We mainly associate Consumer Guarantees with the supply of new products. However, they also extend to second-hand products. So, if you sell second-hand goods through your shop or online store, you need to be aware of the consumer guarantees and how these apply to your business. Consumer guarantees do not apply to private sales, for example selling goods at a garage sale, to a neighbour, or through an internet auction site.
What Products Attract the Consumer Guarantees?
Under the Competition and Consumer Act 2010, consumer guarantees automatically apply to goods or services which are:
- Under $40,000; or
- Over $40,000 but that are normally bought for personal or household use.
A vehicle or trailer will also be included irrespective of the cost if it is acquired primarily for use in transporting goods on a public road.
The consumer guarantees apply to products and services that meet the above test, even if they are sale or second-hand products.
What Consumer Guarantees are Relevant to Second Hand Goods?
Relevantly, the seller must guarantee the second-hand goods are of an acceptable quality. This means that the goods are:
- Safe and free from defects;
- Acceptable in appearance and finish, and
- Adequately perform the job that the user would expect from the product.
The consumer guarantee that the goods or services will be of an acceptable quality applies to second-hand goods. A goods’ age, price, and condition determine its quality. For example, a consumer buying a second-hand refrigerator advertised as ‘unused but scratched’ for $500 expects it to work for many years. Alternatively, a consumer purchasing a refrigerator advertised as ‘10 years old’ for $50 may expect it to need new seals, or re-gassing within the next 12 months.
Defective Goods and Consumer Guarantees
Goods will still meet the guarantee of acceptable quality if the seller alerts the consumer to the defect. Advertising a product as a ‘second’ or ‘second hand’ is not enough. You should explicitly describe the defect either before the time of sale, or display a written notice describing the product’s defect.
This is particularly important with online sales where the consumer cannot examine the goods personally before purchasing them. For example, an online second-hand clothing store selling a jacket and including in the description ‘button missing’ would not be liable to the consumer for the defect.
A consumer who can examine goods before purchasing them, and consequently identify any defects, is not entitled to rely on the consumer guarantee of acceptable quality. This exclusion is relevant for businesses selling second-hand goods from a traditional ‘brick and mortar’ shop. The goods sold will determine the level of inspection required. For instance, a product that is five years old is likely to need closer inspection than a relatively new product.
The consumer can rely on the guarantee if he or she could not have noticed the good’s defect, even with the most thorough inspection.
Second-hand products must also:
- Match their description;
- Be fit for a particular purpose that the consumer makes known;
- Have repair facilities and spare parts reasonably available; and
- Come with undisturbed possession.
If your business sells second-hand goods, the Australian Consumer law and consumer guarantees will apply to your business. As sellers cannot exclude consumer guarantees from the sale of second-hand goods, it is important that you understand the guarantees and your obligations. More information on the Consumer Guarantees and the ACL is available on the Australian Competition and Consumer Commission website.
Questions? Get in touch with LegalVision’s specialist consumer lawyers on 1300 544 755.