Reading time: 3 minutes

In addition to any express warranties you give when you sell a product you are also under implied legal obligations whenever you are selling goods to a customer. As the seller of goods you are under an implied legal obligation to:

  • Sell goods of an acceptable quality
  • Make sure the goods are fit for the purpose they are being sold for
  • Ensure that the goods will be the same as what is in the sample model
  • Ensure that the goods are same as they are described
  • Abide by any warranties you make to customers
  • Ensure that the customer has legal title to the goods they purchase

If the goods or services provided to a customer fail to meet any of these standards, then a customer has a legal entitlement to:

  • A refund;
  • Replacement;
  • Ask for compensation.

What is the legal standard for acceptable quality?

The law is quite specific about what is an acceptable quality for a product sold to a consumer.  It is whether a consumer would find them:

  • Fit for the purposes for which the goods are usually supplied
  • Acceptable in appearance, as you would expect something of the kind to look
  • Without any defects
  • Safe and durable

Relevant to these considerations are:

  • The price
  • Statements about the products on the packaging
  • Any representations about the products made by the seller to the customer

What are damages?

An aggrieved customer may claim damages against you if it is found you have breached the contract between you and the customer.  “Damages” refers to an award of money which a court can order you to pay the other party for breaching the contract. Your defence – when the consumer misuses the items The good news is that there are limits to your liability.  If a consumer misuses the items the legal guarantee of quality will no longer apply. Under Australian consumer law, a seller will not be liable if the consumer uses the goods in what might be considered an ‘abnormal’ manner.  This basically means misusing the goods and covers breaking them or using them in a way for which the product is not intended.  For example:

  • If the consumer drops a mobile phone in water or leaves it out in the rain
  • The screen of a television is broken after an object hits it
  • Using a small lawnmower to mow four or more hectares each week
  • Picking up a laptop by the corner of its screen

‘No Refund’ Signs are unlawful

Yes, believe it or not – but you cannot rob a person of their rights which are enshrined in consumer law by putting up a ‘no refunds’ sign.  Under Australian consumer law all consumers have a basic level of ‘consumer guarantee’. Hence, these signs are also unlawful:

  • “No refund on sale items”; and
  • “Credit note only for return of sale items”

However, a seller is not obliged to refund or change the items simply because somebody has changed their mind.

What if a customer takes legal action against me?

You should talk to a business lawyer, a contract lawyer or get legal advice immediately.  In some cases you may not just be liable for your transaction with your customer, you might be subject to Government fines and penalties as well.

Webinars

Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

Online
If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Online
Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Online
Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Online
Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Online
Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Online
Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Online
Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

Online
As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards