Consumer guarantees

Consumer guarantees

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This precedent has been authored by Dr. Gordon Hughes, Principal, Davies Collison Cave Law.

Introductory note

Consumer guarantees The Australian Consumer Law (ACL) may impose “consumer guarantees” into contracts for the supply of goods or services to “consumers”. The remedy is available to a “consumer”. A person is a “consumer” if the price of the goods or services is less than $40,000, or higher in the case of goods which are ordinarily acquired for personal, domestic or household use or consumption. Consumer guarantees embrace such matters as acceptable quality, fitness for purpose, correspondence with description and the exercise of due care and skill (see: ACL part 3-2). It is not possible to contract out of the consumer guarantees (see ACL section 64) but it is permissible, nevertheless, for the supplier to limit the extent of its liability according to a formula prescribed in section 64A of the ACL.

Warranty against defects

Sometimes a contract will contain additional warranties — e.g. “We will rectify any defect which you report to us within 15 days of delivery” — which are more substantive than the consumer guarantees. These are known as “warranties against defects”.

In these circumstances, certain additional wording is mandated, the purpose being to ensure that consumers are not misled into believing that (in the example given above) they have no remedy other than the 15-day warranty. They retain any statutory rights under the consumer guarantees even though the limited contractual warranty has expired.

Section 102 of the ACL states that regulations may prescribe requirements relating to the form and content of warranties against defects. In this regard, regulation 90 of the Competition and Consumer Regulations 2010 (Cth) applies. Regulation (2) prescribes wording which must be included.

The wording prescribed by regulation 90 was broadened as of June 2019 to include wording relating to the supply of services, or to a transaction involving the supply of both goods and services. The inclusion of this wording is mandatory, with limited exceptions applying only to services regulated under other legislation or services involving the transportation or storage of goods for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported or stored.