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 (Cth) (TPA). The 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.

Who is a Consumer?

For the ACL, a consumer is a person who purchases, hires or leases a product or service:

  • Valued under $40,000.00; and
  • Valued over $40,000.00 if a consumer buys the product or service for a personal or household use.

A consumer includes a person who buys a vehicle or trailer used mainly to transport goods on public roads regardless of its cost.

If a person 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 guarantees to consumers of goods that:

  • The seller has the right to sell the goods. That means they can pass clear title.
  • The consumer will have undisturbed possession of the goods;
  • The goods are free from any undisclosed security. For example, the seller has not used the goods sold as security for a loan.
  • The goods are of acceptable quality;
  • The goods are reasonably fit for the purpose that the business told you it would be fit for or a purpose you made known to the business prior to purchasing;
  • If a good sells with a particular description, the goods will comply with that description;
  • The goods will match a model or a sample that a purchaser requested;
  • That 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. These promises include lifetime guarantees and money back offers.

Be aware that decisions concerning whether a good is of acceptable quality will take account of what a person can expect from goods of that type and cost.

Services

The ACL guarantees to consumers of services:

  • Due care and skill;
  • Fitness for a particular purpose or desired result;
  • Provision of the service within a reasonable time if time is not otherwise specified or determined.

Be aware that under a service contract, a supplier 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.

A business must provide and honour these guarantees to consumers of goods and services automatically. If a business gives consumers any other warranty, those warranties do not affect the guarantees accorded in the ACL.

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.

Before the ACL

The ACL does not cover goods and services purchased before 1 January 2011.
These consumers 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. If in doubt, seek the advice of a legal professional.

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. A lawyer skilled in consumer law can also assist you. Contact LegalVision’s consumer lawyers to assist you with your legal needs. Questions? Call us on 1300 544 755.

Carole Hemingway

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