Remedies

 

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

If goods or services fail to comply with a consumer guarantee, the consumer has the right to a remedy under the ACL. The available remedies include:

repair;

replacement;

refund;

compensation;

cancellation of the contract.

The particular remedies available to a consumer depend on the particular consumer guarantee and the severity of the failure to comply with that guarantee.

A consumer may seek a remedy from the supplier, the manufacturer or both, depending on the particular guarantee. Where a foreign manufacturer does not have a place of business in Australia, a consumer can take action against the importer instead.

The remedies under the ACL exist in addition to remedies in any contract, and any warranty provided by the supplier or manufacturer.

Remedies against suppliers of goods

A consumer can take action against a supplier if the goods fail to comply with a consumer guarantee (s 259 ACL), other than the guarantees relating to repairs and spare parts (which only apply to manufacturers).

Which remedies are available depends on:

whether the failure can be remedied; and

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

Major failures by suppliers of goods

The failure to comply with a consumer guarantee is a major failure if:

the goods would not have been bought by a reasonable consumer who was fully acquainted with the nature and extent of the failure at the time of purchase;

the goods are significantly different from their description, sample or demonstration model;

the goods are substantially unfit for their normal purpose and that unfitness cannot easily be remedied within a reasonable time;

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

the goods are not of acceptable quality because they are unsafe.

In short, a major failure is a problem that cannot be fixed or is very difficult to fix.

If there is a major failure with goods, a consumer can choose to:

reject the goods and choose a refund or replacement (subject to s 262 ACL); or

keep the goods and recover compensation for any reduction in the value of the goods below the purchase price (s 259(3)).

A consumer may not reject the goods where:

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

the rejection period has ended – the rejection period runs from the date of supply until the date it would be reasonable to expect the particular failure to become apparent (s 262).

If a consumer is no longer entitled to reject the goods, they are still entitled to compensation for any reduction in the value of the goods.

To reject goods, a consumer must notify the supplier of the reasons for the rejection and return the goods. If the goods cannot be returned without significant cost to the consumer, then the supplier must collect the goods at its own cost.

It can be difficult to assess whether a consumer is entitled to reject faulty goods. Consumers should get independent expert evidence about the defects in the event of any legal action, particularly in complex matters (e.g. car disputes).

Minor failures by suppliers of goods

If the failure to comply with a consumer guarantee can be remedied within a reasonable time and is not a major failure, the consumer may ask the supplier to fix the problem (s 259(2) ACL).

The supplier must remedy the failure (free of charge and within a reasonable period) by choosing to:

repair the goods;

replace the goods with goods of an identical type;

refund the value of the goods; or

cure any defect in title, if applicable (s 261).

If the supplier refuses or fails to remedy the problem within a reasonable time after the consumer’s request, the consumer may:

have the failure remedied elsewhere and recover all reasonable repair costs from the supplier; or

reject the goods (subject to s 262 ACL).

Consequential loss and damage

In addition to the above remedies for major and minor failures, a consumer may also take action against a supplier of goods to seek to obtain compensation for any reasonably foreseeable consequential loss or damage they have suffered due to the supplier’s failure to comply with a guarantee (s 259(4)).

Remedies against suppliers of services

A consumer can take action against a supplier of services where there has been a failure to comply with a consumer guarantee (s 267 ACL).

The available remedies depend on:

whether the failure can be remedied; and

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

Major failures by suppliers of services

The failure to comply with a consumer guarantee is a major failure if:

the service would not have been acquired by a reasonable consumer fully aware of the nature and extent of the problem;

the service is substantially unfit for its normal purpose and the problem cannot be easily resolved within a reasonable time;

the service (and any product resulting from that service) is unfit for the particular purpose that the consumer made known to the supplier and the problem cannot be easily resolved within a reasonable time;

the service (and any product resulting from that service) does not achieve a desired result that the consumer made known to the supplier; or

the service creates an unsafe situation (s 268).

If there is a major failure with a service, a consumer may choose to:

keep the service contract and recover compensation for the reduction in value of the service below the price paid or the amount payable; or

cancel the service contract and obtain a refund for any parts of the service not used.

Minor failures by suppliers of services

If the failure to comply with a consumer guarantee can be remedied within a reasonable time and is not a major failure, the consumer may ask the supplier to fix the problem (s 267(2) ACL).

The supplier must remedy the problem with the service (e.g. resupply the services) free of charge and within a reasonable period.

If the supplier refuses or fails to remedy the problem within a reasonable time after the consumer’s request, the consumer may:

have the failure remedied elsewhere (e.g. have someone else provide the service) and recover all reasonable costs from the supplier; or

cancel the service contract and obtain a refund (or reduce the amount payable) for the defective service.

Consequential loss and damage

In addition to the above remedies for major and minor failures, a consumer may also take action against a supplier of services to seek to obtain compensation for any reasonably foreseeable consequential loss or damage they have suffered due to the supplier’s failure to comply with the guarantee (s 267(4) ACL).

Remedies against manufacturers of goods

An affected person can bring an action for damages against a manufacturer of goods (s 271 ACL) where there is a failure to comply with the consumer guarantees as to:

acceptable quality (s 54);

matching description (s 56), applicable to any description given by the manufacturer;

express warranties (s 58), applicable to any express warranty given by the manufacturer; or

repairs and spare parts (s 59).

An “affected person” includes the consumer any any person who acquires the goods from the consumer (other than for the purposes of re-supply), such as the consumer’s family, friends or associates (s 2).

If a consumer purchased goods directly from a manufacturer, all the guarantees and remedies applying to suppliers apply to the manufacturer.

Legal action against a manufacturer must be commenced within three years of the date that the affected person became, or ought to have become, aware of the manufacturer’s failure to comply with the relevant guarantee (s 273).

Compensation for reduction in value

An affected person may seek to obtain compensation for the reduction in value of the goods resulting from the manufacturer’s failure to comply with the relevant guarantee (s 272 ACL). The reduction in value is calculated as the difference between the current value of the goods and:

the actual price paid by the consumer; or

the average retail price of the goods at the time of purchase,

whichever is the lower value.

Consequential loss and damage

An affected person may also seek to obtain compensation for any reasonably foreseeable consequential loss or damage they have suffered due to the failure of a manufacturer to comply with a guarantee (s 272 ACL). This includes the cost of inspecting and returning the goods to the manufacturer.

Exceptions

A manufacturer is not liable to pay damages if the relevant guarantee was not complied with only because of:

an act, default, omission or representation made by a person other than the manufacturer, its agent or employee;

something beyond human control that occurred after the goods left the manufacturer’s control; or

the fact that the supplier charged a higher price than recommended or average retail price, creating a higher standard of acceptable quality (due to the higher price) – the manufacturer is only held to the standard expected of goods based the recommended or average retail price.