What is the Australian Consumer Law and Consumer Guarantees?

We often see the terms, Australian Consumer Law, and Consumer Guarantees, displayed when visiting a retail store. Notices of guarantees are generally provided when consumers purchase goods or services. This could include purchases of:

• hardware (i.e tools);
• electronics (i.e a new TV);
• furniture; or
• daily everyday goods for consumption.

The list of things it applies to is essentially unlimited. Each of those purchases, generally, have guarantees provided under the Australian Consumer Law.^[1] That is, goods or services supplied in trade or commerce.

In this article, we explore the frequently asked questions about the Australian Consumer Law and Consumer Guarantees, such as:

• who is a consumer under the Australian Consumer Law?
• what are the common Consumer Guarantees under the Australian Consumer Law?
• what are the remedies available for breaches of the Consumer Guarantees?

Who is a Consumer?

It may be generally thought that a consumer is an everyday person who purchases a good or a service. However, that is not exactly correct. A special meaning of what is a “consumer” is provided under the Australian Consumer Law.

A person is generally considered a “consumer” if:^[2]

• the amount paid for a good or service does not exceed $40,000; or
• the good or service acquired is of a kind that is generally acquired for personal, or domestic use or consumption; or
• the goods were a vehicle or trailer acquired for use principally in the transport of goods on public roads.

There are exclusions to this, however, these are the generally applicable rules.

What are the Consumer Guarantees?

The Australian Consumer Law provides that, when goods or services are supplied to a consumer, the supplier must guarantee they are of a certain standard. Therefore, when a consumer purchases a good, the following guarantees could apply:^[3]

• a guarantee of Acceptable Quality^[4]
• a guarantee for Fitness of Disclosed Purpose^[5]
• a guarantee of Express Warranties^[6]

Each of the guarantees provides protections for a consumer for separate reasons. For example, a Guarantee of Acceptable Quality would generally mean that the goods should, at first instance, be:^[7]

• fit for purpose for which goods of that kind are commonly supplied;
• acceptable in appearance and finish;
• free from defects;
• safe; and
• durable.

This would be different to a Guarantee for Fitness of Disclosed Purpose, which would generally require that the goods supplied were reasonably fit for the purpose that a supplier represented.^[8] For example, if a salesperson said that a vehicle purchased for $30,000 could reach 500km per/hr when in fact it could only reach 150km per/hr, then this may not be fit for the purpose that was represented to you. This is different to the Guarantee of Acceptable Quality, in that not every car generally is expected to go 500km/hr.

When it comes to buying a car, the Australian Consumer Law may also apply to help protect against the purchase of ‘lemon’ cars.

Furthermore, if a consumer purchases a service, the following guarantees could apply:

• a guarantee of Due Care and Skill^[9]
• a guarantee as to Fitness for Purpose or Desired Result^[10]

Similar to the guarantees applicable to goods, the requirements to meet the eligibility for each guarantee provided for services would be different. For example:

• when seeking to rely on a Guarantee for Due Care and Skill, then you can reasonably ask whether the service was provided with due care and skill expected of someone experienced in providing that service?
• when seeking to rely on a Guarantee as to Fitness for Purpose or Desired Result, you might ask whether the service acquired was fit for the purpose that was made known to the supplier when they were engaged?

What are the remedies available?

Remedies are also available when there are failures (major or non-major) relating to goods or services supplied to consumers. In the context of goods supplied, this could include:

• refund, replacement, or repair of the goods;^[11]
• recovery of reasonable costs of having the failure rectified;^[12]
• rejecting the goods;^[13]
• compensation for reduction in value of the goods.^[14]

Furthermore, in the context of services, the remedies available could include:

• terminating the contract for supply of services;^[15]
• recovering compensation for any reduction in the value of the services payable by a consumer.^[16]

However, this does not limit the right for consumers to recover damages for losses incurred by a consumer that are reasonably foreseeable.^[17]

Whilst the array of remedies available to a consumer is broad, seeking legal advice on how the guarantees under the Australian Consumer Law may apply in your situation is important in ensuring that you are fully aware of the recoveries available and that your legal rights are protected.

How Can DSA Law Help?

If you are seeking advice regarding commercial law issues, and how the Australian Consumer Law may apply to your business, and believe you could benefit expert legal assistance, please Contact Us or one of our Commercial Lawyers at DSA Law on (03) 8595 9580.

[1] Competition and Consumer Act 2010 (Cth) sch 2 (‘Australian Consumer Law’).
[2] Australian Consumer Law, s 3.
[3] In our article, we address the common guarantees that are generally applied within the consumer context.
[4] ibid s 54.
[5] ibid s 55.
[6] ibid s 59.
[7] ibid s 54(2).
[8] ibid s 55.
[9] ibid s 60.
[10] ibid s 61.
[11] ibid s 261.
[12] ibid s 259.
[13] ibid.
[14] ibid.
[15] ibid s 267.
[16] ibid s 267.
[17] ibid ss 259, 267.