who provides goods whether by selling, leasing or hiring or
that makes goods, puts them together or has their name on
that imports goods into Australia, if the manufacturer of those
goods does not have an office in Australia;
where the sale of those goods is a 'consumer sale'
automatically gives certain guarantees set by the Competition
and Consumer Act 2010 (Cth) ("CCA").
If these guarantees apply and they are breached by the business,
the consumer is entitled to a remedy.
What is a 'consumer' sale?
A person or a company will be considered a consumer if they
goods or services that cost less than $40,000 (no matter for
what purpose); or
goods or services that cost more than $40,000 but are of a kind
ordinarily acquired for domestic, household or personal use or
a vehicle or trailer primarily used to transport goods on
What are the exclusions to consumer
All goods sold prior to 1 January 2011 that were sold for
personal use or for less than $40,000, continue to be covered by
the implied warranties and conditions in state and territory fair
trading laws and the TPA.
Also, if goods are purchased to be resold or to be transformed
into a product that is sold, the consumer guarantees will not apply
to that transaction.
However, even if you sell the goods for the purposes of
re-supply, if the sale to the end-user is a 'consumer
sale', then that end-user may either make a claim against the
supplier or the manufacturer in relation to a breach of the
consumer guarantees. For this reason, all businesses in the chain
need to ensure that they comply with the consumer guarantees and
the CCA generally.
What are the Consumer Guarantees?
Every business satisfying any of the above requirements must
comply with the consumer guarantees set by the CCA. The consumer
guarantees for goods supplied by the business are that the
will be of acceptable quality;
will match the description;
will match sample or demonstration model;
have clear title; and
are free from hidden securities or charges.
The business must also:
honour any express warranties that it makes; and
guarantee that the goods are sold with undisturbed
The relevant guarantees for services provided by the business
are that the services:
will be carried out with due care and skill;
will be fit for a particular purpose; and
must be supplied within a reasonable time (if no time is
In accordance with section 64A of the ACL, a business may limit
its liability for breach of a consumer guarantee if it makes a
consumer sale that is not for "personal, domestic or household
use or consumption" (for example it is a sale to a business
for business use only) if it is fair and reasonable for the
business to rely on that term of the contract.
The CCA sets the following penalties if a business tells a
consumer that a guarantee does not exist, may be excluded or may
have a particular effect including a business representing that it
will not be responsible for reasonably foreseeable consequential
maximum civil penalty of $1.1M for a body corporate and
$220,000 for individuals; and
criminal penalties of the same amounts also apply.
Remedies Available to Consumers for Breach of a Consumer
Depending on the circumstances and whether or not the failure to
comply with the consumer guarantee is major or minor, the consumer
may be entitled to either repair, replacement, refund or
A major failure to comply with a consumer guarantee is one where
a reasonable consumer would not have purchased the goods had they
known of the full extent of the problem, the goods differ
significantly from any description, sample or demonstration model
or the goods are unsafe. In these circumstances, the consumer may
elect the remedy they wish to receive, including electing to keep
the goods and seek compensation.
A minor failure to comply with a consumer guarantee is every
other failure that is not considered to be a major failure. In
these circumstances, the sellers will be able to choose whether
they remedy the problem with a replacement, repair or refund.
If you have questions about the new rules or how them may affect
you, the team at Coleman Greig can assist you.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Government proposes to extend the unfair contract term protections for standard form contracts to small businesses.
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