As the seller of goods or services, there are certain customer guarantees that cannot be excluded under the Australian Consumer Law (“ACL”). As such, nothing in the Sale Terms and Conditions can try to exclude these guarantees, warranties, representations or conditions implied or imposed by law, including the ACL.

What are the most important provisions in this clause?

There are several important provisions that a business lawyer should draft into this particular clause. These include:

  1. Firstly, that no terms within the agreement can limit the extent to which the law governing the sale of products is effective.
  2. Secondly, the clause should make known to the buyer their entitlements under the ACL, such as a refund or replacement for any ‘major failure’ of the product. On top of this, the terms should entitle the buyer to any further compensation for any other foreseeable loss or damage to the product.
  3. Thirdly, if the product is not in an acceptable condition but the condition does not amount to a ‘major failure’, clearly communicate in this provision that the buyer is entitled to have the product repaired or replaced.
  4. Then, explain to the consumer what ‘manufacturer’s warranty’ refers to and how it operates in relation the consumer. Explain how the buyer, if considered a ‘consumer’ under the law, may have overlapping rights under the ACL. Get your business lawyer to draft this provision so that the consumer is completely aware of their rights and encourage them to check whether any manufacturer’s warranty is attached to the product.
  5. Following this, explain that the buyer will need to provide some evidence of any faulty product if they wish to make a claim for a refund or replacement. This will ensure that buyers are not simply claiming additional products without first providing evidence of the claim.
  6. Next, you’d be wise to have a business lawyer explain the process of providing a refund. Be clear about when, and under what circumstances, a refund will be provided i.e. after the product has (a) been returned, (b) been inspected, and (c) upon approving a refund, refunded by the same means used to pay for the product.
  7. If the customer has used the product in some way (used, connected, installed) making it second-hand, have your business lawyer exclude these products from being refunded. Also, if the product is custom made, it may be more difficult to sell to a new customer. For this reason, draft exclusionary provision on this basis as well.
  8. Get the buyer to adequately repackage the item so to avoid any damage upon return of the item to the warehouse.
  9. Have your lawyer draft into the terms a provision that explains the duty of care that the buyer has over the product while in their possession. Clearly explain here how any damage done to the product upon its return will be the sole responsibility of the buyer who may be liable to pay those repairs, at least to the extent that the product is returned to its original condition. If the cost of repairs surpasses the manufacturing cost to create the item, the buyer will no longer be entitled to any refund. Put this in writing, even if it sounds obvious!

Conclusion

As a retailer, you have certain responsibilities to your consumers. You must ensure that what you are advertising on your website is the same as what you’re delivering to your clients. At the same time, your customers have certain entitlements, such as refunds, exchanges and so on. Correctly drafting this clause into your Sales Terms and Conditions is crucial so that you are limiting the liability where appropriate while taking responsibility for meeting certain consumer guarantees governed by the Australian Consumer Law.

If you need legal advice on how to draft these consumer guarantees into your Sales Terms and Conditions for your online business, speak with a business lawyer at LegalVision to get a fixed-fee quote today.

Lachlan McKnight

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