Many people have misperceptions about what consumer guarantees are and when they apply. As a business selling goods and services, you are required to comply with the Australian Consumer Law (“ACL”), which means complying with various consumer guarantees. The following guide will save you having to visit your business solicitor every time you need to clarify some of the misunderstandings surrounding consumer guarantees.

Replacing faulty goods

One of the misconceptions surrounding consumer guarantees is that ‘faulty goods’ that are older than 3 months do not have to be replaced or repaired. This is not true. In fact, under the ACL, all business owners are required to provide a repair or a replacement of faulty goods within a reasonable period of time after the sale has been made. Depending on what the goods are, the period of time might vary. If the goods are electronics that are designed to last a long time, such as a dryer or an oven, a guarantee of just a few months would be unreasonable under the ACL. When in doubt about the appropriate time period, it is always worth asking a business solicitor.

Manufacturer’s Warranties

Some consumers are under the impression that business owners are under no obligation to replace or refund certain goods when the goods themselves are still within the time period of the manufacturer’s warranty. This is often a business owner’s attempt to shift the liability and responsibility onto the manufacturer and very often does not reflect the actual requirements under the ACL guarantees.

In reality, business owners that sell faulty goods must provide the consumer with a remedy of some sort, despite being within the time period of the manufacturer’s warranty. Of course, business owners have every right to consult a solicitor if they believe that the manufacturer has supplied faulty goods, however, as the seller of the good, they must provide consumers with a remedy.

Postage and Handling

Some business owners will tell their customers that they must pay for the postage and handling costs of returning damaged/faulty goods and receiving the replacement. There is some confusion around the costs of replacement of goods, however, under the ACL guarantees, if the goods are substantially faulty or some other duty of the seller has been breached, then all costs paid, including costs of returning and receiving goods, must be reimbursed/paid by the seller if and when the customer requests.

For minor repairs, however, the seller can choose between the following options:

  • Pay for repairs; or
  • Provide a refund.

In either case, consumers should never be required to pay for the return (after the repairs have been done) of the goods when they have been sent back to the seller to be repaired.

Spare Parts

Do sellers need to have spare parts available if their products are faulty? Some consumers are told that certain businesses are exempt from the obligation to provide spare parts/repairs to hapless consumers who are sold faulty goods.

If you are the seller of goods, you are required to have spare parts available, as well as make sure that goods can be repaired within a reasonable period of time after the point of sale. This sometimes means making sure your manufacturer has spare parts. The ACCC will fine businesses that do not comply with this requirement.

Minimum Guarantees

Goods that are sold after 1 January 2011 must meet certain minimum standards. If you are not sure whether the goods sold in your business meet the following standards, we advise that you speak with a small business solicitor:

  • The quality is acceptable;
  • There is no discrepancy between the goods advertised (the description/appearance on the site) and the goods received;
  • The goods do what they say they do, i.e. they satisfy the purpose for which they are advertised;
  • No available warranties will be denied; and
  • For a ‘reasonable time’, spare parts will be available when necessary.

Conclusion

If you want to avoid legal disputes with unhappy customers, be aware of the various consumer guarantees that the ACL requires you comply with. If you are uncertain about your manufacturer’s policies, you should make the necessary enquiries to ensure they are compliant with the ACL obligations. To speak with a small business solicitor at LegalVision, contact us on 1300 544 755.

Lachlan McKnight

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