09 Jul Changes To Consumer Guarantees From 1 July 2021
On 1 July 2021, the value of goods covered by the definition of ‘consumer’ under the Australian Consumer Law increased from $40,000 to $100,000. This means that the consumer guarantees will apply to more transactions, including when businesses sell to other business.
The guarantees also apply to those who only have an online presence and no retail outlets in Australia. The critical issue is that sales are to Australian consumers. Valve, one of the world’s largest online video game retailers, incurred a $3 million penalty for non-compliance and was unsuccessful in its special leave application to the High Court in April 2018.
The following is an update of my earlier blog and is a useful summary.
What is covered?
Businesses must guarantee products and services they sell, hire or lease that are:
• under $100,000
• over $100,000 if they are normally bought for personal or household use
• business vehicles and trailers, provided they are used mainly to transport goods.
There are some exceptions. For example, products purchased to be resold, or to be transformed into a product that is sold, are not covered.
What are consumer guarantees?
Businesses must provide these automatic guarantees regardless of any other warranties. If a product or service fails to meet a consumer guarantee, the consumer has the right to a remedy.
A ‘major failure’ is when a reasonable consumer wouldn’t have bought the product or service if they had known about the nature and extent of the failure. In these cases, the consumer can choose to have a product repaired, replaced or refunded. For a service, they can:
• end the contract and seek a refund
• keep the contract and be compensated for any drop in value.
For other kinds of failure, the business can choose the remedy, but it must do so within a reasonable time. Possible remedies include:
• repairing the faulty good
• replacing it with an identical good
• refunding the consumer
• repairing any defect in the service provided.
Summary of Consumer Guarantees on Products and Services
Products must be of acceptable quality, that is:
- safe, lasting, with no faults
- look acceptable
- do all the things someone would normally expect them to do.
Acceptable quality takes into account what would normally be expected for the type of product and cost.
Products must also:
- match descriptions made by the salesperson, on packaging and labels, and in promotions or advertising
- match any demonstration model or sample you asked for
- be fit for the purpose the business told the consumer it would be fit for and for any purpose that the consumer made known to the business before purchasing
- come with full title and ownership
- not carry any hidden debts or extra charges
- come with undisturbed possession, so no one has a right to take the goods away or prevent the consumer from using them
- meet any extra promises made about performance, condition and quality, such as life time guarantees and money back offers
- have spare parts and repair facilities available for a reasonable time after purchase unless the consumer was told otherwise.
- be provided with acceptable care and skill or technical knowledge and taking all necessary steps to avoid loss and damage
- be fit for the purpose or give the results that the consumer and the business had agreed to
- be delivered within a reasonable time when there is no agreed end date.
Consumer guarantees on products and services also apply to:
- bundled products and services
- gifts with proof of purchase
- sale items
- online products and services bought from Australian businesses
- second-hand products from businesses, taking into account age and condition.
Who can a consumer claim a remedy from?
A consumer can claim a remedy from the retailer. The retailer can’t refuse to help a consumer by sending the consumer to the manufacturer or importer. A consumer has the option to claim a remedy directly from the manufacturer or importer if certain conditions are met. A consumer can also claim a remedy from the supplier if the services do not meet any of the consumer guarantees in relation to services.
If you are involved in sales and purchases contact our commercial team of (Charlie, Eugene, Brendan, Mary-Lee and Olivia) at Belperio Clark 8212 1322 or email them on their email addresses appearing on our website.
Prepared by Eugene Reinboth