The Australian Consumer Law (ACL) provides a national framework that ensures fair trading and consumer protection across Australia. The ACL consolidates previous state and territory consumer laws, offering a unified approach to consumer rights and business obligations. Central to the ACL are consumer guarantees, which are legally binding promises about the quality and performance of goods and services.

Consumer guarantees are automatic protections that apply to the goods and services purchased by consumers. These guarantees cover various aspects, such as acceptable quality, fitness for purpose, and conformity with descriptions or samples. Importantly, these guarantees cannot be excluded or limited by businesses, ensuring robust consumer protection.

Understanding consumer guarantees is crucial for both consumers and businesses. Consumers need to be aware of their rights to seek remedies when goods or services do not meet the required standards. On the other hand, businesses must comprehend their obligations to avoid legal pitfalls and maintain customer trust. Legal practitioners play a vital role in guiding both parties through these aspects, ensuring compliance and advocating for clients when disputes arise.

Consumer guarantees for goods

The application of these guarantees can be illustrated through various real-life scenarios. For example, a consumer purchasing a refrigerator in Western Australia would expect the appliance to cool food efficiently, operate safely, and remain functional for a reasonable period. If the refrigerator fails to perform these functions due to a manufacturing defect within a few months of purchase, it would be considered a breach of the acceptable quality guarantee. The consumer would then be entitled to a remedy, which could include repair, replacement, or refund.

Another example involves a consumer purchasing a new smartphone that was advertised as water-resistant. If the phone fails to withstand water exposure under conditions stated in the advertisement, this would constitute a failure to match description and provide express warranties. The consumer would be entitled to seek a remedy from the supplier, ensuring that their rights under the ACL are upheld.

These guarantees form the bedrock of consumer protection in Australia, ensuring that consumers can have confidence in the goods they purchase. Businesses must understand these obligations to avoid legal disputes and maintain consumer trust.

Under the Australian Consumer Law (ACL), goods are required to meet certain guarantees. These guarantees are intended to ensure that consumers receive products that fulfil reasonable expectations of quality and performance. The guarantees for goods under the ACL include:

• Acceptable Quality: Goods must be of acceptable quality, meaning they are safe, durable, free from defects, acceptable in appearance and finish, and fit for all the purposes for which goods of that kind are commonly supplied. The standard of what is “acceptable” is determined by what a reasonable consumer fully acquainted with the state and condition of the goods would regard as acceptable, considering factors such as the nature of the goods, their price, any statements on packaging or labels, and any other relevant circumstances.
• Fit for Purpose: Goods must be fit for any purpose that the consumer makes known to the supplier before purchase, as well as for any purpose for which the supplier represents they are fit. This includes both express and implied purposes.
• Match Description: Goods must correspond with any description provided by the supplier. If a consumer relies on the description when deciding to purchase the goods, the goods must match that description.
• Match Sample or Demonstration Model: If a consumer buys goods based on a sample or demonstration model, the goods received must match the sample or model in quality, state, and condition.
• Express Warranties: Any additional promises or representations made about the goods must be honoured. This can include verbal assurances or written guarantees beyond the statutory requirements.
• Clear Title: The consumer is entitled to assume that the supplier has the right to sell the goods and that the goods are free from any undisclosed security or charge.
• Undisturbed Possession: The consumer is entitled to possess the goods without any interference from the supplier or third parties.
• No Undisclosed Securities: Goods should not be subject to any undisclosed security or charge, ensuring that the consumer can use the goods without the risk of repossession by a creditor.
• Availability of Spare Parts and Repair Facilities: Manufacturers and importers must ensure that spare parts and repair facilities are available for a reasonable period after purchase unless the consumer is advised otherwise.

Consumer guarantees for services

Under the Australian Consumer Law (ACL), businesses that supply services must adhere to specific guarantees. These guarantees ensure that consumers receive a standard level of service quality and performance. The primary service guarantees under the ACL are:

• Due Care and Skill: Services must be provided with due care and skill. This means that the service provider must possess the necessary level of competence and take all necessary precautions to avoid causing loss or damage. The standard of care is typically judged by what a reasonable person would expect in the circumstances.
• Fit for Purpose: Services must be fit for any particular purpose that the consumer specifies, and that the supplier agrees to. This can be an expressed purpose discussed prior to the service being rendered or an implied purpose based on the nature of the service.
• Reasonable Time: If no specific time frame is agreed upon, services must be delivered within a reasonable time. What constitutes a reasonable time can vary depending on the type of service and the surrounding circumstances. Factors such as the complexity of the service and industry standards may be considered.

Services guarantees in practice

The practical implications of service guarantees are significant for both consumers and service providers. For instance, a homeowner in Perth who hires a plumber to fix a leaky pipe expects the service to be completed with due care and skill. If the plumber fails to fix the leak properly, resulting in water damage, the homeowner would be entitled to seek a remedy under the due care and skill guarantee. This might involve the plumber rectifying the issue at no extra cost, or in some cases, compensating the homeowner for the damage caused.

Another example could involve a consumer hiring a contractor for a home renovation project. If the contractor agrees to complete the project by a specific date but significantly delays the work without valid reasons, this could constitute a breach of the reasonable time guarantee. The consumer would then have grounds to seek a remedy, which might include negotiating a new timeline or seeking compensation for the inconvenience caused by the delay.

Service providers must understand and adhere to these guarantees to avoid disputes and maintain a positive reputation. Compliance with service guarantees not only fulfils legal obligations but also fosters trust and reliability, crucial elements for business success.

Remedies

Under the Australian Consumer Law (ACL), consumers have the right to remedies if goods or services fail to meet the required consumer guarantees. The type of remedy available depends on whether the failure is classified as “major” or “minor.”

Minor failures

A minor failure occurs when the problem with the goods or services can be fixed within a reasonable time. In such cases, the consumer is entitled to:

Repair: The business must repair the goods within a reasonable time.
Replacement: If the goods cannot be repaired within a reasonable time, the consumer can request a replacement.
Refund: If a repair or replacement is not feasible, the consumer may seek a refund.
Compensation: The consumer can also seek compensation for any consequential loss or damage resulting from the failure.

Major failures

A major failure is when the goods or services:

• Would not have been purchased by a reasonable consumer if they had known about the problem.
• Are significantly different from their description or sample.
• Are substantially unfit for their normal purpose and cannot easily be fixed to make them fit for purpose.
• Are unsafe.

In cases of major failure, the consumer can choose to:

• Reject the goods and obtain a refund.
• Reject the goods and obtain a replacement.
• Keep the goods and seek compensation for the reduction in value below the price paid.

For services, if the failure is major, the consumer can:

• Cancel the service contract and obtain a refund for the services not performed or partially performed.
• Seek compensation for the difference in value between the service delivered and what was paid for.

Supplier obligations

Businesses have a legal obligation to provide remedies promptly and effectively when consumer guarantees are breached. Failing to comply with these obligations can lead to significant penalties under the ACL, as well as reputational damage.

Businesses must also ensure that they do not mislead consumers about their rights. For example, businesses cannot claim that they do not offer refunds or that consumers must contact the manufacturer for a remedy, as these statements are against the ACL provisions.

In Western Australia, businesses should be particularly aware of their obligations as the Department of Energy, Mines, Industry Regulation and Safety has a robust compliance and investigations team that regularly takes action, including prosecuting, businesses that do not comply.

Obligations in practice

Consider a scenario where a consumer in Perth purchases a laptop that develops a major fault within six months of purchase. The fault renders the laptop unusable for its primary purpose of work. Given that this constitutes a major failure, the consumer is entitled to either a full refund or a replacement laptop. If the consumer opts for a replacement but the retailer fails to provide one within a reasonable time, the consumer can seek a refund or pursue further compensation for any additional losses incurred, such as lost income due to the inability to work.

In another example, a consumer hires a company to paint their house, but the job is done poorly and not as specified in the contract. If the issues are minor, the consumer can require the company to fix the problems. However, if the painting job is so poorly done that it significantly deviates from what was promised and cannot be easily remedied, this would be a major failure, entitling the consumer to a full refund or compensation.

By understanding these remedies and obligations, both consumers and businesses can better navigate the process of resolving disputes related to consumer guarantees. Legal professionals at Juris Partners are well-versed in advising on these matters, ensuring that clients receive the appropriate remedies or fulfil their legal responsibilities effectively.

Exceptions

While the Australian Consumer Law (ACL) provides robust consumer guarantees, there are specific circumstances where these guarantees do not apply. Understanding these exceptions is crucial for both consumers and businesses to manage expectations and legal responsibilities effectively.

• Goods Over $100,000 for Business Use: Consumer guarantees do not apply to goods costing more than $100,000 that are purchased primarily for business use. For instance, heavy machinery bought for industrial purposes falls outside the scope of these guarantees.
• Goods Purchased for Resale: Items purchased with the intention of reselling them are not covered by consumer guarantees. This includes goods bought by businesses for the purpose of reselling them to other consumers or businesses.
• Private Sales: Transactions involving private sellers, such as goods bought from a garage sale or through private online marketplaces, are generally not covered by consumer guarantees. However, buyers are still entitled to guarantees of clear title, undisturbed possession, and no undisclosed securities.
• Traditional Auctions: Goods purchased at traditional auctions, where the auctioneer acts on behalf of the owner, are exempt from consumer guarantees. However, guarantees related to title, possession, and undisclosed securities still apply.
• Professional Services Provided by Qualified Architects or Engineers: Services rendered by professionals such as architects or engineers, which require specialised knowledge and skills, are not subject to standard consumer guarantees.
• Financial Products and Services: Different regulatory frameworks govern financial products and services that are not covered by the ACL’s consumer guarantees. These products are regulated by the Australian Securities and Investments Commission (ASIC).
• Insurance Contracts: Insurance policies are another category excluded from consumer guarantees, as they fall under separate regulatory provisions.
• Goods and Services Purchased Before 2011: The ACL does not apply retrospectively. Therefore, goods and services purchased before the enactment of the ACL in 2011 are not covered by its provisions.