As a business, you rely on certain products and services for your everyday operations. These products may range from a truck to carry your goods to a printer for your office. The Australian Consumer Law (ACL) protects you for some of these products. If the products do not meet consumer guarantees, you may have a right to a refund, replacement or repair. This article set out your rights if your business purchases a product or service that fails to meet the consumer guarantees under the ACL.

Products Covered by the ACL

Businesses must provide consumer guarantees on products and services they sell, hire or lease for:

  • under $40,000; and
  • over $40,000 that are normally bought for personal or household use.

Business vehicles and trailers also fall under the ACL if a business uses 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.

If you buy a computer for your office that costs $2,000, it is implied that it will work in a way that meets the consumer guarantees. Therefore you may receive a refund, replacement or repair if your computer does not meet the consumer guarantees. However, if you were planning to re-sell that computer as part of your business, consumer guarantees do not apply.

Similarly, if you buy farming equipment that is worth more than $40,000, the ACL does not cover you. Rather, your rights are set out in the contract between you and the supplier.

Refund, Replacement or Repair

Major Problem

If you have a major problem with a product, you have a right to a refund or replacement. You can choose to receive compensation for the drop in the value of the price paid or a refund.

A major problem is when your product or good:

  • has a problem that would have stopped someone from buying it if they had known about it;
  • is significantly different from the sample or description;
  • is substantially unfit for its common purpose and cannot easily be fixed within a reasonable time;
  • does not do what you asked for and cannot easily be fixed within a reasonable time; or
  • is unsafe.

Imagine buying a printer for your office. It comes in a box with a picture of the printer printing out a colourful photo. However, when you try it for the first time, you realise that it only prints in black and white. Such a product is significantly different from the description on the box and you have a right to a refund or replacement.

A service has a major problem when it:

  • has a problem that would have stopped you from buying it if you had known about it;
  • is not suitable for its common purpose and cannot easily be fixed within a reasonable time;
  • does not meet the specific purpose you asked for and cannot easily be fixed within a reasonable time; or
  • creates an unsafe situation.

Minor Problem

If you have an issue with your product or service that is not a major problem but the product or service still does not meet your consumer guarantees, you have a right to a free repair. The business must provide you with a free repair within a reasonable time frame.

Alternatively, you can try to:

  • fix the product or service elsewhere and pass on the costs to the provider;
  • ask for a replacement (the business does not have to provide a replacement);
  • ask for a refund (the business does not have to provide a refund); or
  • recover compensation for the drop in value below the price paid.

 

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 your decision to purchase the product or service;
  • misused the product in a way that caused the problem;
  • were entirely aware of the faults with the product  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

As a business, purchasing services and products is an integral part of your daily activities. It can be very frustrating when services or products you purchase do not meet your expectations and are not suitable for their purpose. If this happens, you may be able to seek a refund, replacement or repair from the supplier. The type of remedy you can seek depends on whether you have a major or minor problem with your purchase.

If you have any questions or need assistance with seeking a repair, replacement or refund, get in touch with LegalVision’s competition lawyers on 1300 544 755 or fill out the form on this page.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Eugenia Munoz

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