Reading time: 4 minutes

If your business sells products to consumers, these goods will come with automatic guarantees under the Australian Consumer Law (ACL). If you do not meet the requirements of these guarantees, the customer can ask you to rectify the issue. In some circumstances, customers may be able to reject the goods. This article explains what your obligations are if your customer rejects products you have sold to them. 

Consumer Guarantees

The consumer guarantees apply to any goods you sell that are less than $40,000. While the guarantees are mostly relevant to your sales with consumers, they may also cover your transactions with other businesses. This is as long as the companies are not reselling the product.

For example, if you sell a couch to a manufacturing company to use in their staff room, this company will be covered by the consumer guarantees.

However, if you sell a couch to a furniture retailer who then sells it to customers, this transaction will not be covered by the consumer guarantees.

There are eight consumer guarantees provided by sellers that state that the goods must:

  • be of acceptable quality, in other words, safe, long-lasting, and work as you would expect them to;
  • match descriptions made on the packaging or advertising;
  • match demonstration models or samples;
  • be fit for their intended purpose;
  • come with full ownership; 
  • not have any hidden security interests attached to them; and
  • come with undisturbed possession, so that no one can take them from you.

Manufacturers or importers also guarantee that:

  • goods will be of acceptable quality;
  • they will honour any express warranties; 
  • products will match their description;
  • they will provide repairs or spare parts for a reasonable time; and
  • they will provide spare parts when necessary. 

Remedying a Breach of a Consumer Guarantee

If you do not meet these guarantees, a customer can go to you (and in some instances, your manufacturer) and request a remedy. To remedy the issue, you may provide a: 

  • repair;
  • replacement; or
  • refund. 

However, you do not have to provide a remedy when the customer has just changed their mind about the purchase. 

The type of remedy you have to provide will depend on whether there is a minor or major failure with the product. 

Minor and Major Failures 

A minor failure one which you can fix reasonably easily, and within a reasonable time. If the product has a minor failure, you can decide whether to provide a: 

  • repair;
  • replacement; or
  • refund. 

A major failure happens if the:

  • product was not accurately described; 
  • customer would not have bought the product if they knew about the failure;
  • product is not fit for its purpose, and you cannot fix it to make it fit for purpose; or
  • product is unsafe.

If a customer asks you to fix a problem and you refuse to do so within a reasonable time, the customer may either:

  • pay someone else to fix the issue and have you recover those costs; or
  • notify you that they reject the goods.

If there is a failure to comply with a guarantee that cannot be remedied or is a major failure, the customer can:

  • notify you that they reject the goods; or
  • recover money for the reduction in value below the price they paid. 

Rejecting Goods

To reject a product, the customer should let you know that they reject it and provide a reason why. They must return the product to you unless it cannot be replaced easily. Instances where products cannot be returned easily include when:

  • they are too expensive to send via post;
  • the products are too large; or 
  • the products are installed in a way which makes them hard to remove.

For example, large products like televisions or furniture will likely be too costly or cumbersome to post. So, if there is a major failure with the product and the customer decides to reject the product, you will be responsible for collecting it and providing a refund or replacement.

Customers are not entitled to reject goods when:

  • a reasonable time from when the consumer received the goods has passed;
  • the goods are lost, destroyed, damaged or disposed of after delivery; and
  • the goods are attached to other property, and they cannot be unattached without damaging them.

Key Takeaways 

As a business owner, you need to be aware of the consumer guarantees that will automatically apply to your products. If you do not meet these guarantees, your customers will likely be able to take action to fix the problem. In some instances, your customers may be able to reject the goods they purchased, and you may be responsible for collecting them. If you have any questions about ensuring you are compliant with the ACL, contact LegalVision’s competition lawyers on 1300 544 755 or fill out the form on this page.

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

Jessica Anderson
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