Introduction
Under the Australian Consumer Law (ACL), statutory consumer guarantees give consumers a comprehensive set of rights for the goods and services they purchase. These guarantees are essential to ensure consumers receive the products they have paid for and that the products perform as intended.
It is important that businesses are aware of the scope of these statutory consumer guarantees.
If a guarantee is not met, consumers may be entitled to remedies such as repair, replacement or a refund. The appropriate remedy depends on the type of defect and whether the consumer has the right to reject the goods.
What goods and services are covered by the consumer guarantees?
As a general rule, goods and services that are sold in trade or commerce to a consumer are covered by consumer guarantees. A business can be a consumer as well.
Subject to some statutory exceptions, a consumer is generally someone who purchases:
- any goods or services costing $100,000 or less, including GST
- any goods or services (irrespective of cost) that are normally used for personal, domestic or household purposes
- a vehicle or trailer used mainly to transport goods on public roads.
Second-hand goods and gifted goods or services are also covered by the majority of these consumer guarantees.
What is not covered by the consumer guarantees?
Goods and services that are not covered by consumer guarantees include, among others, those bought at auction, bundled products and services, insurance contracts and financial products.
What are the responsibilities of suppliers and manufacturers under the consumer guarantees?
If you are a supplier or manufacturer, the consumer guarantees automatically apply to the supply of goods and services to consumers. The consumer guarantees are in addition to any express warranties offered by suppliers and manufacturers, although those warranties are also covered by the consumer guarantees.
‘Supplier’ include traders, retailers, service providers and anyone else who sells, leases or hires goods or services in trade or commerce to a consumer.
‘Manufacturer’ includes a person or business that makes and puts goods together and has their name or brand on the goods. It includes a person or a business importing goods into Australia (where the maker of the goods does not have an Australian office).
For more information on the difference between consumer guarantees and warranties, please see our article here.
Guarantees applying to goods
Suppliers and manufacturers must guarantee that:
- goods are of acceptable quality
- goods will match any description provided
- any express warranties will be honoured.
Manufacturers must guarantee the availability of repairs and spare parts. Guarantees do not apply to auctioned goods.
Additionally, suppliers guarantee that a consumer is buying goods that:
- have clear title (unless otherwise stated)
- do not have undisclosed securities
- are fit for any disclosed purpose
- have a right to undisturbed possession
- match the sample or demonstration model provided.
Guarantees applying to services
For a supplier providing services, those services must be provided:
- with due care and skill
- in a manner fit for any specified purpose (except for services supplied by architects or engineers)
- within a reasonable time.
An exception applies for services supplied under contracts related to the transportation or storage of goods for certain purposes, as well as contracts for insurance.
How long do you need to provide consumer guarantees?
The ACL does not set a specific timeframe for when consumer guarantees expire. Whether they still apply depends on factors such as the type and intended use of the product, the time since purchase and the product’s reasonably expected lifespan.
What are the consequences for failure to comply with the consumer guarantees?
Consumers will have rights against you as a supplier, and in some cases as a manufacturer, where a good or service fails to meet a consumer guarantee. When a deficiency or failure occurs, a remedy must be provided to the consumer, depending on whether the issue is minor or major and subject to statutory conditions.
Where a supplier fails to satisfy a consumer guarantee and depending on the type of failure, remedies may include:
- repair, replacement or refund
- cancellation of a service
- compensation for damages and loss,
For a minor failure, businesses may choose the remedy to provide, but it must be at least a free repair.
In the event of a major failure, consumers (not businesses) can choose between a refund or replacement. If a service contract has a major failure, consumers have the right to terminate the agreement. Multiple minor failures can constitute a major failure. A right to a refund is lost if a disentitling event occurs.
Manufacturers who fail to meet a guarantee may also be liable to any reduction in value and may also have to compensate for damages.
Need further advice?
Please contact David Grace, Adelaide Hayes or Lochlann Woodall if you would like any advice on compliance with consumer guarantees.
