Australian Consumer Law Guarantees

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Schedule 2 of the Competition and Consumer Act 2010, known commonly as the Australian Consumer Law (ACL), provides a number of protections for consumers that are important to know for suppliers, as failure to comply with these could result in claims being made against you.

In order to be covered by ACL a customer must firstly be defined as a consumer as per section 3.

To do they must have purchased a good or service:

  • That is of a kind ordinarily acquired for their personal, domestic or household purpose or,
  • That is any type of good or service costing up to $40,000 or,
  • That is a vehicle or trailer used mainly to transport goods on public roads.

If your customer is defined as a consumer under ACL they will be entitled to a number of consumer guarantees. These guarantees include:

  1. Title
  2. Undisturbed possession
  3. Protection from any undisclosed securities
  4. Goods being of acceptable quality
  5. Fitness for any disclosed / particular purpose
  6. Relating to description
  7. Relating to supply of goods by sample or demonstration model
  8. Repair and spare parts
  9. Services will be done with due care and skill
  10. Reasonable time for supply of a service

In addition to all of the potential guarantees, ACL will work alongside any express warranty that you have given. The consumer guarantees also cannot be excluded by any contractual terms, for example, the statement “No Refunds”.

Where one of the guarantees has not been properly complied with, then the remedy they will be entitled to will depend on the nature of the breach of guarantee/s. Where there is a breach the ACL will define this as either being a major failure or a minor failure. To be a major failure the good or service:

  • Would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure or,
  • Is a significant departure from the description or,
  • Is a significant departure from the sample or demonstration model referenced or,
  • Are unfit for a disclosed purpose that was made known or,
  • Are not of an acceptable quality as they are unsafe.

Where there has been a major failure you may be liable to give to the consumer a refund, damages or a replacement of the defective good or service.

In regards to the major failure of a good/s, it is also possible for a customer to reject them. To do this though is what is known as the “rejection period” and it must not have passed. What timeframe this rejection period has taken will depend on the time a failure associated with one of the guarantees will be reasonably expected to become apparent. This will have regards to:

  • The type of goods, and
  • The use to which the consumer is likely to put them, and
  • The length of time for which it is reasonable for them to be used, and
  • The amount of use to which it is reasonable for them to be put before such a failure becomes apparent.

Therefore, if a consumer becomes aware of a breach and lets you know soon after it is likely they will be entitled to reject the goods.

Where it is a defective service that has been provided and there has been a major failure, then it is possible for a customer to terminate the supply contract. As with the rejection of goods, this must be done so within a reasonable time of being aware of the major failure and must be expressly communicated to you and becomes effective from the point you are made aware of this. You will also be liable to refund all payments made to you by the consumer for the service.

If the goods or services do not meet any of the above criteria then they will only be classified as having a minor failure. This does not mean that a remedy is not available for the consumer however, and where there has been a minor failure you are required to repair this issue within a reasonable time, which is an objective test done against what a reasonable person in the circumstances would expect. Where this is not done, the issue will then be classified as a major failure so it is imperative to repair minor issues as soon as possible.

Should you require assistance with any breach of a consumer guarantee please contact the MTA on 8291 2000 or email the Workplace Relations team by clicking here.