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As a business, you rely on certain products and services for your everyday operations. These may range from a truck to carry your goods to a printer for your office. These products must meet consumer guarantees, which under the Australian Consumer Law (ACL), automatically protect you from faulty, dangerous or misleading goods and services. If they do not meet consumer guarantees, you may have a right to a refund, replacement or repair. This article sets out your rights if your business purchases a product or service that fails to meet the ACL consumer guarantees and the options you can take to refund, replace or repair it.
Products Covered by the ACL
The businesses you purchase, hire or rent from must provide consumer guarantees on products and services that cost:
- under $100,000 (or $40,000 for goods and services supplied prior to 1 July 2021); and
- over $100,000 (or $40,000 for goods and services supplied prior to 1 July 2021) that are normally bought for personal or household use.
Business vehicles and trailers also fall under the ACL if you use them to transport goods on public roads.
Consumer guarantees do not apply to items that you plan to on-sell or change to re-supply as a business. For example, if you purchase a computer so that you can then sell it for a profit under your business model, consumer guarantees do not apply.
This guide provides key information on how to manage a business dispute as quickly and cost-effectively as possible.
Refund, Replacement or Repair
Major Problem
Under the ACL, if you purchase a good or service with a major problem, you have the right to choose between a refund, replacement or repair. A major problem is when your purchased product or service fails to meet a consumer guarantee. This can include it:
- being unsafe, or for services, creating an unsafe situation;
- having a problem that would have stopped you from buying it if you had known about it;
- being significantly different from the sample or description;
- being substantially unfit for its common purpose and not easily fixable within a reasonable time; or
- being different to what you asked for and not easily fixable within a reasonable time.
For example, you may have purchased a printer for your office. On the box, there is an image of it printing out a colourful photo. However, when you try it for the first time, you realise that it only prints in black and white. This product is significantly different from the box’s description and you have a right to a refund or replacement.
Solutions for Major Problems
If you purchase a product that develops a major problem later on, you have the option to choose between a refund or a replacement. The refund should be the full amount you paid, and this still applies even if you used the good. The business must not deduct an amount from the refund to account for if you used the product.
- For services, you are not guaranteed a full refund. Instead, you may need to pay a certain amount for the services you have received so far or receive a partial refund. If you wish to keep the contract, you can negotiate a lower price because the service quality was greatly affected by the problem.
Minor Problem
Non-major failures to meet the ACL consumer guarantees are called minor problems. When your purchased product or service has a minor problem, the business must fix the problem or repair the product for free within a reasonable time period.
Importantly, what is a ‘reasonable’ amount of time for a business to fix a problem will depend on the nature of the product or service. For example, it will take longer for a custom piece of furniture to be repaired than a piece of clothing at a tailor.
Solutions to Minor Problems
If the business cannot or will not repair or fix the problem within a reasonable amount of time, you can try to:
- fix the product or service elsewhere and pass on the costs to the problematic supplier;
- ask for a replacement, though you are not guaranteed to receive one;
- ask for a refund, though you are not guaranteed to receive one; or
- recover compensation for the drop in value below the price you paid.
Below is a summary of when a business may seek a refund, replacement or repair:
| Major Problem | Minor Problem | |
| Repair | Yes | Yes |
| Refund | Yes | No |
| Replacement | Yes | No |
Exceptions
You cannot seek a repair, replacement or refund for a product or service that does not meet the consumer guarantees if you:
- changed your mind about purchasing the product or service and no longer want it;
- misused the product in a way that caused the problem;
- were entirely aware of the product’s faults before purchasing it; or
- asked for the performance of a service in a certain way, against the advice of the business, or were unclear about what you wanted.
Key Takeaways
For consumers who have purchased a faulty product, the best first step is often to contact the business that sold you the product. You can do that yourself or use an online platform like Ajust to make and manage your complaint.
For businesses, buying services and products is a crucial aspect of daily operations. It can be frustrating when the products or services you purchase cause problems and are not fit for their intended purpose. In these cases, you might have the option to request a refund, replacement, or repair from the supplier. The remedy available to you depends on whether the issue with your purchase is major or minor.
If you would like assistance regarding disputes about consumer guarantees, contact our experienced dispute resolution lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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