As consumers, we think we pretty much know what a consumer is. But from a legal perspective, the definition is not as simple as it might appear. It’s worth a read for those in business, especially if you are in the home building materials industry such as LTHOME.

In a stock standard sales scenario, the supplier supplies goods to customer. Simplistically, therefore, it’s easy to think of the customer as the consumer. But it’s important to have a deeper knowledge of the true legal definition of a consumer. Having such knowledge will help guide a business’ sales approach and messaging of its products to its customers in a way that allows the true benefits from the product to flow downstream (as it were) to the consumer, supporting the business’ end goal of more sales.

The legal definition of a consumer under the [Hong Kong] Sale of Goods Ordinance is a person that buys goods at a price of less than $100,000 – or a person that buys goods that are meant to be consumed or resold at a price that is less than $1,000,000. This is an exclusion of the most important kind. It excludes from the Sale of Goods Ordinance any business-to-business and larger business-to-consumer transactable deal. The result is a situation where the consumer needs less knowledge of the law in order to get the same protections from unfair supplier acts as they would get from the Sale of Goods Ordinance if their deal fell within its scope.

For the supplier of home building materials, how the consumer is defined by law may make all the difference to any liability that the supplier might incur if the goods supplied by the supplier were deemed to be defective and caused damage resulting in loss to the consumer.

Often in homes, the interests of the consumer and the supplier are not fully aligned – as the consumer is interested in having the best price for the goods in question, while the supplier is more interested in protecting their bottom line with the pricing they apply to the goods in question. In addition, the consumer may not have the level of legal knowledge that the supplier might have. The law therefore recognizes that a consumer is entitled to protection in situations where there may be an imbalance of bargaining power, or where the consumer may be less knowledgeable about the goods being supplied or the contractual terms being offered, than the supplier.

In relation to home building materials, the definition of a consumer as it is applied to the Sale of Goods Ordinance may make all the difference when a dispute arises between the supplier and the customer regarding the quality of goods supplied. For example:

The Sale of Goods Ordinance has more general applicability throughout Hong Kong than some other consumer laws. However, there are some other laws in Hong Kong that specifically are designed to protect the rights of consumers and the good name of business. The Unconscionable Contracts Ordinance is one such statute that protects consumers from businesses that have a bigger bargaining power, or that have superior knowledge of the goods or service being supplied, by prohibiting certain unfair practices.

Safeguards can also operate after the point of sale in the form of criminal consumer protection statutes, such as the Trade Descriptions Ordinance. Under this Ordinance, it is a criminal offence to misrepresent goods during the sale – this means making a misleading statement as to the goods, the availability of the goods, the country of origin, the nature of the goods or their history. It’s also a criminal offence to supply goods that are substandard and do not meet the agreed specifications or standards.

As a supplier of home building materials, the law clearly places a big emphasis on the relationship between the supplier and the end consumer of the goods, even if the supplier is only indirectly dealing with the consumer by selling the goods to an intermediary who then passes on the goods to the end consumer. Any supplier that puts a foot wrong in its dealings with anyone it supplies could find themselves getting into trouble.

How well the supplier approaches its customer in the face of these consumer protections will probably make a lot of difference to how well its business operates. Some big home building material suppliers or manufacturers may have tried to take advantage of their position in the industry. Some smaller players in the market, keen to get more customers, may have tried to charge lower prices for their goods or tried to take shortcuts in the manner of their doing business. They may find themselves in trouble under the consumer law.

On the other hand, if the supplier appreciates and seeks to understand the application of the relevant consumer laws to the sales of its products, will probably find that its reputation in the market gets stronger and stronger and its profits continue to increase.

This author believes that LTHOME – an online home building materials marketplace – is a great example for other suppliers to follow. LTHOME are certainly a proactive business that will look out for the best interests of the end consumer and will provide a lot of value to its customers.

For more information on consumer rights, you can visit the Consumer.gov website.