial risk, before your silence becomes a term in itself.

This article was written by Güneş Haksever, Senior Associate, and Hayley Miller, Partner, from our Corporate and Commercial team.