When do the ACL’s consumer guarantees apply?

 

Australian Consumer Law provides for a number of minimum standards in addition to a warranty or contract, but the first step is to know what is meant by the terms “consumer”, “supply”, “trade or commerce”, “goods” and “services”.

Definitions

Generally, the ACL’s consumer guarantees only apply to the supply of goods and services to a consumer in trade and commerce. Remedies can be sought against the supplier or, in some cases, the manufacturer. It is therefore necessary to define the terms “goods”, “services”, “consumer”, “supplier”, “manufacturer” and “trade or commerce”.

Goods

The ACL (s 2) defines “goods” broadly. It expressly includes second-hand goods, computer software, animals, gas and electricity, and component parts.

Services

The ACL (s 2) defines “services” broadly to include any rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce. This definition covers most contracts for the supply of services to consumers, including professional services (e.g. legal or accounting services).

However, the consumer guarantees do not apply to:

professional services by a qualified architect or engineer (s 61);

services relating to the transport or storage of goods for a business (s 63);

financial services, which are regulated under the Australian Securities and Investments Commission Act 2001 (Cth) and the Corporations Act 2001 (Cth). However, the ACL does apply to “linked credit” (seeThe ACL and finance agreements”).

Consumer

A person acquires goods or services as a “consumer” if, and only if:

the amount payable for the goods or services is less than $40,000;

the goods or services were of a kind ordinarily acquired for personal, domestic or household use or consumption; or

the goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads (s 3(1) ACL).

Therefore, even goods acquired by a business may be covered if they cost less than $40,000.

However, a person is not a consumer if they acquired goods:

for the purpose of re-supply; or

for the purpose of using them up or transforming them in a process of production, manufacture, or repair (s 3(2) ACL).

If it is alleged that a person is a consumer in any proceeding, then it is presumed they are a consumer unless the contrary is established (s 3(10) ACL).

Supplier

In relation to goods, “supply” (including re-supply) includes selling, exchanging, leasing, hiring and hire-purchasing. In relation to services, “supply” includes providing, granting and conferring. The terms “supplier” and “supplied” have corresponding meanings.

Manufacturer

A person is a “manufacturer” of goods if they:

actually manufacture the goods;

claim to be the manufacturer;

permit someone else to claim they are the manufacturer;

permit their business name or one of its brand names to be applied to the goods (e.g. printed on a wrapper or woven on a label); or

imported the goods if the actual manufacturer does not have an office in Australia (s 7 ACL).

Trade or commerce

A number of the ACL’s consumer guarantees only apply when goods are supplied “in trade or commerce”. Generally, this means that the supplier must be carrying on a business of supplying goods and services. Therefore, the consumer guarantees do not cover goods or services sold by a private individual as a once off.

The guarantees relating to title, undisturbed possession and undisclosed securities apply whether or not the goods are sold in trade or commerce.

Goods bought at auction

Many of the ACL’s consumer guarantees do not apply to goods bought at a traditional auction, where the auctioneer is an agent of the seller. The only consumer guarantees that apply to goods bought at a traditional auction are the guarantees relating to title, undisturbed possession and undisclosed securities.

Online auctions may be covered by the consumer guarantees if the website does not act as an agent of the seller. Check the terms and conditions, and seek legal advice in advance of the auction (see Legal services that can help).

Goods bought online or overseas

The ACL’s consumer guarantees apply to goods bought from online businesses based in Australia. However, these guarantees may not apply to goods bought from overseas websites. Even if they do, there may be practical difficulties in taking legal action and obtaining an effective remedy.

Can guarantees be excluded or limited by contract?

A consumer’s rights under the ACL’s consumer guarantees cannot be excluded. A term of a contract is void (i.e. not enforceable) if it purports to exclude the operation of the consumer guarantees or exclude liability for a failure to comply with a consumer guarantee (s 64 ACL).

However, a term of a contract may limit liability to the replacement or repair of faulty goods, or payment for replacement or repair, but only if the goods are not goods ordinarily used for personal, domestic or household use or consumption (s 64A ACL). This means that any term in a contract that attempts to limit the remedies available for personal, domestic or household goods is void.