Consumer Guarantees provide Australian consumers with legal protection when purchasing goods and services. Whilst it may be hard to picture modern day marketplaces working efficiently without this form of consumer protection, many Australian consumers are either not aware of their rights, or the extent of these rights. If you include yourself in either of those categories, keep reading. This article discusses how the consumer guarantees apply specifically to goods.

Relevant Law

The Australian Consumer Law (ACL) covers the consumer guarantees that apply to goods and services. For goods, the guarantees mean that all suppliers and manufacturers in Australia provide certain assurances about the products that they sell, lease or hire out to consumers. The guarantees apply to both minor and major problems. Of course, a supplier or manufacturer can make other warranties to a customer. However, the consumer guarantees exist irrespective of such warranties.

Applicable Definitions

To access the consumer guarantees, a consumer must first meet the relevant definition in the ACL. The ACL also defines manufacturer and supplier.
Consumer
A consumer is a person who buys:

  • Any good or services costing up to $40,000.00 (or amount specified in the Australian Consumer Law Regulations);
  • Goods or services costing over $40,000.00 typically used for personal, domestic or household uses; or
  • Goods which consist of a vehicle or trailer that is principally used to transport goods on public roads.

However, a purchaser will not be a consumer if they buy goods in the course of trade or commerce intended for:

  • Re-supply;
  • Use/Transformation through processing, production, manufacture; or
  • To repair or treat other goods/fixtures on land.

Manufacturer and Supplier
A manufacturer is a person who:

  • Grows, extracts, produces, possesses or assembles goods;
  • Holds themselves out to the public as a manufacturer of goods;
  • Permits or causes their name, brand mark or business name to be applied to the goods supplied;
  • Permits themselves to be held out as the manufacturer by another person; or
  • Imports goods into Australia where the manufacturer of the goods has no place of business in Australia.

A supplier is a person who in the course of trade or commerce sells goods or services as is usually described as a trader, retailer or service provider.

Consumer Guarantees

In total, nine guarantees apply to goods. Suppliers and sometimes manufacturers guarantee that:

  • A good is of an acceptable quality when sold to a customer;
  • Their description of it (for example, in a catalogue) is accurate;
  • A good will satisfy any additional promises made about it;
  • The good is reasonably fit for any purpose the consumer or supplier specified;
  • The good matches a sample or demonstration model and any description provided;
  • The supplier has clear and unencumbered title to the good unless informing the consumer is told otherwise before sale;
  • No person will attempt to repossess or take back the goods or prevent use of them except in particular circumstances;
  • Suppliers warrants that goods are free of hidden securities or charges and will remain so except in some specific cases; and
  • Manufacturers/Importers guarantee they will take reasonable steps to supply spare parts and repair facilities for a reasonable time after purchase.

How do the Guarantees apply to goods?

Guarantees provide automatic protection for consumers who have purchased a good. If a consumer has a problem with their purchase because it does not meet one of the guarantees, they will have a statutory right against the supplier or manufacturer.
Suppliers and manufacturers cannot avoid or contract out of these assurances. Consumers have enforceable remedies that oblige suppliers and manufacturers to correct faults, deficiencies or failures to meet the guarantees.
The remedies open to consumers of goods where the breach is minor include:

  • Repair or replace;
  • Refund; and
  • Compensation for consequential loss.

In cases of minor problems, the supplier has the right to choose the remedy.

However, if the problem constitutes a ‘major failure’, the remedies include:

  • Reject the good and the choice of a refund or replacement; or
  • Request compensation for any attendant drop in the value of the good on account of the problem.

In cases of major failure, it is the consumer who chooses the remedy.

In some instances, purchasers can recover damages from the manufacturer/importer of the good, depending on the guarantee(s) breached. Not all consumer guarantees give legal rights against a manufacturer/importer.
The consumer guarantees provided by manufacturers/importers are:

  • Acceptable quality;
  • Availability of repairs and spare parts;
  • Matching its description; or
  • In cases of an express warranty made by the manufacturer/importer.

Questions about how the consumer guarantees apply to goods often provoke queries about why they exist at all. The reason they exist is to protect consumers despite the often large power differentials that exist between consumers and businesses in the marketplace. The guarantees oblige businesses to act in a way that they may not otherwise be inclined to do for commercial reasons in the absence of such law.

Goods Not Covered by ACL

Not all products are covered by the ACL. In those cases, consumers have no recourse to the consumer guarantees for goods or the available legal remedies. In brief, these include goods bought:

  • Before 1 January 2011;
  • From one-off sales by private sellers (for example, garage sales);
  • At auctions (in person or online); and
  • Costing more than $40,000.00 and for business use (for example, machinery).

Consumers who purchased goods before 1 January 2011 (the date the ACL came into effect), have rights under the Trade Practices Act 1974 and various state and territory statutes in force before 2011.

If you would like further information on consumer guarantees or the ACL, the Australian Competition and Consumer Commission website is an excellent resource. If you are a business owner who sells goods, it is essential to get professional legal advice on your obligations under the ACL. Advice now will help you implement sound business practices and may save your business difficulties later. Contact LegalVision’s qualified lawyers to assist you. Questions? Call us on 1300 544 755.

Carole Hemingway

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