What are Australia’s Consumer Remedies and when do they Apply?

In general the ACL applies when a person buys goods or services from a business.

It is important to note the ACL does not apply to private sales.

This means if you buy something from a private-seller (a person) and not from a business you do not have the protections provided by the ACL.

A common example of this is purchases made from private sellers on platforms like Facebook marketplace.

If you buy a second hand item off someone in this context it’s unlikely you will get the protection of the ACL.

This law about private sales applies regardless of the value of the item being purchased.

For example in one case, in New South Wales, a $3 million house purchase was not covered by the ACL because it was a private sale.

If you are considering making a substantial purchase through a private sale – as in from a person not a business – you should seek an expert opinion on what you are buying and consider getting legal advice.

Also, while the ACL does not apply to private sales, the laws that govern contracts do.

You can learn more about laws on contracts in subsequent chapters of the Tasmanian Legal Handbook.

Another notable exemption to the ACL is governments.

The federal government, as well as Australia’s state governments and local council are generally exempt from the ACL.

The general rule is that governments are immune from the ACL except in cases where they are selling a product or service for commercial gain.

For this reason in the vast majority of cases an action against a government for a breach of the ACL is unlikely to be appropriate.

Regardless, of whether or not you have anything in writing guaranteeing these basic facts about something you buy from a business, the ACL means sellers are obligated to make sure these things are true.

The list below sets out each of these entitlements in brief – along with the section of the ACL that applies to them.

These entitlements are then detailed in more depth under individualised headings below.

• That the seller legitimately owns and is therefore entitled to sell the goods (Section 51).
• That the buyer will have undisturbed possession (Section 52).
• That the goods are free from any security, charge or encumbrance (Section 53).
• That the goods are of acceptable quality unless bought at auction (Section 54).
• That the goods are fit for the purpose for which they are purchased unless bought at auction (Section 55).
• That the goods bought or hired on the strength of a description conform to that description unless bought at auction (Section 56).
• That where sale is by sample or demonstration model, the goods correspond with the sample or demonstration model unless bought at auction (Section 57).
• A guarantee that the manufacturer of the goods will take reasonable action to ensure that facilities for the repair of the goods, and parts for the goods, are reasonably available for a reasonable period after the goods are supplied unless the goods were bought at auction (Section 58).
• A guarantee that the manufacturer or supplier of the goods will comply with any express warranty given or made by the manufacturer or supplier in relation to the goods (Section 59).

Undisturbed possession

Section 52 of the ACL guarantees that the buyer will enjoy undisturbed possession of the goods.

This would be so even if the goods were leased or bought on hire purchase and title remained with the supplier.

Let’s use the example of a second-hand car.

If someone sells a vehicle but fails to tell the person buying it that it’s actually been leased to someone else – the ACL guarantees the buyer undisturbed possession.

This does not necessarily mean the person with the lease will not have a claim over use of the vehicle.

However, it does mean that the buyer can take legal action against the seller for damages.

If you are facing a situation like this it is worth getting legal advice as to your rights.

Free from any security, charge or encumbrance

The ACL at Section 53 guarantees that goods are free from any security, charge or encumbrance.

This section of the Act is generally referring to where someone has registered an interest over an item on the Personal Property Security Register (PPSR).

The PPSR is a register, maintained by the Federal Government, where an interest over property can be entered.

For example, if you take out a car-loan the lender is likely to register its interest over the car.

If you sell the car the lender may be able to reclaim it and sell it again to pay-off the loan.

However, under the ACL a consumer who buys an item only to later find out someone else has registered an interest over it, will be able to take legal action against the seller.

So, in the example of a used car the buyer may lose the vehicle to the lender but they are able to take legal action against the seller under the ACL.

Obviously, this is a less than ideal scenario and it is always wise to undertake a PPSR check before making a major purchase – or seek legal advice.

Goods must be of acceptable quality (merchantable quality)

Where a person supplies goods to a consumer in the course of business, there is an implied condition that the goods supplied are of acceptable quality Section 54.

This means that the goods must be as;

(a) Fit for all the purposes for which goods of that kind are commonly supplied; and
(b) Acceptable in appearance and finish; and
(c) Free from defects; and
(d) Safe; and
(e) Durable;

As a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the following:

(a) The nature of the goods; and
(b) The price of the goods (if relevant); and
(c) Any statements made about the goods on any packaging or label on the goods; and
(d) Any representation made about the goods by the supplier or manufacturer of the goods; and
(e) Any other relevant circumstances relating to the supply of the goods.

These criteria provide a flexible test that caters for different circumstances.

Second-hand goods, for example, cannot be expected to be in the same condition as one would expect for brand new goods.

One question to ask is whether a reasonable person who wanted goods of that type would be prepared to accept the goods in that condition.

It will not always be sufficient that the goods are fit to perform the purpose for which goods of that sort are normally used.

For instance, if a consumer purchases a new car and the car arrives with scratched paintwork, then a reasonable person would not accept the car.

The car is therefore not of acceptable quality, even though it is fit for the purpose for which cars are used.

The guarantee of acceptable quality will not apply in the following situations:

• Where defects in the goods have specifically been drawn to the consumer’s attention before a contract is made; or
• If the consumer examined the goods before the contract was made, and a reasonable examination ought to reveal that they were not of acceptable quality; or
• The goods were bought at auction.

Goods must be fit for a particular purpose (unfit for purpose issues)

Under Section 55 of the ACL goods need to be fit for any disclosed purpose.

Obviously, people can not just buy items for purposes they’re not supposed to be used for and then return them saying they don’t work.

However, if an item is advertised as being capable of fulfilling a certain use and it does not, the ACL provides the consumer with a course for legal action.

Usually this takes the form of a refund, or a return.

In some circumstances an item may not be advertised as being fit for a particular purpose but the expert advice of seller can mean this area of law is brought into play.

One example of this is were someone goes to a specialist equipment store and asks for advice from a shop attendant about which products are suitable for a particular purpose.

In this scenario the seller is made aware by the consumer of the purpose for which goods are required.

By providing advice the store-person, or the seller, has represented that the goods are reasonably fit for a particular purpose.

This applies whether or not the goods are commonly supplied for that purpose.

This guarantee does not apply where the consumer has not relied on the skill and judgment of the person selling the goods or where it would be unreasonable to do so.

Nor does it apply if the goods are bought at auction.

For people purchasing goods from a seller in the course of the seller’s business, the purchaser must show that:

• The particular purpose for which the goods are required was made known to the supplier, either expressly or by implication, or the supplier volunteered that the goods were suitable for a particular purpose; and
• The purpose was made known to the supplier in such a way as to show that the supplier’s skill and judgment was relied upon.

Although at first sight these requirements appear rather onerous, the courts have taken a liberal approach which is favourable to consumers. In the case of goods which only have one particular purpose, requirement (1) will be satisfied by merely placing an order for the goods.

In consumer cases, requirement (2) will be satisfied, for example, by the fact that the consumer went into the supplier’s shop. In effect the consumer is said to rely on the seller’s skill in selecting the goods.

Sale by description (goods as described)

Under Section 56 of the ACL when a person buys goods based on how they’re described – without seeing what they’re buying – the goods need to correspond with that description.

Many consumer transactions are by description, that is, the consumer does not actually see the goods being purchased. This may occur in two ways:

• Goods are ordered from a distance, for example, by telephone, or online; or
• A consumer may, for instance, ask for a tin of fine-ground coffee, or select a tin labelled fine-ground coffee from a supermarket shelf.

Both of these are sales by description.

In the latter case it can be argued that the consumer relies on the description on the label (compared with the situation where the tin is opened and the contents examined).

If the tin does not contain fine-ground coffee then the consumer may take advantage of the protection offered by the ACL.

Note that Section 56(2) provides that supply of goods is not prevented from being supply by description merely because a consumer selects goods exposed for sale or hire.

If the sale is by reference to a sample as well as by description, then it is not sufficient that the goods correspond to the sample if they do not also correspond with the description Section 56(3).

Protections when goods are bought by sample

A few consumer transactions are of the type where the consumer buys by reference to a sample of the goods or a demonstration model.

For example, a consumer may buy carpet by reference to a sample shown in a samples book.

In this case, Section 57 of the ACL provides that where this is done in the course of the seller’s business (other than by auction) it is a condition of the contract that:

• The bulk of the goods will correspond with the sample in quality;
• The consumer will have a reasonable opportunity of comparing the bulk with the sample; and
• The goods will be free from any defects rendering them unacceptable that would not be apparent on a reasonable examination of the sample.

In the example given, if the sample of the carpet shown to the consumer was a pure wool carpet and the bulk of the carpet delivered to the consumer turned out to be a blend of wool and synthetic, the consumer will be entitled to reject the carpet delivered.

It is most important that the consumer reject the goods as soon as the defect is discovered and preferably not accept the goods at all.

If the goods are accepted, the right to terminate the contract may be lost, and the consumer will be forced to rely on a remedy for damages.

This of course may not be satisfactory because the court will award damages on the basis of the difference between the price of, in this example, a wool carpet and the carpet of wool and synthetic material.

A consumer who does not wish to accept a wool and synthetic carpet under any circumstances but nonetheless accepts delivery of the goods may have to accept the carpet and be content with what can be gained by way of damages.

For this reason if you have taken delivery of goods that don’t match the sample you inspected you should seek prompt legal advice.

Repairs and spare parts

Section 58 of the ACL guarantees a manufacturer will take reasonable action to ensure that facilities for the repair of the goods, and parts for the goods, are reasonably available.

This guarantee can also apply to retailers in some cases.

It is difficult to know what action can be taken against the retailer if this guarantee is not honoured, apart from suing for damages.

An action for damages can also be brought against the manufacturer (s271(5)) but often this is not practical.

You should seek specific legal advice before commencing private legal action in relation to this statute.

Express warranties

An express warranty is a warranty which expressly states a good will last for a certain period of time.

Under Section 59 of the ACL any express warranties given by the retailer or the manufacturer must be honoured.

This applies to, for example, the 12-month warranty. That must be honoured but it is in addition to the rights provided by the ACL. It is not a substitution for those rights.

The same applies to an extended warranty that is purchased by the consumer.

If you have purchase a product that came with a warranty and feel it has been breached Tasmania’s Consumer Building and Occupation Services may be able to assist.