Consumer guarantees

Australian Consumer Law

If you operate a business that provides goods or services to consumers, you need to be aware of the consumer guarantees contained in the Australian Consumer Law.  Those guarantees provide consumers with a comprehensive, non-negotiable set of rights in relation to the goods and services they acquire. The key points to know are:

• The consumer guarantees apply to a supplier or manufacturer of goods.
• Goods are covered as long as they are sold in trade and commerce and bought by a consumer.
• A consumer is a person who buys any type of goods or service costing up to $40,000, or goods and services costing more than $40,000 which are normally used for personal, domestic or household purposes.
• The consumer guarantees do not cover one-off sales by private sellers or sales to another business.
• Signs that limit consumer rights are unlawful, including ‘no refund’ signs.
• A business cannot limit or restrict the consumer guarantees, or avoid their obligations by getting the consumer to agree that the consumer guarantees do not apply.

Goods

The consumer guarantees which apply to goods are as follows:

• The goods are of acceptable quality when sold to a consumer.
• The goods will be reasonably fit for any purpose the consumer or supplier specified.
• The supplier’s description of goods (eg in a catalogue) is accurate. A consumer who buys goods that don’t match the description is entitled to a remedy.
• The goods will match any sample or demonstration model or any description provided.
• The goods will satisfy any extra promises made about them.
• They have the right to sell the goods (ie clear title).
• No-one will try to repossess or take back goods.
• The goods are free of any hidden securities or charges.
• A manufacturer or importer will take reasonable steps to provide spare parts and repair facilities for a reasonable time after purchase.

Services

There are different guarantees applying to services provided to consumers. Services must be provided:

• with due care and skill
• which are fit for any specified purpose, and
• within a reasonable time.

Remedies

A consumer has a right to a remedy if goods or services do not meet a consumer guarantee. A consumer might also seek compensation for any consequential loss or damage resulting from the failure to meet a consumer guarantee, provided it’s reasonably foreseeable and not caused by something outside human control.

There are a range of remedies available to a consumer who has been provided with goods that have a major failure. They can reject the goods and get a refund or a replacement, or they can keep the goods and get compensated for the decrease in value caused by the problem.

Thermomix

In June, the ACCC commenced court action against Thermomix In Australia Pty Ltd (‘Thermomix’), alleging it contravened the Australian Consumer Law as follows:

1. Thermomix misled customers about their consumer guarantee rights, by representing to certain consumers that the Australian Consumer Law remedies to which they were entitled could only be obtained by signing non-disclosure and non-disparagement agreements. It is alleged Thermomix also represented to some consumers that it would not provide refunds or replacements. In fact, consumers who have purchased a faulty product have rights under the law to remedies which businesses cannot restrict, alter, or remove, and this includes getting a repair or replacement for the product, or a refund.
2. Thermomix failed to comply with mandatory reporting requirements for injuries arising from the use of the appliances, in that on a number of occasions it failed to notify the Commonwealth Government within two days of becoming aware that a person had suffered a serious injury associated with the use of a Thermomix appliance. The law requires that suppliers must provide notice as soon as they become aware that a person has suffered a serious injury, as this helps the ACCC protect the safety of consumers and prevent further injuries.
3. Thermomix made false representations and engaged in misleading conduct regarding the safety of the TM31 model by representing to consumers that it wasn’t aware of any safety issues with it and continuing to supply that model when it was aware of a safety issue that ultimately led to a recall action.

The ACCC is seeking declarations, pecuniary penalties, injunctions, corrective publication orders, compliance program orders and costs against Thermomix.

Next steps

Please contact us if you have any questions in relation to the Australian Consumer Law and the way it impacts upon your business. We can provide specialised legal advice in relation to marketing and selling practices, and represent businesses in relation to claims brought by customers or regulators.