Consumer Guarantees

Are you complying with the Consumer Guarantees?

If you are a business that provides goods (selling, leasing or hiring) or a service to a consumer in Australia you need to be aware and ensure that you comply with the consumer guarantees set out in the Competition and Consumer Lat Act 2010 (Cth) Sch 2 (‘Australian Consumer Law’)(‘ACL’).

A consumer is defined as, a business or person that purchase goods or services for their own use:

• To an amount of $40,000.00 or less; or
• To an amount of more than $40,000.00 but are normally bought for personal or household use or consumption; or
•  A vehicle or trailer principally used to transport goods on public roads.

Guarantee for supply of Goods

A business should be aware of the following guarantees that apply to all consumers:

• Title to Goods (s51): Requires that the business has the right to sell the goods. (clear title) This does not apply to hire or leased goods.
• Undisturbed possession (s52): Ensures that the business must not try to reclaim the goods they sold to a customer unless a customer has failed to meet their obligations under the Contract, whether it be a Contract of Sale, Lease or Hire.
• No undisclosed securities (s53): Requires the goods purchased to be free of any security interests or charges over the property. The exemption to this, is if it is disclosed to the consumer and the consumer agrees.
• Acceptable Quality (s54): Requires the goods purchased to be of acceptable quality. Goods are of acceptable quality, when a reasonable consumer, fully aware of the goods’ condition would find them:
  • Fit for all purposes that the goods are commonly supplied for;
  • Acceptable in appearance;
  • Free from defects;
  • Safe; and
  • Durable.

When determining if goods are of acceptable quality the ACL takes into consider the following:

• Nature of goods;
  • Price paid;
  • Any statements about the goods;
  • Representation made about the goods; and
  • Any other relevant circumstances.
• Fit for specific purpose (s55):  Requires the goods supplied to be fit for the purpose that is disclosed by the consumer or represented by the supplier. If the consumer discloses a purpose as to why they are buying the goods, then the supplier will need to ensure that the goods supplied comply with the disclosed purpose.
• Match Description (s56): Requires the description of the goods to be accurate and not misleading.
• Goods correspond with a sample or demonstration (s57): Requires that the goods supplied should correspond with the sample, if a sample is supplied to the consumer.
• Repairs and Spare parts (s58):  Requires a business to ensure that they will take reasonable action to ensure that they have facilities for the repair of the goods available for a sufficient period after they are supplied to the consumer.
• Express Warranties (s59): If you have voluntarily offered a warranty to the consumer in relation to the condition, quality state or performance of the goods then it would amount to an express warranty and the warranty must be respected. Consumers may be eligible for a refund or repair even after any voluntary warranty period has expired.

Guarantee for supply of Services

• Due Care and Skill (s60): Requires the business to exercise due care and skill when providing a service.
• Fit for particular purpose (s61): Requires the service being provided will be reasonably fit for purpose, in particular regard to where the consumer has divulged that they require the service for a specific purpose.
• Reasonable Time for Supply (s62): Requires that the service be provided within a reasonable time.

If a business fails to meet these Guarantees, then a consumer is entitled to a remedy under the ACL. A remedy is dependent on the circumstances and can include repairs, replacements, refunds or compensation for the loss.

If you want to find out more information in relation to Consumer Guarantees and whether you are complying, please call our office on 07 5444 4750.