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The Australian Consumer Law

Consumer Guarantees for Goods
(includes refunds, replacement and repairs)

From 1 January 2011 all suppliers and manufacturers of goods and services in Australia must comply with the Competition and Consumer Act 2010 also known as The Australian Consumer Law. 

Consumer guarantees provide consumers with a comprehensive set of rights for the goods and services they acquire after 1 January 2011 and are based on the same core principles as implied warranties and conditions that previously existed in state and territory fair trading laws and the Trade Practices Act 1974. This also includes goods and services received as gifts.  Goods and services purchased up to 31 December 2010 are covered by the implied warranties and conditions in state and territory fair trading laws and the Trade Practices Act 1974. 

Who is a supplier?

A supplier is anyone who, in trade or commerce, sells goods or services to a consumer. This includes traders, retailers and service providers.

Who is a manufacturer?

A manufacturer is a person or business that makes or puts goods together or has their name on the goods.  This includes the importer, if the maker does not have an office in Australia. 

 

Which goods ARE covered

Which goods ARE NOT covered

Goods sold in trade or commerce* and bought by a consumer including second-hand, leased or hire goods on or after 1 January 2011

goods bought before 1 January 2011. These are covered by statutory implied conditions and warranties under the Trade Practices Act 1974 and any state or territory legislation in force prior to 1 January 2011.

any type of goods or services up to $40,000 (or any future amount set by the ACL)

goods bought from one-off sales by private sellers, eg garage sales and fairs

a vehicle or trailer used mainly to transport goods (Note cost is irrelevant)

goods bought at auctions where the auctioneer acts as agent for the owner

goods costing more than $40,000 which are normally used for personal, domestic or household purposes

goods costing more than $40,000 bought normally for business use, eg, farm equipment 

 

goods a person buys to on-sell or re-supply

 

goods a person wants to use as part of a business to manufacture, produce, repair or otherwise use on goods or fixtures

 *  Trade or commerce means in the course of a supplier's or manufacturer's business or professional activity including non-profit business or activity.

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Nine Guarantees

The nine guarantees that apply to goods are:

  1. goods are of acceptable quality

  2. goods are fit for any purpose specified

  3. description of goods is accurate

  4. goods will match any sample or demonstration model and description provided

  5. goods will satisfy any extra promises made (express warranties)

  6. goods have clear title unless the consumer was advised prior to the sale they had 'limited title'.

  7. no one will try to repossess or take back goods or prevent the consumer using the goods except in certain circumstances

  8. goods are free of any hidden securities or charges and will remain so except in certain circumstances

  9. manufacturers or importers guarantee they will take reasonable steps to provide spare parts and repair facilities for a reasonable period of time.

The consumer guarantee acceptable quality does not apply when:

  • the supplier alerts the consumer to any hidden defect prior to purchase (either verbally or displays a written notice) however a consumer may be entitled to a remedy for a different fault with the item.
  • the consumer examines the item prior to purchase and should have noticed the fault
  • the consumer uses the goods:
    • abnormally (refer to page 14 of the guide for examples of 'abnormal')

    • causes the quality of the goods to become unacceptable

    • fails to take reasonable steps to avoid the quality becoming unacceptable

The consumer guarantee fit for the specified purpose does not apply when:

  • the consumer did not rely on the supplier's skill or judgement when buying the goods (fit for the purpose)
  • under the circumstances, it was unreasonable for the consumer to have relied on the supplier's skill or judgement or lack of it (see page 15 of the guide for examples)

The consumer guarantees match description and match sample or demonstration model do not apply when:

  • goods are bought at auction  

A consumer is not entitled to a remedy when a supplier does not meet a consumer guarantee due to something:

  • someone else said or did (excluding the supplier's agent or employees) or
  • beyond human control that occurred after the goods were supplied.

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When a consumer changes their mind

A consumer is not entitled to a remedy when they change their mind about the goods however a supplier may have a store policy to offer a refund, replacement or a credit note. If so they must abide by this policy.

For more detailed information on the nine guarantees including explanations of terms used, refer to:

Dealing with problems

Consumers will have rights against the supplier, and in some cases the manufacturer, if goods do not meet a consumer guarantee and this applies to both minor and major problems. 

When the problem is minor

When the problem with the goods is minor, the supplier can choose:

  • to repair the item; OR
  • offer a replacement; OR
  • offer a refund

When the problem is major   (see page 21 of the guide for examples)

When the problem with the goods is major, the consumer can choose to reject the goods and:

  • choose a refund; OR
  • choose a replacement; OR
  • ask for compensation for any drop in value of the goods 

The supplier must:

  • repay any money paid by the consumer for the returned goods
  • return any other form of payment made by the consumer (eg a trade-in). If this isn't possible, they must refund the consumer the value of the payment.

The supplier must not:

  • offer a credit note, exchange card or replacement of goods instead of a refund
  • refuse a refund or reduce the amount because the goods were not returned in the original wrapping or packaging.

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 When a consumer rejects the goods

A consumer must advise the supplier if they intend to reject the goods, explain why and:

  • return the rejected goods to the supplier; or
  • ask the supplier to collect the rejected goods, if the goods cannot be returned without significant cost to the consumer.

When a consumer cannot reject the goods

A consumer cannot reject goods when:

  • the goods have been thrown away, destroyed, lost or damaged through no fault of the supplier, after delivery to the consumer
  • the goods are attached to other property and cannot be removed without causing damage
  • too much time has passed however this does depend on:
    • the type of goods
    • how a consumer is likely to use the goods
    • the length of time the goods could reasonably be used
    • the amount of use the goods could reasonably be expected to tolerate before failing

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Responsibility for returning goods

When the consumer notifies the supplier they are returning the goods, the goods become the supplier's property.  The consumer must return the goods to the supplier unless the cost of returning, removing or transporting is significant. If this is the case, the supplier must collect the goods at their own expense and within a reasonable time (see page 23 of the guide for examples).

Services connected to returned goods (linked service contracts)

A consumer who has returned goods within a reasonable time and is entitled to a refund, may also cancel the linked service contract. They can do this when returning the goods, or within a reasonable time.  A consumer who cancels a linked service contract is entitled to a refund or can refuse to pay for any services not yet received.

The supplier does not have to give a refund for any services the consumer has received up to the time they reject the related goods.

When a consumer chooses a replacement

The supplier must provide goods of the same type and similar value. If such a replacement is not reasonably available, the consumer may choose a repair or refund.  The consumer must return goods to the supplier. If this involves significant cost to the consumer, the supplier must collect the goods at their own expense.

The consumer guarantees that applied to the original goods will apply to the replacement.

Claims against the manufacturer (refer to page 30 of the guide)

A manufacturer is a person or business that:

  • makes or puts goods together
  • has their name on the goods, or
  • imports the goods (if the maker does not have an office in Australia).

A manufacturer must provide a remedy when goods fail to meet the consumer guarantees for:

  • acceptable quality
  • matching description
  • repairs and spare parts

A manufacturer must honour:

  • any additional promise or representation they made about the goods
  • a consumer's rights under consumer guarantees regardless of whether the goods are covered by any warranty.

If the manufacturer refuses to honour an express warranty or fails to do so within a reasonable period of time, the consumer can:

  • take legal action in a tribunal or court to enforce the warranty
  • assert their rights under the consumer guarantees
  • ask for compensation for consequential loss
  • ask for an amount covering any drop in the value of the goods.  This amount must be equal to or less than the difference between the current value of the goods and the lowest of either the:
    • average retail price of the goods at the time of purchase, or
    • the actual price paid.
  • ask for compensation for any reasonably foreseeable loss suffered due to the manufacturer's failure to meet the consumer guarantees.  Reasonably foreseeable  cost including costs of inspecting and returning the goods to the manufacturer (refer to page 28 of the guide).

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 No refund signs and other statements

  • Signs and statements limiting, restricting or excluding consumers' rights are unlawful. This includes 'no refund' signs.
  • Suppliers must not avoid their obligations by getting consumers to agree the law of another country applies to the contract or any dispute.
  • Suppliers must not tell a consumer they are required to pay for any rights equivalent to a consumer guarantee.  This means when selling an extended warranty, a supplier or manufacturer must be very clear about what the warranty offers over and above the consumer guarantees.
  • Consumers cannot sign away or surrender their consumer guarantees rights and any such terms may be considered unfair contract terms.
  • A supplier must not tell a consumer that a consumer guarantee:
    • does not exist
    • may be excluded or
    • may not have a particular effect

Extended Warranties

When selling extended warranties suppliers and manufacturers should explain to the consumer what an extended warranty provides in addition to the consumer's rights under the consumer guarantees.

Suppliers and manufacturers must not:

  • pressure consumers to purchase an extended warranty
  • tell a consumer they must pay for an extended warranty when there are already equivalent consumer rights under a consumer guarantee 

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Limits on compensation for non-household goods

Suppliers and manufacturers can limit their liability under consumer guarantees for goods not used for personal, dometic or household purposes to:

  • replacing or repairing the goods
  • reimbursing the consumer for repairing or replacing the goods

Suppliers and manufacturers can only do this if it is fair and reasonable. Fair and reasonable will depend whether:

  • the consumer had no choice but to agree to limit compensation
  • the consumer was given something in return for buying goods from that particular supplier or manufacturer, at the expense of buying from someone else
  • the consumer knew or should have known about the limit on compensation
  • the goods were a special order for the consumer

When a supplier fixes a problem that isn't their fault (manufacturer's indemnity)

A consumer may ask a supplier, not the manufacturer, to deal with the problem.  If this occurs, the manufacturer must reimburse the supplier.  The amount can include any compensation paid to the consumer for reasonably foreseeable consequential losses.

A supplier has three years to ask the manufacturer for reimbursement from:

  • the date they fixed any problems with the goods
  • the date the consumer took legal action against the supplier.

Suppliers and manufacturers can make an agreement about what they will each cover however a manufacturer cannot contract out of their obligation to reimburse the supplier.

When goods are not used for personal, domestic or household purposes and it is fair and reasonable to do so, the manufacturer can limit their liability to the lowest cost among:

  • replacing the goods
  • obtaining equivalent goods
  • repairing the goods

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Receipts and other proof of purchase

Consumers who want to make a claim about faulty goods or services need to show they obtained the goods or services from the supplier or manufacturer and businesses will want to ensure claims made to them are genuine.  Forms of proof include:

  • a tax invoice. This is the best proof of purchase and consumers are strongly advised to get one and keep it.
  • a lay-by agreement
  • a confirmation or receipt number provided for a telephone or internet transaction
  • a credit card statement
  • a warranty card showing the supplier's or manufacturer's details and the date or amount of the purchase
  • a serial or production number linked with the purchase on the supplier's or manufacturer's database

The same applies to goods and services given as gifts. 

A consumer may be required to provide additional proof of purchase to support their claim, eg, if a receipt does not clearly itemise the faulty item.  A supplier or manufacturer may choose to accept the consumer's claim even if the consumer cannot show they bought the goods from them.  If a dispute arises over a claim without proof of purchase the consumer may seek the opinion of an Australian court or tribunal. 

 

Related information and resources

A range of resources has been developed to help businesses and consumers understand the new laws.

Training 

Consumer Guarantees - Training Videos   A series of videos developed to answer questions on the Australian Consumer Law for business and consumers.

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Free publications and guides

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Order printed copies of these guides by emailing consumer.affairs@justice.tas.gov.au

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