When Do the Consumer Guarantees for the Sale and Purchase of Goods and Services Apply?

The Australian Consumer Law (ACL) provides automatic guarantees for consumers. As a business owner, you cannot exclude such guarantees and must provide them. It is essential to be aware of such guarantees. Accordingly, you can ensure that consumers are provided with the rights in the appropriate circumstances. This article outlines when the consumer guarantees for the sale and purchase of goods and services apply and the circumstances where a consumer may not have such rights available to them.  

Who is a Consumer? 

Under the ACL, an individual or a business is a consumer when they purchase goods and services:

• valued less than $100,000; 
• valued more than $100,000 and were purchased to be used for personal, domestic or household purposes; or 
• consist of a commercial vehicle or trailer principally acquired for the primary purpose being to transport goods on public roads.

Any business which provides goods and services through hiring, selling or leasing to Australian consumers must comply with these consumer guarantees. The consumer guarantees should be unaffected by any other warranties you might give a consumer during the purchase.

What are the Consumer Guarantees? 

The ACL sets out different guarantees applying to goods and services. It is important that consumers know the rights available to them. Likewise, business owners should also be aware of these guarantees’ impact on their business. 

What Do the Consumer Guarantees Apply?  

Consumer guarantees apply to:

• goods gifted to you from the person who purchased them, along with proof of transaction (such as receipts, invoices, and credit card statements);
• goods purchased at a traditional auction; 
• goods and services bundled together;
• sale items;
• goods and services purchased online from an Australian business; or
• goods purchased second-hand from a business, taking into account age and condition.

When Consumer Guarantees Do Not Apply

There are circumstances where a business can somewhat limit its obligations to consumers and the consumer will not be afforded certain rights under the ACL. These circumstances include where a consumer:

• got what they asked for but changed their mind, found it cheaper somewhere else, decided they did not like the purchase or had no use for it;
• misused a product in any way that caused the problem;
• knew of, or were made aware of, the faults before buying the product; or 
• asked for a service to be done in a certain way against the advice of the business or were unclear about what they wanted.

Obligations of Service Providers

The guarantees above apply automatically to any service you buy, regardless of other guarantees or warranties you may receive. If a service you purchase does not meet a guarantee, you have consumer rights and remedies, which include:

• refunds, repairs and replacements/exchanges;
• cancellation of the service; and
• compensation for loss or damages.

As a service provider, you must ensure you provide these remedies. Notably, if multiple breaches occur, customers may claim compensation for consequential loss. 

Like the consumer guarantees, remedies may not be entitled to the consumer in those instances mentioned above. The consumer is not entitled to claim against a seller where the failure to meet a consumer guarantee is due to: 

• something someone else said or did unless it was their agent or employee; or 
• an event that was beyond the seller’s control (i.e. bad weather or delays in delivery). 

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Obligations of Suppliers 

Similarly for suppliers, if there is a problem with a good the consumer purchases, the consumer will have rights and remedies that the supplier cannot avoid. These remedies are enforceable and are there to ensure that any flaws or deficiencies are corrected. 

The type of remedy will depend on the nature of the problem: 

• if it is a minor problem, the supplier can either provide a repair of the goods or offer a replacement or refund; or 
• if it is a major problem, the consumer has the right to reject the goods and choose either a refund or replacement or request compensation for any drop in the value of the goods. 

Key Takeaways

As a consumer or business owner, it is crucial to understand the rights under the law that the other will have. Ultimately, the law aims to give consumers and business owners a fair go. It is not designed to protect the consumer if they are careless or make unreasonable demands. 

If you need help with your consumer contracts, our experienced contract lawyers can assist 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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