March 25, 2013

Inescapable Guarantees in Australian Consumer Law

The Australian Consumer Law (ACL) is an exceptionally broad law that bolsters consumer rights.

The ACL guarantees certain standards for goods and services sold to consumers, whether or not a customer and seller have agreed to those standards.

SCOPE OF THE ACL

The ACL applies to:

  • any type of goods or services costing up to $40,000;
  • goods or services costing more than $40,000 which are normally used for personal, domestic or household purposes; or
  • a vehicle or trailer (the cost of the vehicle or trailer is irrelevant).

If a party is involved in a transaction that meets the test above, that party falls within the definition of “consumer” for the purposes of the consumer guarantee provisions.

CONSUMER GUARANTEE PROVISIONS

If an individual or business has acquired goods or services as a “consumer” under the ACL, the terms of the transaction will contain the statutory guarantees outlined below.

For goods, amongst other things, a supplier guarantees that a consumer is purchasing goods:

  • that have clear title, unless otherwise stated;
  • that do not have undisclosed securities;
  • that are fit for any disclosed purpose;
  • with a right to undistributed possession; and
  • that match the sample or demonstration model.

For services, amongst other things, a supplier guarantees that services are provided:

  • with due care and skill;
  • fit for any specified purpose; and
  • within a reasonable time (if no time has been specified).

 

BREACH OF GUARANTEE

If goods or services fail to meet a relevant guarantee, a consumer will have rights against the supplier and, in some cases, the manufacturer, who is legally obliged to provide a remedy as follows:

  • When the problem with the good or service is minor, the supplier can choose whether to provide a repair or offer the consumer a replacement or refund.
  • Where there is a major failure, the consumer can reject the goods or services and choose a refund or replacement, or ask for compensation for any decrease in value of the goods or services.