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The Australian Consumer Law (ACL) does not just apply to individual people. It also offers consumer protections to businesses who purchase goods or services, including faulty goods, and meet the definition of a “consumer”. 

In this article, we:

  • look at who a “consumer” is under the ACL;
  • set out the consumer guarantees; and
  • outline what steps you can take if your business has purchased faulty goods.

Who is a “Consumer”?

The ACL automatically offers consumer guarantees to anyone that comes within the definition of a “consumer”. If you are a consumer, you have rights under the ACL that cannot be contracted or negotiated out of, regardless of what a retailer or manufacturer has said to you.

To determine if you are a consumer, ask yourself the following two questions:

1. What price did I pay for the goods?

You qualify as a consumer if you did not pay more than $40,000 for the goods concerned.

If you did pay more than $40,000, you will only be a consumer if that good was:

  • for personal, domestic or household use; or
  • a trailer or vehicle for use in transport of goods.

2. For what purpose did I acquire the goods?

You are not a consumer if you acquired the goods to:

  • re-supply them; or
  • use or transform them for business.

What Are the Consumer Guarantees?

Consumer guarantees are automatically available to consumers under the ACL. At a high level, these are guarantees that the goods must:

  1. be of acceptable quality;
  2. be fit for any disclosed purpose;
  3. correspond with the description provided to consumers; and
  4. comply with any express warranties made.

The table below describes these requirements in more detail.

 

Goods must be of acceptable quality To be of “acceptable quality”, the good must be:

  • fit for purpose;
  • free from defects;
  • safe; and
  • durable.

When determining whether something is of acceptable quality, the court looks at what a reasonable consumer evaluating the product would think. 

For example, the level of acceptable quality will probably differ greatly between a $30 camera and a $2,000 camera.

Goods must be fit for any disclosed purpose

Ask yourself the common sense question, “How would a regular person expect to use this product?”

For example, you would expect a teacup to hold liquid without leaking.

Goods must correspond with descriptions provided to customers In assessing this, consider the accuracy of the product’s labelling, marketing or other communications you have received about it. 
Goods must comply with any express warranties made

An express warranty is a promise that is made in addition to your legal protections.

For example, a retailer may tell you that an item has a 10 year lifespan.

 

Remedies

If you have received faulty goods, you have two main avenues for correcting the error depending on the severity of the problem:

Type of Problem Remedies Available
Major You can ask for a replacement or refund.
Minor The business has the option of offering you a free repair, instead of a replacement or refund.

 

A problem is major if the good:

  • is significantly different from the sample or description;
  • is substantially unfit for its purpose and cannot be easily fixed within a reasonable time;
  • does not do what you asked for and cannot easily be fixed within a reasonable period of time;
  • is unsafe; or
  • would not have been purchased by you if you had known about the problem.

On the other hand, a minor problem is anything less significant than a major problem.

What is Misleading and Deceptive Conduct?

The ACL imposes strict liability for loss or damage to consumers caused by conduct that is:

Strict liability means that the retailer or manufacturer will be at fault regardless of whether they intended to mislead you or not. 

For example, imagine if a retailer selling single-use plastic dinnerware promised that “this plastic is so tough that you’ll be using these for years to come”. However, the dinnerware snapped after the first use. A comment like this may be misleading as to the quality of the goods.

Therefore, if you have purchased faulty goods, consider whether the retailer or manufacturer engaged in misleading conduct. Were any verbal or written representations or promises made to you in relation to the goods? These representations may take the form of promotional emails or in marketing materials. If these promises were misleading, remedies may be available to you.

What is Unconscionable Conduct?

Unconscionable conduct is conduct that is seen as unfair or against good conscience. The ACL prohibits a person, in the course of business, from engaging in unconscionable conduct in relation to a product.

For example, it is generally unconscionable that a party with great bargaining power would attempt to take advantage of a vulnerable party for their benefit. Imagine if a retailer handed a written contract to an illiterate consumer that gave more power to the retailer and the consumer signed it.

Therefore, think about whether the circumstances of your purchase, or the defects in your faulty goods, were unconscionable in any way. This requires a thorough assessment of your circumstances, so it is important to seek tailored legal advice before taking action. 

Key Takeaways

Businesses often depend on goods in order to run a business. If your business has bought faulty goods, you may have rights under the ACL. It is worthwhile seeking legal advice on whether you are a “consumer”. If a breach of your consumer rights exists, you can seek a remedy to rectify the problem.

If you want help figuring out whether you are a consumer under the ACL, or for assistance in remedying a faulty goods purchase, contact LegalVision’s competition lawyers on 1300 544 755 or fill out the form on this page.

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