As a trade promotion organiser, you must understand and comply with consumer guarantees. Consumers are automatically granted guarantees under the Australian Consumer Law. Specifically, you must note that you cannot contract out of these guarantees. Consumer guarantees include, among other things, that goods will be of acceptable quality and match their description. This article considers whether you, as the organiser of a trade promotion, must comply with the consumer guarantees when offering prizes to recipients who participate in your trade promotions, even if those prizes are given to the recipient for free.
What are the Consumer Guarantees?
The Australian Consumer Law creates several mandatory standards of quality which apply where businesses supply goods or services to consumers. Under the Australian Consumer Law, suppliers cannot contract out, limit or exclude consumer guarantees. Any attempt to do so will be void.
Who is a Consumer?
Under the Australian Consumer Law, a party is a consumer if they have acquired particular goods and (among other things):
- the amount paid or payable for the goods did not exceed $100,000; or
- the goods are a type ordinarily acquired for personal, domestic or household use or consumption (even if those goods were more than $100,000).
The word ‘acquire’ in the Australian Consumer Law suggests that goods that are supplied and in a consumer’s possession, regardless of whether they were purchased or not, will generally be afforded the protection of the consumer guarantees.
Continue reading this article below the formComplying With Consumer Guarantees
If you are offering prizes as part of your trade promotions, you must ensure (among other things) that:
- the prize matches the description published or communicated to the recipient;
- the prize is safe, durable and fit for purpose; and
- the prize is free from defects.
Prizes Failing to Meet Consumer Guarantees
If a prize fails to meet one or more of the consumer guarantees, the recipient of the prize will be entitled to a remedy. The remedy you must provide will depend on whether the failure is considered a ‘major’ or ‘minor’ failure.
Minor Failures
If a failure to comply with a guarantee is minor and you can remedy it within a reasonable time, you, as the supplier, can choose whether you will repair or replace the prize for the recipient.
Major Failure
Suppose the failure to comply with a guarantee is major. For example, this may be the case if the prize is:
- significantly different from the description or sample shown to the recipient;
- unfit; or
- unsafe.
Consequently, the recipient can choose a repair, replacement or refund.
This fact sheet outlines what records you need to keep when you run a trade promotion for each state and territory, and what documents you should keep.
How Long Am I Liable?
The Australian Consumer Law does not specify a time when the consumer guarantees ‘expire’. Instead, several factors will determine whether a recipient is entitled to a remedy under the Australian Consumer Law and, if they are, whether they are entitled to a repair, replacement or refund.
These factors include:
- the condition of the prize, for example, whether the prize is new or second-hand;
- the value of the prize with higher value prizes expected to be more durable;
- any statements made about the prize; and
- any other relevant circumstances surrounding the supply of the prize.
Other Considerations
In addition to consumer guarantees, there is a suite of other regulations and legislation to consider when offering or setting up a trade promotion. Accordingly, you must ensure your trade promotion complies with all its legal requirements.
Key Takeaways
If you are offering prizes as part of your trade promotions, you may need to comply with the Australian Consumer Law’s consumer guarantees. It is essential to familiarise yourself with these guarantees as they are automatically granted to consumers. Moreover, you cannot contract out of them.
If you need more information about Australian Consumer Law, our experienced consumer 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.
Frequently Asked Questions
Yes, consumer guarantees still apply to goods you offer as prizes.
If a failure to comply with a guarantee is minor and you can remedy it within a reasonable time, you, as the supplier, can choose whether you will repair or replace the prize for the recipient.
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