A number of concerns have been expressed with the existing
statutory implied terms regime in Australia. As a result, the
Commonwealth Consumer Affairs Advisory Council is currently
undertaking a review of the existing laws on implied terms.
In addition to any warranties given voluntarily by manufacturers
and retailers of goods and services, the national Trade Practices
Act 1974 (the TPA) and the fair trading and sale of goods acts in
the States and Territories imply certain rights and obligations
into all consumer contracts.
Whether a particular consumer can have the benefit of the
operation of implied terms in their favour will depend on the
monetary thresholds and use limitations that apply under the law
that is being relied upon. For example, under the TPA a consumer
qualifies if either the goods or services acquired have a value of
$40,000 or less, or the goods or services are of a type ordinarily
used or purchased for personal, domestic or household use or
By reason of the terms implied in consumer contracts by the TPA,
a consumer that purchases goods may have a remedy for breach of
contract against the seller if:
the goods are not of merchantable quality;
the goods are not fit for their intended purpose;
the goods do not match the description or sample given to the
the consumer does not receive clear title to the goods;
the consumer does not enjoy quiet possession of the goods;
the goods are encumbered.
The type of remedy that the consumer will be entitled to will
depend on the circumstances. However, typically, it may include
replacement of the goods, the repair of the goods, compensation for
loss or damage or a refund.
The TPA also implies terms into consumer contracts for the
supply of services. If the services are not carried out with due
care and skill or they (or any materials supplied in connection
with the service) are not fit for their intended purpose, a
consumer will again have a remedy under contract.
Many of the above principles are echoed in the fair trading and
sale of goods acts in the States and Territories. However, the laws
between the States and Territories do differ in some respects and
to varied extents.
A number of concerns have been identified as arising under the
existing statutory implied terms regime. These include:
lack of awareness and misinformation (of consumers and
businesses) as to what their respective rights and obligations are
under the laws;
differing implied terms laws across jurisdictions leading to
uncertainty and inconsistency;
lack of clarity in legislation, including the fact that
available remedies for breaches of implied terms are not set out
and ambiguity of certain terms;
inability of the laws to sufficiently redress harm suffered by
inaccessibility of remedies;
the uncertainty presented by extended warranties and how they
interact with implied terms;
the fact that Australia does not currently have "lemon
laws" (which provide a remedy where consumer goods repeatedly
the additional risks presented by online shopping.
As a result, the Commonwealth Consumer Affairs Advisory Council
is currently undertaking a review of the existing laws on implied
terms. It examined the issues outlined above in its Issues Paper in
It is apparent that it might not be desirable, necessary or
possible to address all of these matters and that identification of
the precise issues requires further development. Since the Issues
Paper puts forward no suggestion as to how the implied terms regime
might be reworked, submissions made in response to the Issues Paper
are currently only able to contribute to the debate on the
effectiveness of the existing regime, without addressing any
proposed solution in detail.
However, it is clear that in light of the current proposals to
amend and harmonise other consumer laws in Australia, it is also
appropriate to consider reconfiguring the statutory implied terms
regime at this time. How such a review is ultimately approached
will be determinative of the outcome.
The review procedure and its underlying policies will be
something to watch closely over coming months.
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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