Consumer guarantees: Goods
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Suppliers and manufacturers guarantee that goods are of acceptable quality (ACL s 54). This means that they must be saleable. Goods are of acceptable quality if they are:
fit for all the purposes for which goods of that kind are commonly supplied;
acceptable in appearance and finish;
free from defects;
safe; and
durable,
to the standard that a reasonable consumer who is aware of the goods’ state and condition (including hidden defects) would regard as acceptable, considering the tests set out in section 54(3) of the ACL:
the nature and price of the goods;
any statements on the packaging or labelling;
any representations about the goods made by the supplier or manufacturer; and
any other relevant circumstances relating to the supply of the goods.
In short, would a reasonable consumer who knew about the defects at the time of purchase regard these defects as acceptable?
The guarantee of acceptable quality does not apply to the following situations:
the defects were drawn to the consumer’s attention before purchase;
the defects were disclosed in a written notice displayed with the goods;
the defects would have been clear if the consumer conducted a reasonable examination before purchase;
the consumer caused the goods to become unacceptable quality or failed to take reasonable steps to prevent them becoming unacceptable quality;
the consumer’s abnormal use damaged the goods (ACL ss 54(4)–(6)); or
the goods were bought at auction (ACL s 54(1)(a)).
If you can’t determine whether goods you have purchased are of acceptable quality, seek legal advice.
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Suppliers guarantee that the goods are reasonably fit for any purpose specified (disclosed) by the consumer or the supplier (ACL s 55).
The goods must be fit for:
any purpose that the consumer made known (expressly or by implication) to the supplier or the person who conducted the sales negotiations; and
any purpose for which the supplier represents that the goods are reasonably fit (ACL s 55).
This guarantee does not apply where the consumer did not rely on, or where it was not reasonable for the consumer to rely on, the skill or judgment of the relevant person. This guarantee does not apply to manufacturers or goods bought at auction.
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Suppliers and manufacturers guarantee that goods correspond to their description (ACL s 56). This includes a description given in an advertisement or catalogue. The guarantee applies even where the consumer inspected the goods before purchase. If goods are supplied by reference to a description and a sample, the consumer guarantees under sections 56 and 57 of the ACL apply. This guarantee does not apply to goods bought at auction.
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Suppliers guarantee that goods supplied by reference to a sample or demonstration model correspond with that sample or demonstration model in quality, state or condition (ACL s 57).
Specifically, there is a guarantee that:
the goods correspond with the sample or demonstration model in quality, state or condition;
the consumer has a reasonable opportunity to compare the goods with the sample; and
the goods are free from any defect that would not be apparent on reasonable examination, or would cause it not to be of acceptable quality.
If goods are supplied by reference to a sample or demonstration model and description, the consumer guarantees under sections 56 and 57 of the ACL apply. This guarantee does not apply to manufacturers or goods bought at auction.
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Manufacturers guarantee that they will take reasonable action to ensure that repair facilities and spare parts are available for a reasonable period after purchase (ACL s 58(1)). This applies even where the goods are not bought directly from the manufacturer or importer.
Whether a time period is ‘reasonable’ depends on the type of goods. For example, a reasonable period will be longer for parts for new cars than for cheap toys.
A manufacturer is not liable after a specified time if it took reasonable steps to ensure that the consumers are advised in writing, at the time of purchase, that repairs or parts won’t be available after a certain time (ACL s 58(2)).
This guarantee does not apply to goods bought at auction.
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A manufacturer guarantees that it will comply with any ‘express warranty’ (extra promises) given by the manufacturer in relation to the goods (ACL s 59(1)).
Similarly, a supplier guarantees that it will comply with any express warranty given by the supplier (ACL s 59(2)).
Express warranty is defined broadly (ACL s 2) and includes any undertaking, assertion or representation:
about the quality, state, condition, performance or characteristics of the goods;
about the availability of parts, repairs, or identical goods; and
the natural tendency of which is to induce persons to acquire the goods.
This guarantee does not apply to goods bought at auction.
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Several consumer guarantees protect consumers when a seller does not have the right to sell the goods. These guarantees do not require the supply to be in trade or commerce, which means that they apply to all sellers, whether or not they are operating a business. These guarantees also apply to goods bought at auction.
First, the supplier must have the right to dispose of the goods (i.e. they must have clear title in the goods) at the time the consumer acquires property in the goods (e.g. by taking delivery of the goods) (ACL s 51). This means that when a consumer buys goods, there is a guarantee that ownership rights are passed to the consumer. The only exceptions are:
where there is a clear intention that the consumer will not obtain clear title in the goods (e.g. where the goods are provided for a limited period); or
where the goods are hired or leased because the consumer does not expect to own the goods outright.
Second, consumers have a right to undisturbed possession of goods (i.e. that no one will try to repossess or reclaim the goods) subject to any security, charge or encumbrance (e.g. a mortgage) that was disclosed to the consumer when they purchased the goods (ACL s 52). This guarantee applies to hired or leased goods, but only for the period of the hire or lease. Further, if the consumer purchased the goods under a payment plan and the consumer fails to make the payments, the seller may be entitled to repossess the goods.
Third, goods supplied to a consumer must be free from any undisclosed security (e.g. a mortgage), charge or encumbrance unless it has been disclosed to the consumer (ACL s 53). This guarantee does not apply to goods that are hired or leased.
Consumer guarantees: Goods
Chapter: 7.3: Consumer guarantees
Contributor: Paul Latimer, Adjunct Professor, Swinburne Law School; Volunteer lawyer, Fitzroy Legal Service
Current as of: 1 September 2024
Law Handbook Page: 631
Next Section: Consumer guarantees: Services
