Consumer guarantees

As a supplier or manufacturer, you guarantee that goods are of acceptable quality when sold to a consumer. This means you guarantee the goods will be:

• safe, durable and free from defects
• acceptable in appearance and finish, and
• do the job that type of thing is usually used for.

The test is whether a reasonable consumer, fully aware of the goods' condition - including any defects - would find them:

• fit for all the purposes for which goods of that kind are commonly supplied eg. a toaster must be able to toast bread
• acceptable in appearance and finish eg. a new toaster should be free from scratches
• free from defects eg. the toaster's timer knob should not fall off when used for the first time
• safe eg. sparks should not fly out of the toaster
• durable eg, the toaster must function for a reasonable time after purchase, without breaking down.

This test takes into account:

• the nature of the goods eg. a major appliance such as a fridge is expected to last longer than a mobile phone
• the price paid for the goods eg. a cheap toaster is not expected to last as long as a top-of-the-range one
• any statements about the goods on any packaging or label on the goods eg. the toaster box shows a special defroster function
• any representation you made about the goods eg. the supplier said the crumb tray was easy to detach and clean
• any other relevant circumstances relating to supply of the goods.

Second-hand goods

Second-hand goods sold in trade or commerce are covered by the guarantee of acceptable quality, but age, price and condition must be taken into account.

Leased or hired goods - acceptable quality

Consumer goods leased or hired to a consumer must also be of acceptable quality.

Example: two tourists hire a campervan to tour Australia. Fifty kilometres along the road, the van breaks down. A mechanic says the van has not been properly maintained or serviced for some time. The tourists would have the right to a remedy.

This guarantee does not apply when you alert the consumer to any hidden defects

Some goods may not be of acceptable quality due to problems you already know about - for example, goods with cosmetic defects sold as seconds. Defective goods can be sold, usually for lower prices, if the consumer is alerted to the defects before sale by:

• telling the consumer before selling the goods, or
• displaying a written notice with the goods. This must be clearly presented, legible and expressed in plain language.

It is not enough to simply describe the goods as seconds, sale items or 'as is'.

The consumer examines the goods

A consumer is not entitled to a remedy if they had an opportunity to examine the goods before purchase and did not find defects that they should have noticed.

The consumer uses the goods in an abnormal manner

Goods are not expected to be indestructible; a consumer's use of goods can affect the durability of those goods.

The guarantee of acceptable quality will not apply if the consumer:

• uses the goods abnormally
• causes the quality of the goods to become unacceptable
• fails to take reasonable steps to avoid the quality becoming unacceptable.

The law does not define abnormal use. However, examples of abnormal use include:

• a mobile phone is dropped in water or is left out in the rain
• a television is broken by an object hitting the screen
• a laptop is picked up by the corner of its screen, which then cracks down the middle.

Mandatory text on warranty documents

A document evidencing a warranty against defects must include mandatory text to ensure consumers are aware that any warranty against defects operates in addition to consumers’ rights under the ACL. The mandatory text for the supply of goods is:

Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure.

From 9 June 2019, the mandatory text for the supply of services is:

Our services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled:

• to cancel your service contract with us; and
• to a refund for the unused portion, or to compensation for its reduced value

You are also entitled to be compensated for any other reasonably foreseeable loss or damage.

If the failure does not amount to a major failure, you are entitled to have problems with the service rectified in a reasonable time and, if this is not done, to cancel your contract and obtain a refund for the unused portion of the contract.

From 9 June 2019, the mandatory text for the supply of goods and services is:

Our goods and services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled:

• to cancel your service contract with us; and
• to a refund for the unused portion, or to compensation for its reduced value.

You are also entitled to choose a refund or replacement for major failures with goods. If a failure with the goods or a service does not amount to a major failure, you are entitled to have the failure rectified in a reasonable time. If this is not done you are entitled to a refund for the goods and to cancel the contract for the service and obtain a refund of any unused portion. You are also entitled to be compensated for any other reasonably foreseeable loss or damage from a failure in the goods or service.

As a supplier, you guarantee that goods will be reasonably fit for the purpose that you specify. This guarantee does not apply to goods bought at auction.

Consumer specifies purpose of goods

A consumer might want goods to do a specific job or achieve a specific purpose, different from the normal use or purpose of those goods. You guarantee that goods will be fit for such a special job or purpose if the consumer, before buying the goods:

• told you what they wanted to use the goods for, and
• relied on your knowledge or expertise when deciding whether the goods were suitable for that use or purpose.

This guarantee does not apply when

• the consumer did not rely on your skill or judgment when buying the goods
• under the circumstances, it was unreasonable for the consumer to have relied on your skill or judgment (or lack of it).

As a supplier or manufacturer, you guarantee that the description of goods – for example, in a catalogue or television commercial – is accurate. If the goods do not match the description, the consumer is entitled to a remedy. You cannot argue that the consumer inspected the goods before purchase and should have picked up any errors in the description. This guarantee does not apply to goods bought at auction.

Matching sample or demonstration model

You also guarantee goods will match any sample or demonstration model shown to the consumer. Example: a sample of fabric is used to sell a couch but the couch delivered to the consumer is different from the sample. The consumer has a right to a remedy. This guarantee does not apply to goods bought at auction.

Hidden defects

Goods sold by relying on a sample or demonstration model must not have any hidden defects.

Unavoidable differences

This guarantee applies even if the differences are unavoidable. Example: if shading, piling or colouring in an installed woollen carpet is substantially different from the sample used to sell it, the consumer may be entitled to remedy.

Legal reference: Cavalier Marketing (Australia) Pty Ltd v Rasell (1990) 96 ALR 375).

Reasonable time to compare the goods

You must give the consumer a reasonable amount of time to compare the goods with the original sample. This does not apply to demonstration models. If you show a sample or demonstration model to the consumer and give a description of the goods, the goods must match both.

As a manufacturer, you guarantee to take reasonable steps to provide spare parts and repair facilities – a place that can fix the consumer’s goods – for a reasonable time after purchase.

If the maker of the goods does not have an office in Australia, the importer takes on these responsibilities. For example, a consumer drops his digital camera, which he bought new a year ago for $2,000. He contacts the importer and asks where he can get it repaired. The importer advises they no longer supply parts for that model of camera.

A reasonable consumer would expect a camera only one year old to be repairable. The supplier has not taken reasonable steps to provide spare parts or facilities.

How much time is reasonable?

This will depend on the type of goods. For instance:

• it would be reasonable to expect that tyres for a new car will be available for many years after its purchase
• it may not be reasonable to expect that spare parts for an inexpensive children’s toy are available at all.

This guarantee does not apply on repairs and spare parts if you advised the consumer in writing, at the time of purchase, that repair facilities and spare parts would not be available after a specified time.

As a supplier, you guarantee you have the right to sell the goods (clear title), unless you alerted the consumer before the sale that you had limited title. If goods are sold with limited title, any other person with ownership rights – for example, a person owed money by the previous owner – can ask a court for permission to take the goods back from the consumer.

Undisturbed possession of goods

You guarantee that no one will try to repossess or take back goods bought by a consumer, or prevent the consumer from using those goods, except when:

• the consumer has not met their obligations under the sale, hire or lease contract
• before the sale, you told the consumer that another person had a security interest over the goods
• the consumer hired or leased the goods and the hire or lease period has ended
• at the time of buying the goods, the consumer was aware you only had limited title.

No undisclosed securities on goods

You guarantee that goods bought by a consumer are free of any hidden securities or charges and will remain so, unless the security or charge was either:

• placed on the goods with the consumer’s permission
• brought to their attention in writing before they bought the goods.