A consumer guarantee is an assurance that when you buy a good or service, it will work and do what you requested. It assures consumers of their rights when purchasing a good or service. The Australian Consumer Law (ACL) covers what certainties a consumer of goods and services can rely on when they make a purchase. The ACL began operating on 1 January 2011 and replaced the Trade Practices Act 1974. The Federal Government implemented the ACL so as to:
- reduce complexity and uncertainty in the law about consumers;
- improve consumers’ awareness of their rights; and
- provide effective enforcement mechanisms for consumers.
This article will explain what the consumer guarantees are for goods and services, and the exceptions where they do not apply.
Who is a Consumer?
For the ACL, a consumer is a person or business that purchases, hires or leases a product or service valued:
- under $100,000; or
- over $100,000 if a consumer buys the product or service for a personal or household use.
Prior to July 2021, the definition of consumer was narrower. It only applied to purchases under $40,000 (or over $40,000 if for personal or household use). Since a consumer does not need to be an individual person and can be a business, this change is likely to mean that the consumer guarantee provisions will cover more business to business transactions.
If a person or business buys goods in the course of trade and commerce in the following circumstances, they are not a consumer under the ACL:
- for re-supply;
- to use or transform the goods through processing, production or manufacture; and
- to repair or treat other goods or fixtures on land.
What is a Consumer Guarantee?
When considering the guarantees in detail, it is important to distinguish between goods and services.
Goods
The ACL contains a number of guarantees that businesses are required to give to consumers of goods, including guarantees that:
- the seller has the right to sell the goods. That means they can pass clear title in the goods to the consumer;
- the goods are free from any undisclosed security. For example, the seller has not used the goods sold as security for a loan;
- a consumer will have undisturbed possession of the goods;
- the goods are of acceptable quality;
- the goods are reasonably fit for the purpose that the business told you they would be fit for, or a purpose you made known to the business prior to purchasing;
- a good if advertised or comes with a particular description, complies with that description;
- goods will match a model or a sample that a purchaser requested;
- it is possible to secure spare parts and obtain repairs for a reasonable period after purchase unless the business advised the consumer otherwise; and
- a supplier or manufacturer can meet any additional promises made about the goods, such as promises concerning performance, quality, or condition.
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Services
The ACL contains guarantees that businesses must give to consumers of services, including that the services:
- will be provided with due care and skill;
- are fit for a particular purpose or desired result; and
- will be provided within a reasonable time if time is not otherwise specified or determined.
As services can often come with a service contract, businesses could potentially exclude liability for the service. However, the guarantees in the ACL exist independently of contract law. They cannot be restricted, limited, excluded or modified in a service contract.
If the business does not fulfil any of the guarantees, a consumer has a right to:
- repair, replacement, refund;
- cancel a service; and
- compensation for damages and loss.
Exceptions
Consumers will not be able to rely on the consumer guarantees in circumstances where they:
- received a good or service as requested, but simply changed their mind;
- misused a product in any way that caused the problem;
- knew of or were made aware of the faults before the good or service was purchased; or
- asked for a service to be done in a certain way against the advice of the business.
Before the ACL
The ACL does not apply to goods and services purchased before 1 January 2011. Consumers who have purchased goods before this date will have recourse to the implied conditions and warranties in the Trade Practices Act 1974 and relevant state and territory legislation in force at the time of purchase.
Key Takeaways
If you would like to know more about consumer guarantees provided under the ACL, the Australian Competition and Consumer Commission’s website is an excellent resource. Additionally, LegalVision’s experienced consumer lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
They give consumers access to a detailed list of rights for the goods and services they buy. There are nine guarantees relating to goods and three which are specific to services.
Neither you nor anyone who works for your business may exclude, limit or modify the guarantees in the ACL.
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