Remedies when goods or services don’t comply with the ACL Guarantees

 

The best action for consumers to take depends on the severity of the breach and whether it can be remedied. If goods were purchased using finance agreements, additional remedy is possible.

A range of remedies

Different remedies apply depending on whether there has been a breach of the guarantees relating to goods, or to those relating to services. Different remedies also apply depending on the severity of the breach. For example, the remedy for a “major failure” to comply with a guarantee may be different to the remedy for a less severe failure.

Remedies: goods

Under the ACL (s 259(1)), a consumer can take action against a supplier of goods where one of the ACL guarantees has been breached by the supplier (other than the guarantee relating to repairs and spare parts (s 58), and the guarantee relating to express warranties (s 59)).

The remedies available to consumers depend on:

whether the failure can be remedied; and

whether the failure to comply with a guarantee was a “major failure”.

A major failure to comply with a guarantee is where (s 260):

the goods would not have been acquired by a reasonable consumer who is fully acquainted with the failure to comply with the guarantee;

the goods differ significantly from their description (if supplied by description), or sample or demonstration (if supplied by reference to sample or demonstration);

the goods are substantially unfit for a purpose for which goods of that kind are commonly supplied, and that unfitness cannot easily be remedied within a reasonable time;

the goods are unfit for a purpose disclosed to the supplier (or their agent) before supply, and that unfitness cannot easily be remedied within a reasonable time; or

the goods are unsafe.

Where a failure can be remedied and is not a major failure

If a supplier’s failure to comply with a guarantee can be remedied – and is not a major failure – the consumer can ask the supplier to remedy the failure to comply with the guarantee (s 259(2)).

A supplier may remedy a failure to comply with the guarantee by (s 261):

curing any defect in title, if there is such a defect;

repairing the goods;

replacing the goods with goods of an identical type; or

refunding the amount paid by the consumer.

If the supplier does not remedy the failure, the consumer may have the failure remedied elsewhere (e.g. by having the defective goods repaired), and take action against the supplier to recover the reasonable costs of remedying the failure (s 259(2)(b)(i)). Alternatively, the consumer may notify the supplier that they reject the goods (s 259(2)(b)(ii)).

Where a failure cannot be remedied or is a major failure

If a supplier’s failure to comply with a guarantee is a major failure, or a failure that cannot be remedied, the consumer has the choice (subject to section 262) to either:

reject the goods; or

retain the goods and take action against the supplier to recover compensation for any reduction in the value of the goods below the purchase price (s 259(3)).

The circumstances where a consumer may not reject goods are where (s 262(1)):

time has passed since the goods were supplied, within which it would be reasonable to expect that the failure to comply with a guarantee would become apparent to the consumer; or

the consumer has lost, destroyed, or disposed of the goods.

In addition to rejecting the goods or recovering compensation for a reduction in the goods’ value, the consumer may also take action against the supplier to recover damages for any loss or damage they have suffered due to the supplier’s failure to comply with the guarantee, if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure (s 259(4)).

However, the consumer is not entitled to seek damages if the supplier’s failure to comply with the guarantee occurred only because of a cause beyond human control, which happened after the goods left the supplier’s control (s 259(5)).

Remedies: services

Under the ACL (ss 267–270), a consumer can take action against a supplier of services where one of the ACL guarantees has been breached by the supplier.

A person who has suffered loss or damage as a result of a breach of one of the ACL guarantees may recover the amount of loss or damage from the person who contravened the ACL (or against any person involved) (s 236(1)).

A consumer can take action against a supplier any time up to six years from the date the ACL guarantee was breached (s 236(2)).