Since 2011, businesses that provide goods (whether by selling or leasing them) or services to consumers in Australia must comply with certain consumer guarantees (as do manufactures and importers) imposed by the Australian Consumer Law (ACL).
Businesses must provide these ACL guarantees automatically, regardless of any other warranties they give to you or sell you.
Who is a consumer?
A person – including a business – will be considered a “consumer” if:
- they purchase goods or services that cost less than $40,000;
- the goods or services cost more than $40,000, but they are of a kind ordinarily acquired for domestic, household or personal use or consumption; or
- the goods are a commercial road vehicle or trailer used primarily to transport goods on public roads.
CONSUMER GUARANTEES – GOODS
Businesses that sell goods guarantee that those goods:
- are of acceptable quality – safe, lasting, have no faults, look acceptable and do all the things someone would normally expect them to do;
- are fit for any purpose that the consumer made known to the business before buying (either expressly or by implication), or the purpose for which the business said it would be fit for;
- have been accurately described;
- match any sample or demonstration model;
- satisfy any express warranty (ie, anything promised by the business about the goods);
- have a clear title, unless you otherwise advise the consumer before the sale;
- come with undisturbed possession, so no one has the right to take the goods away from or to prevent the consumer from using them;
- are free from any hidden securities or charges; and
- have spare parts and repair facilities reasonably available for a reasonable period of time, unless the consumer is advised otherwise.
Manufacturers and importers guarantee that their goods:
- are of acceptable quality;
- have been accurately described;
- satisfy any manufacturer’s express warranty; and
- have spare parts and repair facilities reasonably available for a reasonable period of time, unless the consumer is advised otherwise.
What happens if these guarantees regarding goods aren’t met?
If a business sells a good to a customer that fails to meet one or more of the above consumer guarantees, they are entitled to a remedy – either a repair, replacement or refund and compensation for any consequential loss – depending on the circumstances.
Minor problems
Generally, if the problem is minor, the business can choose whether to remedy the problem with a replacement, repair or refund. If business chooses to repair and it takes too long, the consumer can get someone else to fix the problem and ask the business to pay reasonable costs, or reject the good and get a full refund or replacement.
Major problems
If the problem is major or can’t be fixed, the consumer can choose to:
- reject the goods and obtain a full refund or replacement, or
- keep the goods and seek compensation for the reduction in value of the goods.
What is “minor” and what is “major” when considering goods?
A purchased item has a major problem when it:
- has a problem that would have stopped someone from buying the good if they had known about it;
- is unsafe;
- is significantly different from the sample or description;
- doesn’t do what the business said it would, or what the consumer asked for and can’t easily be fixed.
Gift recipients are entitled to the same rights as consumers who bought the goods directly.
A business can’t refuse to provide a remedy if the good is not returned in its original packaging.
The buyer also must not refuse to deal with a customer about the returned good and tell them to deal with the manufacturer instead (however a manufacturer can be approached directly by the consumer).
CONSUMER GUARANTEES – SERVICES
Businesses that supply services to consumers guarantee that those services will be:
- provided with due care and skill;
- fit for any specified purpose (express or implied); and
- provided within a reasonable time (when no time is set).
What happens if these guarantees regarding services aren’t met?
If a business sells a customer a service that fails to meet one or more of the consumer guarantees, the consumer is entitled to a remedy – for example, a refund, a further service to rectify the problem and in some circumstances compensation for consequential loss. The service provider must then provide the appropriate remedy.
Minor problems
If the problem is minor and can be fixed, the business can choose how to fix the problem.
The consumer cannot cancel and demand a refund immediately. The business must have an opportunity to fix the problem. If the repairs take too long, the consumer can get someone else to fix the problem and ask the business to pay reasonable costs, or cancel the service and get a refund.
Major problems
If the problem is major or can’t be fixed, the consumer can choose to:
- terminate the contract for services and obtain a full refund; or
- seek compensation for the difference between the value of the services provided compared to the price paid.
What is a “major” problem when looking at services?
A purchased service has a major problem when it:
- has a problem that would have stopped someone from purchasing the service if they had known about it;
- is substantially unfit for its common purpose, and can’t easily be fixed within a reasonable time;
- does not meet the specific purpose the consumer asked for and can’t easily be fixed within a reasonable time; or
- creates an unsafe situation.
EXCEPTIONS
A business may not be required to provide a remedy if a consumer:
- simply changes their mind, decides they do not like the purchase or has no use for it;
- discovers they can buy the goods or services more cheaply elsewhere; or
- has misused the goods in a way that caused the issue or damaged the goods by using them in a way that was unreasonable.
- knew of or was made aware of the fault before they bought the good;
- asked for a service to be done in a certain way against the advice of the business.
HOW CAN BUSINESSES HELP THEMSELVES?
Although the consumer guarantees cannot be contracted out of, businesses can take steps to limit its effect, such as:
- Putting in place appropriate Terms of Trade that confirm the understanding of the parties as to things that can often cause issues like time for delivery (as opposed to the unclear “reasonable” time), imposing obligations on the consumers as to how to properly use the goods/services and so on;
- Putting in place appropriate workplace policies and employment contracts that limit the “promises” that sales staff may make about goods or services being sold;
- Considering marketing and product/service detailed material so as to ensure the descriptions and promises about the goods and services are clear and correct and not misleading or likely to cause complaints.
FURTHER INFORMATION
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to consumer rights, business or commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au
This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.
