Consumers are often aware that the consumer guarantees give them rights against businesses. Less well known are what remedies are available to them when this happens. However, all consumers need to know about it. Such knowledge will enable them to safeguard their rights, and observe those of a supplier, in what are sometimes fraught situations. Whether you are a consumer or a business owner, this article helps you to know the remedies available to purchasers if a business is in breach of consumer guarantees.

Consumer Guarantees

The Australian Consumer Law (Cth) (ACL) contains all consumer guarantees. The ACL comprises Schedule 2 of the Competition and Consumer Act 2010 (Cth). The guarantees tell customers what assumptions they can automatically rely on when they purchase a good or service.

The ACL also provides remedies in instances where a supplier of products or services fails to meet a guarantee.  In certain circumstances, consumers may have a claim against a manufacturer. The particular remedies and against who consumers can enforce them depend on the guarantee breached, whether the problem is major or minor and whether it pertains to a good or service.

Of course, to access these remedies, a purchase must fall within the ACL.  If a person is unsure, the website for the Australian Competition and Consumer Commission (ACCC) is an excellent resource for accessible generalised information.

Remedies for Goods

If a supplier of goods fails to meet their consumer guarantees, consumers may receive:

  • Repair or replacement;
  • Refund;
  • Compensation for consequential loss.

Minor Problems

For minor problems, a consumer cannot at the outset reject the product and request a refund.  They can ask the supplier to fix the fault. It is then the supplier’s decision whether to repair, replace or refund.

If a business chooses to repair, they return the item to the manufacturer. All suppliers must complete repairs within a reasonable time. There is no one definition of ‘reasonable time’.   It depends on the circumstances and the item. For example, repairs for an essential household item ought to happen faster than for non-essential products.  

If the supplier either cannot fix the product in a reasonable amount of time, a consumer can:

  • Reject the product and request a refund or replacement; or
  • Have the item fixed elsewhere and invoice the supplier for the reasonable costs of repair.

A reasonable cost of repair typically encompasses the actual cost of repair and other necessary costs like transportation.

If a business will not fix a product or agrees to do so but takes an unreasonable length of time, a consumer can:

  • Reject the item and request a refund or replacement; or
  • Have the item fixed elsewhere and charge the supplier for the reasonable costs of repair.

Major Failure

A major failure for goods under the ACL refers to specific consumer problems.  If a fault is a major failure, consumers can, at first instance:

  • Reject the good and choose either a refund or replacement; or
  • Request compensation for the diminished value of the product.

A consumer might be able to recover damages from a manufacturer for certain faults. To find out which ones, visit the ACCC website.

If a consumer purchases directly from a manufacturer, the manufacturer stands in the position of a supplier. As such, the remedies available to consumers are those applicable to suppliers. If required, a manufacturer must provide a refund.

Remedies for Services

If a service provider does not meet their consumer guarantees, consumers can:

  • Have the problem fixed at no cost in a reasonable amount of time;
  • Cancel the service contract and receive a refund for any unconsumed portion of the service;
  • Maintain the service contract and receive compensation.

Minor Problems

When a consumer problem with a service is considered minor, the consumer has no right at the outset to cancel the contract and request a refund. The supplier has the right to fix the problem (at their expense) in a reasonable amount of time. As with goods, ‘reasonable’ will depend on circumstances.

If the supplier refuses to rectify the problem or takes too long to do so, a customer has the right to:

  • Engage someone else to fix the problem and invoice the supplier the reasonable costs of doing so; or
  • Cancel the contract. If they have paid, they must receive a refund.

If a consumer cancels a contract and has not yet paid or has partly paid the contract price, they can refuse to pay at all or pay less than the contract price.

Major Failure

Again, a major failure vis-à-vis a service refers to certain defined consumer issues. If a problem is major, the purchaser can:

  • Cancel the service contract and receive a refund for all unconsumed parts of the contract; or
  • Keep the contract and receive compensation for the difference between the service purchased and the service supplied.

If a consumer cancels a contract for a major failure, they can do so at any time verbally or in writing. In contrast and as outlined above, a purchaser with a minor problem must wait until the supplier does not fix the failure in an appropriate period.

Key Takeaways for Breach of Consumer Guarantee

There are no remedies if a consumer changes their mind about purchasing a good or service. As no guarantee is at issue, there is no remedy. Of course, a supplier may have a business policy in such cases. If they do, they are obliged to follow it.

If you need further general information on consumer guarantees, remedies, minor problems, major failures or anything else concerning consumer law, the ACCC website is an excellent general resource. If you have questions about a particular situation, it is advisable to consult a LegalVision lawyer.

Carole Hemingway
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