Consumer guaranteesBY Michael Smith
While most businesses are by now aware of the existence of the consumer guarantees contained in Australian Consumer law (the ACL), there are a number of peculiarities in this area of law which can cause confusion. In light of this we’ve put together a quick FAQ about some of the issues which often arise.
Can only individuals be consumers?
No. Basically any legal entity (which can include a corporation) which acquires goods or services for $40,000 or less (including acquisitions which are free of charge) is a consumer for the purposes of the ACL.
An entity is also a consumer if it acquires goods or services for more than $40,000 where the goods or services are of a type ordinarily acquired for personal, domestic or household use of consumption.
As such business to business transactions can fall within the scope of the consumer guarantees.
Are there any exceptions to consumer guarantees?
Yes. The consumer guarantees contain a number of exceptions, including where:
- The consumer acquires goods (or holds itself out as acquiring the goods) for the purposes of resupply;
- The goods are to be used up in trade and commerce in a process of manufacture or production; and
- The goods are not acquired in the course of the supplier’s trade or commerce, so, for example, a one-off garage sale will not be subject to consumer guarantees because a) the defect in the goods is due to the misuse of goods by the consumer, or b) the defect was brought to the consumers attention prior to the acquisition.
Can you limit your liability to a consumer for a breach of the consumer guarantees?
Ordinarily no, though in certain limited circumstances this may be possible.
If you supply goods or services which are not of a kind ordinarily provided for personal, domestic or household use or consumption then you can generally limit your liability to the replacement or repair of the goods, or the re-supply of the services (or paying the cost of such replacement, repair or re-supply). Of course, this limitation only applies if you have an existing, binding contract with the consumer.
Do the consumer guarantees give customers the right to a refund for change of mind?
No. The consumer guarantees provide specific protections, including that goods are of acceptable quality, they match their description and that they comply with any samples. A consumer is not entitled to a refund for a simple change of mind.
Do my product warranties overrule the consumer guarantees?
No. Any warranty given in relation to your product sits separately from the consumer guarantees. It is also important not to represent that your warranties replace the consumer guarantees, as doing so may in itself be a breach of the ACL.
Who is liable for a breach of the consumer guarantees?
A consumer will generally bring a claim against the business who supplied the goods, however, in the event that the manufacturer of the goods is responsible for the relevant defect, the supplier can pursue them for compensation.
For any further advice on ACL guarantees, please contact the ARA Employment Relations Line on 1300 368 041, option 3.
About Atkinson Vinden Lawyers
AVL have been providing legal services to companies and individuals for almost 40 years, and are widely recognised as focused on providing commercially sensible and practical advice.
ABOUT THE AUTHOR
Michael is AVL's Associate in their commercial practice. Visit www.avlawyers.com.au/