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Consumer Law

Contributed by Nick Seddon, originally amended by Cathy He and Jane Black (NT Law Handbook), as amended by Adam Thompson and Andrew Tan, Consumer Law Centre ACT and current to May 2018

About the Australian Consumer Law

The Australian Consumer Law (ACL) came into force on 1 January 2011. The ACL is found in Schedule 2 of the Competition and Consumer ACT 2010 (Cth). For consumer transactions before 1 January 2011, the Trade Practices Act 1974 (Cth) applies.

All states and territories have enacted laws applying the ACL as a law of their respective jurisdictions. In the ACT, s 7 of the Fair Trading (Australian Consumer Law) Act 1992 (ACT) applies the ACL as a territory law. This law may be cited as the Australian Consumer Law (ACT).

The ACL provides a number of specific and general protections to consumers. Some protections are based on provisions of the Consumer Guarantees Act 1993 (NZ). Accordingly, New Zealand case law can provide persuasive authority for Australian courts and tribunals.

When does the ACL apply?

The specific guarantees of the ACL only apply to consumer transactions. The general protections apply more broadly. A consumer transaction occurs when a person purchases goods or services:

  • in trade or commerce; and
  • the goods or services are of a kind ordinarily acquired for personal, domestic or household use or consumption, or acquired for $40,000 or less; or
  • the goods consist of vehicles or trailers acquired principally for the transportation of goods on public roads.

If the ACL does not apply, the law of contract or another law may provide a remedy. If you are unsure, seek advice from a community legal centre.

Specific consumer guarantees

When you buy goods or services, and they don't work or don't perform as generally expected, you have rights under the law. The ACL creates a basic set of guarantees that apply to consumer goods and services purchased in Australia, even if they were supplied from overseas.

Suppliers and manufacturers must comply with these guarantees. If the manufacturer does not have a place of business in Australia, then the importer is considered the manufacturer under the ACL.

These guarantees are intended to ensure that you receive the goods or services that you have paid for. When you have a problem and one or more of the guarantees has not been met, you are entitled to a remedy. These apply in addition to any express warranties, manufacturer's warranties and extended warranties that may apply.

The type of remedy depends on the circumstances but may include a refund, a replacement, compensation or a free repair.

The consumer guarantees apply when you buy goods and services from a person, or a company or other entity which, that is in the business of supplying goods and services.

When you buy goods, the supplier guarantees that:

  • the goods will be of acceptable quality;
  • the goods will be fit for a particular purpose;
  • the goods will match their description;
  • the goods will match the sample or demonstration model;
  • the supplier will honour any express warranties;
  • you will have exclusive title to the goods;
  • you have the right to undisturbed possession of the goods;
  • there are no undisclosed securities on the goods.

The manufacturer guarantees that:

  • the goods will be of acceptable quality;
  • the goods will match their description;
  • the manufacturer will honour any express warranties;
  • the manufacturer will take reasonable action to ensure that repair facilities and spare parts are reasonably available for a reasonable period after the goods are supplied.

When you buy services, the supplier guarantees that:

  • the supplier will provide the services with due care and skill;
  • the services will be fit for a particular purpose;
  • the services will be provided within a reasonable time, if no completion time is set.

When do consumer guarantees apply?

The consumer guarantees apply to consumers as they are defined under the ACL.

Section 3 of the ACL defines consumers as a person who:
  • has purchased goods or services costing $40,000 or less; or
  • has purchased goods or services that were of a kind ordinarily acquired for personal, domestic or household use or consumption, irrespective of price; or
  • has purchases goods consisting of a vehicle or trailer acquired for use principally to transport goods on public roads, irrespective of price.
This means the consumer guarantees apply to purchases of goods and services of up to $40,000 for business purposes - for example, furniture or equipment for office use.

The consumer guarantees also extend to persons who receive goods or services as a gift (s 266 ACL). A gift recipient can exercise the same ACL rights and remedies as the purchaser of the goods or services.

However, the consumer guarantees do not apply to:
  • purchases of goods for re-supply;
    • for example, a purchase of electronics by a department store for re-supply;
  • purchases of goods for use in production, manufacture, repair or treatment of other goods and fixtures, in trade or commerce;
    • for example, a purchase of paint or building materials to complete a construction contract;
  • purchases of services for the transport or storage of goods for business, trade, profession or occupation purposes;
    • for example, a contract of delivery of building materials onsite to complete a construction contract;
  • insurance contracts.
Some financial products and services are not defined as goods and services in the ACL and therefore ACL rights and remedies do not apply to them. However, the Australian Securities and Investments Commission Act 2001 (Cth) provides separate consumer protection guarantees in relation to financial products and services.

The consumer guarantees cannot be modified, restricted or excluded by a contract between the supplier or manufacturer and the consumer (s 64 ACL).

For example, suppliers and manufacturers cannot modify, restrict or exclude consumers guarantees by:
  • "no refund", "store credit only", "no refunds for sale items" and similar signage; or
  • including a contract term stating that the law of another country applies to the contract or only arbitration is available if there is a dispute; or
  • stating there is no warranty as it is sold "as is".
The consumer guarantees apply regardless of, and in addition to, any extended warranty or manufacturer's warranty that apply to the goods or services.

Guarantees for Goods

Acceptable quality

Suppliers and manufacturers separately guarantee that goods are of acceptable quality [s 54 ACL]. This means that the goods must:

  1. be safe, durable and free from defects;
  2. be acceptable in appearance and finish; and
  3. do everything that they are commonly used for.

When deciding whether goods meet this guarantee, you need to consider the nature of the goods, the price, and any information provided directly by the supplier or the manufacturer, or on packaging or promotional material. Second-hand goods, imperfect goods and seconds are also covered by the guarantee, but age, price and condition will be taken into account.

However, goods are not expected to be indestructible. A consumer who has damaged goods by abnormal use or has failed to take reasonable steps to prevent goods becoming of unacceptable quality, will not be able to seek a remedy under this guarantee.

Furthermore, where a supplier alerts you to any defects before the purchase, you should inspect the defects before you buy the goods to make sure you accept the nature of the stated defects. You would not be entitled to a remedy to rectify defects that were specifically drawn to your attention. You would also not be entitled to a remedy if you have examined the goods and ought reasonably to have found that the goods were not of acceptable quality at the time you purchased them.

For example, a consumer who purchases a pair of shoes which are stated to be slightly damaged around the heel, cannot then claim a remedy later for that damage. However, the consumer would be able to claim a remedy if one of the shoes loses a heel from normal usage shortly after purchase--unless, for instance, the consumer had examined the shoes and ought reasonably to have seen that the heel was partly-detached from the shoe.

Fit for purpose

Suppliers guarantee that goods will be suitable for any particular purpose that you make known to the supplier before you buy the goods (s 55 ACL).

Where the supplier is made aware by the consumer of the purpose for which the goods are required, or the supplier represents that the goods are reasonably fit for a particular purpose, then the goods must be reasonably fit for that purpose.

This guarantee applies whether or not the goods are commonly supplied for that purpose. However, it does not apply where the consumer has not relied on the skill and judgment of the person selling the goods, or where it would be unreasonable to do so.

For example, a consumer purchases paint from a hardware store after explaining to the supplier that they are painting their outdoor decking. After a couple of months, the paint begins to peel, as it is unsuitable for outdoor surfaces. The consumer can claim a remedy for breach of this guarantee because the paint was not fit for the particular purpose that was made known to the supplier.

However, the guarantee would not apply if the consumer failed to disclose the purpose of the paint to the supplier, and had instead disclosed it to another customer at the hardware store, and then relied on this customer's recommendation.

Match description

Suppliers and manufacturers separately guarantee that, where goods are sold by description, they correspond with the description (s 56 ACL).

Goods are often sold by description, because the consumer does not actually see the goods being purchased. This may occur where:

  • goods are ordered from a distance, such as by online means, telephone or mail, without the consumer seeing them; or
  • goods are purchased with reference to their packaging or labelling.

For example, a personal computer is described online as being blue with a 1TB hard drive and 8GB of memory but after delivery the consumer discovers it has one, two or neither of these features. The consumer can claim a remedy for breach of this guarantee.

Note that subsection 56(2) provides that a supply of goods is not prevented from being a supply by description merely because the consumer inspected the goods and should have discovered the errors in the description.

If the sale is by reference to a sample as well as by description, then the goods must correspond both to the sample and the description (s 56(3) ACL).

Match sample or demonstration model

Suppliers guarantee that if you have chosen goods based on a sample or demonstration model, then:
  • the goods will correspond with that sample or demonstration model in quality, state or condition; and
  • where there are defects that would not be apparent on reasonable examination of the sample or demonstration model, these defects would not cause the goods to not be of acceptable quality.
Furthermore, if the goods are supplied by reference to a sample, the supplier guarantees that the consumer will have a reasonable opportunity to compare the supplied goods with the sample.

For example, a consumer purchases a leather sofa based on a sample of a leather. The consumer would have the right to a reasonable opportunity to compare the purchased sofa with the sample. If the colour or texture of the purchased sofa did not reasonably correspond to that of the sample, then the consumer can claim a remedy for breach of this guarantee.

Spare parts and repairs

Manufacturers guarantee that when you purchase a product, the manufacturer must take reasonable action to ensure that spare parts and repair facilities are available for a reasonable time after purchase (s 58 ACL).

How long is a "reasonable time" will depend on the type of goods. For example, it might be reasonable to expect that spare parts and a repair facility will be available for a laptop computer for several years. On the other hand, it might not be reasonable to expect that spare parts or a repair facility are available for plastic stationery at all.

This guarantee applies even if you did not purchase the goods directly from the manufacturer. However, this guarantee does not apply if the manufacturer took reasonable action to ensure you received written notice, before or at the time of purchase, that repair facilities and spare parts will not be available after a specified period.

Express warranties are honoured

Suppliers and manufacturers separately guarantee that they will comply with any express warranties they have made (s 59 ACL). These express warranties apply in addition to the consumer guarantees, rights and remedies provided by the ACL.

A common example of an express warranty is a 30-day change-of-mind return policy that is provided by many large retailers and supermarkets.

For example, a consumer purchases a kitchen knife. The supplier represents that it will stay sharp for 10 years, but after 5 years, the knife is no longer sharp. The consumer can claim a remedy because the knife did not meet the express warranty.

Title to goods

Suppliers guarantee that they have a right to sell the goods to you--such that ownership rights, known as "title", will pass to you upon the completion of the transaction (s 51 ACL).

For example, if a second-hand car purchased from a dealer is repossessed because it was still owned by another person, the consumer can claim a remedy from the dealer for breach of this guarantee.

This guarantee does not apply to goods that are leased or hired.

However, there are circumstances where goods may be sold with limited title. An intention to transfer limited title may be stipulated in the contract or it may be inferred. For example, a contract may state that title does not pass unless goods are paid for in full.

Undisturbed possession

Suppliers guarantee that, except where goods are sold with limited title, no one has the right to repossess the goods (s 52 ACL).

If goods were sold with limited title, suppliers guarantee that other than persons with a security, charge or encumbrance on the goods that was disclosed before sale, no one has the right to repossess the goods.

For goods that are hired or leased, the guarantee applies only to the period of the hire or lease. However, if the goods are purchased under a payment plan and you fail to make the agreed payments, the supplier may be able to repossess the goods under the terms of the contract.

No undisclosed securities on goods

Suppliers guarantee that goods will be free of any undisclosed securities or charges, unless you are clearly told otherwise before you purchase the goods (s 60 ACL).

This guarantee does not apply to goods that are leased or hired.

Guarantees for Services

Due care and skill

Suppliers guarantee that services will be rendered with due care and skill (s 53 ACL).

That is, they must take all necessary care to avoid loss or damage, and use an acceptable level of skill or technical knowledge, when providing the services.

For example, a consumer engages a tradesperson to erect a fence. However, the fence later collapses after a minor wind storm. An expert report from a certified builder states that the foundations of the fence were not adequate. The consumer can claim remedy against the tradesperson for breach of this guarantee.

Fitness for a particular purpose

Suppliers guarantee that services will be reasonably fit for any particular purpose that the consumer makes known, expressly or impliedly, to the supplier (s 61 ACL).

If the consumer tells the supplier or the supplier's agent the result that the consumer wishes the services to achieve, then the supplier guarantees that the services, and any product resulting from the service, will be of a nature, and of a quality, state or condition, that may reasonably be expected to achieve the result.

For example, a small business engages a website developer to build a secure e-commerce website for the business, and the service contract is $25,000. However, the website developer uses an outdated and incorrect module to build the website, so the website is not secure for online transactions. The consumer can claim a remedy from the website developer for breach of this guarantee because the website is not of a state that may reasonably be expected to be used for e-commerce.

As an exception, this guarantee does not apply if the consumer did not rely on, or could not reasonably rely on, the skill or judgment of the supplier.

A further specific exception applies to a supply of professional architectural or engineering services by a qualified architect or engineer respectively. This exception does not apply to the supply of engineering services by an architect or the supply of architectural services by an engineer.

Completion within a reasonable time

Where no time is fixed by the contract or to be determined in an agreed manner, suppliers guarantee that services will be supplied within a reasonable time (s 62 ACL).

What is reasonable will depend on the nature of the services.

Remedies available

Under the ACL, the remedies that are available if a guarantee has not been met, depend on whether the breach of the guarantee is considered a major failure or non-major failure.

Where there has been a major failure to meet a consumer guarantee for the supply of goods, you can choose to reject the goods and receive a refund, insist on a replacement or receive compensation.

Where there has been a major failure to meet a consumer guarantee for the supply of services, you can choose to terminate the contract of service and receive a refund to the extent the service has not been consumed or receive compensation.

Where there has been a non-major failure to meet a consumer guarantee with goods or services, the supplier can choose to remedy the failure by providing a free repair, replacement or refund.

Major failure relating to supply of goods

Section 260 of the ACL provides that there is a major failure in respect of goods where:

  • the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
  • the goods depart in one or more significant respects:
    • if they were supplied by description, from that description; or
    • if they were supplied by reference to a sample or demonstration model, from that sample or demonstration model; or
  • the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied, and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
  • the goods are unfit for a disclosed purpose that was made known to the supplier or the supplier's agent, and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
  • the goods are not of acceptable quality because they are unsafe.

Remedies for major and non-major failures relating to the supply of goods

If a failure to comply with a guarantee in respect to goods can be remedied and is not a major failure, the consumer can require the supplier to remedy the failure within a reasonable time (s 259(2) ACL).

Depending on the specific nature of the failure, the supplier can choose to:
  • cure any defect in title, if the failure relates to title; or
  • provide a free repair; or
  • replace the goods with goods of an identical type; or
  • refund any money paid by the consumer for the goods and an amount equal to the value of any non-monetary consideration paid by the consumer for the goods.
However, if the supplier refuses or fails to provide a remedy within a reasonable time, the consumer may:
  • have the failure remedied elsewhere or otherwise and recover all reasonable costs incurred by the consumer to do so against the supplier; or
  • notify the supplier that the consumer rejects the goods and request a refund or replacement.
Where a failure to comply with a guarantee cannot be remedied or is a major failure, the consumer may:
  • notify the supplier that the consumer rejects the goods and the ground(s) for the rejection, and request a refund or replacement; or
  • recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods.
The supplier cannot choose to provide a refund in the form of store credit or exchange of store items (s 263(5) ACL).

Regardless of whether there has been a major or non-major failure to comply with the guarantee, the consumer may recover reasonably foreseeable consequential losses suffered because of the supplier's failure to comply with the guarantee (s 259(4) ACL).

For example, if a consumer uses a cleaning product in accordance with its directions and the product causes damage to a shower screen, the consumer can claim the costs of a replacement shower screen from the supplier: De Flumeri v Canberra Discount Chemicals Pty Ltd and Anor (Appeal) [2016] ACAT 50].

As an exception, in the case of the purchase of goods for business purposes, suppliers can limit their liability for failures to comply with consumer guarantees to replacement or the supply of equivalent goods, or the repair of the goods, or the payment of the cost to replace the goods, supply equivalent goods or repair the goods (s 64A(1) ACL).

The consumer may take action against the supplier whether or not the goods are in their original packaging (s 259(7) ACL). Whenever goods are replaced, the same consumer guarantees apply to the replacement goods (s 264 ACL).

Rejection of Goods

The consumer may reject goods if:
  • the supplier has failed to comply with a consumer guarantee, and refuses, or fails to, provide a remedy within a reasonable amount of time; or
  • the supplier has failed to comply with a consumer guarantee, and this failure cannot be remedied, or constitutes a major failure.
To reject goods, the consumer must:

  • notify the supplier that the consumer rejects the goods and the ground(s) for the rejection; and
  • return the goods to the supplier unless they have already been returned to, or retrieved by, the supplier; or
  • if the goods cannot be returned, removed or transported without significant cost to the consumer because of the nature of this failure, or the size, height or method of attachment of the goods, the consumer must notify the supplier to collect the goods within a reasonable time at its own expense.

As part of rejection, the consumer has the right to choose to receive a refund, or a replacement of the same type and of similar value. The supplier cannot choose to provide a refund in the form of store credit or exchange of store items (s 263(5) ACL).

However, consumers are not entitled to rejects goods if:

  • the rejection period (see below) for the goods has ended; or
  • the goods have been lost, destroyed or disposed of by the consumer; or
  • the goods were damaged after being delivered to the consumer for reasons not related to their state or condition at the time of supply; or
  • the goods have been attached to, or incorporated in, any real or personal property and they cannot be detached or isolated without damaging them.

The rejection period is the period from the supply of the goods within which it would be reasonable to expect the relevant failure to become apparent, having regard to:

  • the type of goods; and
  • the use to which a consumer is likely to put them; and
  • the length of time for which it is reasonable for them to be used; and
  • the amount of use to which it is reasonable for them to be put before such a failure becomes apparent.

If goods are rejected and the supplier is required to give the consumer a refund, then the consumer may also terminate a services contract that is linked to the rejected goods by notifying the supplier of services of his or her intention to terminate the services contract (s 265 ACL). The termination takes effect at the time the consumer indicates his or her intention to terminate the contract--whether by words or by conduct. The consumer is then entitled to a refund of the value of the services not yet consumed at the time the termination takes effect.

Under the ACL services contracts include any contracts granting rights, benefits, privileges or facilities in trade or commerce. This include contracts for employment, lease, royalties, insurance, retail banking and credit contracts - this is not an exhaustive list.

For example, a consumer purchases a second-hand car from a dealer. At the same time, he also purchases 12 months of comprehensive insurance cover for the car through the dealer. However, the car breaks down within two months due to a major failure by the supplier to meet the consumer guarantee of acceptable quality and it cannot be driven. The consumer can notify the dealer that he or she rejects the car, request the dealer to collect it and seek a refund. The consumer can also notify the dealer or the insurance company that he or she intends to terminate the insurance contract and seek a refund for the 10 months of unused comprehensive insurance cover.

A linked credit contract may also be terminated under s 135 of the National Credit Code (Cth). Linked credit is credit obtained though the supplier, usually at the point of sale.

Major failure relating to supply of services

Section 268 of the ACL provides that there is a major failure in respect of services where:

  • the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
  • the supply of the services creates an unsafe situation; or
  • the services are substantially unfit for a purpose for which services of the same kind are commonly supplied; and
    • they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
  • the services, and any product resulting from the services, are unfit for a particular purpose for which the services were acquired by the consumer that was made known to the supplier; and
    • they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
  • the services, and any product resulting from the services, are not of such a nature, or quality, state or condition, that they might reasonably be expected to achieve a result desired by the consumer that was made known to the supplier; and
    • they cannot, easily and within a reasonable time, be remedied to achieve such a result.

Remedies for major and non-major failures relating to the supply of services

If a failure to comply with a guarantee in respect to services can be remedied and is not a major failure, the consumer can require the supplier to remedy the failure within a reasonable time (s 267(2) ACL). A suitable remedy could be to supply the services again or to supply additional services to rectify the failure.

However, if the supplier refuses or fails to provide a remedy within a reasonable time, the consumer may:
  • have the failure remedied elsewhere or otherwise and recover all reasonable costs incurred by the consumer to do so against the supplier; or
  • terminate the services contract.
Where a failure to comply with a guarantee cannot be remedied or is a major failure, the consumer may:
  • terminate the services contract; or
  • recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services.
Regardless of whether there has been a major or non-major failure to comply with the guarantee, the consumer may recover reasonably foreseeable consequential damages suffered (s 267(4) ACL).

For example, if a carpet cleaning service damages a consumer's carpet, the consumer can claim compensation to have the carpet repaired or replaced.

As an exception, in the case of purchases of services for business purposes, suppliers can limit their liability for failures to comply with consumer guarantees to the supply of the services again, or the payment of the cost to have the services supplied again (s 64A(2) ACL).

Termination of services

The termination of services is a remedy exercisable against a supplier of services in certain circumstances.

As explained above, the consumer may terminate a services contract if:
  • the supplier has failed to comply with a consumer guarantee, and refuses, or fails to, provide a remedy within a reasonable amount of time; or
  • the supplier has failed to comply with a consumer guarantee, and this failure cannot be remedied, or constitutes a major failure.
To terminate a services contract, the consumer must notify the suppler of his or her intention to terminate the services contract.

The termination takes effect at the time the consumer indicates his or her intention to terminate the contract--whether by words or by conduct. The consumer is then entitled to a refund of the value of the services not yet consumed at the time the termination takes effect (s 269(3) ACL).

If the consumer terminates a services contract, then the consumer is taken to have also rejected any goods that are linked to the services contract (s 270 ACL). The consumer must return the goods to the supplier of the goods unless they have already been returned to, or retrieved by the supplier, or the goods cannot be returned, removed or transported without significant cost to the consumer because of the nature of the failure, or the size, height or method attachment of the goods. If the latter applies, the supplier must collect the goods at its own expense. The consumer is then entitled to a refund of the rejected goods.

For example, a consumer purchases a mobile phone plan that also includes a new mobile phone, having made known to the supplier that he or she needs to be able to make calls from his rural property. However, the consumer then discovers there is no mobile reception from their rural property, such that there is a major failure by the supplier to meet the consumer guarantee of fitness of purpose. The consumer can notify the supplier that he or she intends to terminate the service contract. The consumer can also reject the mobile phone and seek a refund for it.

Remedies against a manufacturer

Unless the manufacturer is also the supplier, the consumer has not entered into a contract with the manufacturer by simply purchasing the goods from the supplier. Therefore, the consumer usually does not have any contractual rights against a manufacturer.

However, a consumer of goods has a remedy against the manufacturer under the ACL if the manufacturer has breached the following guarantees:
  • the goods are not of acceptable quality (s 54 ACL); or
  • the goods do not correspond with description (s 56 ACL); or
  • the manufacturer has not taken reasonable action to ensure that spare parts and repair facilities are available for a reasonable period after the goods are supplied (s 58(1) ACL); or
  • the manufacturer has not complied with any express warranty given or made by the manufacturer in relation to the goods (s 59 ACL).
The ACL provides for two main exceptions.

Firstly, a consumer of goods would not have a remedy against the manufacturer where the goods are not of acceptable quality only because of:
  • an act, default or omission of, or any representation made by, any person other than the manufacturer or its agent; or
  • a cause independent of human control occurring after the goods left the manufacturer's control; or
  • the fact that the price charged by the supplier was higher than the manufacturer's recommended retail price, or the average retail price for the good.
Secondly, a consumer of goods would not have a remedy against the manufacturer where the goods do not correspond with their description only because:
  • the description was applied to the goods by the supplier, without express or implied consent from the manufacturer; or
  • of an act, default or omission of, or any representation made by, any person other than the manufacturer or its agent; or
  • of a cause independent of human control occurring after the goods left the manufacturer's control.
If none of the above exceptions apply, the consumer is entitled to recover damages from the manufacturer, for:
  • the amount of reduction in value of the goods resulting from the manufacturer's failure to comply with the guarantee; and
  • any reasonably foreseeable consequential losses suffered by the consumer because of the manufacturer's failure to comply with the guarantee--including the cost of inspecting and returning the goods to the manufacturer.
The amount of reduction in value is determined from the lower price between the price actually paid or payable by the consumer, and the average retail price of the goods at the time of supply (s 272(1)(a) ACL). The consumer may take action against the supplier whether or not the goods are in their original packaging (s 259(7) ACL).

The consumer must commence a claim of damages against the manufacture within 3 years of the day on which the consumer became aware, or ought reasonably to have become aware of the manufacturer's failure to meet the consumer guarantee (s 273 ACL). This is not necessarily the same as within 3 years of purchase.

However, if the consumer has instead chosen to require the manufacturer to provide a repair or replacement in accordance with an express warranty, then the consumer cannot then seek to recover damages unless the manufacturer has refused, or failed to, provide the repair or replacement within a reasonable time.

It is generally more convenient to seek a remedy from the supplier because the supplier may be closer-at-hand and because the consumer may be able to exercise a right to reject the goods against the supplier--which is not exercisable against the manufacturer. However, in some instances, the consumer may find the manufacturer to be more willing to negotiate or accepting of responsibility for failing to meet a consumer guarantee. Therefore, it is often recommended for consumers who have exercisable remedies against both the supplier and the manufacturer, to attempt to exercise their rights against, or negotiate with, both the supplier and the manufacturer concurrently.

Misleading or deceptive conduct

The ACL prohibits a person (a person includes a business) in trade or commerce from engaging in conduct that is misleading or deceptive, or is likely to deceive or mislead a consumer (s 18 ACL).

Misleading conduct can occur through advertisements, promotions, quotations, verbal or written statements, and by silence in certain circumstances. Fault or intention to mislead is not required. A supplier's statement about goods for sale could be misleading even if they honestly believed it to be true, had no intention of deceiving the consumer and had no reason to doubt the statement at all.

However, "puffery" is not considered misleading or deceptive under the ACL. Puffery is wildly exaggerated, fanciful or vague claims that no reasonable person could possibly treat seriously or find misleading. An example would be "we have the best coffee in town".

A consumer who has suffered loss or damage as a result of misleading conduct can claim monetary compensation and/or other orders including setting aside the contract and obtaining a refund.

Case study

An internet company offered unlimited download plans for users who signed up to their services. However, the plans were subject to major limitations including speed reductions when a certain amount of data was downloaded. The court found that the use of the term unlimited in relation to the plans were subject to major limitations that were not disclosed, and that was misleading and deceptive. Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20

False or misleading misrepresentations

If the business conduct does not fall within one of the categories below, it may come within general misleading and deceptive conduct provision (see s 18 ACL above). Where a supplier commits any of the following breaches, the consumer can seek various remedies, including compensation, rescission of the contract or an injunction.

A person (or business) is prohibited from making certain false or misleading representations in connection with the supply or possible supply of goods or services. Some examples are as follows.

A person must not make false or misleading representations:
  • that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or
  • that services are of a particular standard, quality, value or grade; or
  • that goods are new; or
  • that a particular person has agreed to acquire goods or services; or
  • that purports to be a testimonial by any person relating to goods or services; or
  • concerning a testimonial by any person or a representation that purports to be such a testimonial relating to goods or services; or
  • that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or
  • that the person making the representation has a sponsorship, approval or affiliation; or
  • with respect to the price of goods or services; or
  • concerning the availability of facilities for the repair of goods or of spare parts for goods; or
  • concerning the place of origin of goods; or
  • concerning the need for any goods or services; or
  • concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (s 29 ACL).
Some examples of business behaviour that is misleading under either s 18 or s 29 of the ACL are:
  • a real estate agent misinforms you about the characteristics of a property by advertising 'beachfront lots' that are not on the beach;
  • a jewellery store advertises that a watch 'was' $200 and is 'now' $100 when the store never sold the watch for $200;
  • a business predicts the health benefits of a therapeutic device or health product but has no evidence that such benefits can be attained;
  • a transport company uses a picture of aeroplanes to give you the impression that it takes freight by air, when it actually sends it by road.
Note that s 18 of the ACL applies to general conduct and s 29 applies to specific conduct. If s 29 applies, then there is no room for s 18 to operate in respect of the same conduct. However, there may be instances where both provisions apply. For example, a supplier says that the goods purchased are made locally when in fact they were made overseas (a breach s 29) and the supplier separately lies about their qualifications and experience (a breach of s 18).

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