AUSTRALIAN CONSUMER LAW – COMMERCIAL LAW WEEK 11

© RMIT University, 2018

Who is a consumer?
Section 3(1) ACL provides that a person is taken to have acquired goods as consumer if the
amount paid for the goods does not exceed $40,000; OR if the price of the goods exceeds
$40,000, the goods were of a kind ordinarily acquired for personal, domestic or household
use or consumption; or the goods consisted of a vehicle or trailer acquired for use
principally in the transport of goods on public roads.

Section 23(3) (b) ACL provides the definition of ‘consumer contract’ as a contract for the
supply of goods, services or an interest in land to an individual whose acquisition of the
goods, services or interests is wholly or predominantly for personal, domestic or household
use or consumption.

S 51 Guarantee that the seller has a right to dispose of the goods.

S 52 The consumer has a right to undisturbed possession of the goods

S 53 The goods are free of any undisclosed security, charge or encumbrance

S 54 Suppliers and manufacturers guarantee that goods are of acceptable quality when sold to a
consumer.

S 55 The supplier guarantees goods are reasonably fit for any disclosed purpose for which the supplier
represents they are reasonably fit

S 56 If goods are sold by description they must correspond with that description

S 57 If goods are sold by sample or demonstration model they correspond with the sample or model.

S 58 Manufacturers or importers guarantee they will take reasonable steps to provide spare parts and
repair facilities (a place that can fix the consumer’s goods), for a reasonable time after purchase.

S 59 A supplier must not tell a consumer that they are required to pay for any rights equivalent to a
consumer guarantee.
This means that, when selling an extended warranty, a supplier or manufacturer should be very
clear exactly what it offers over and above the consumer guarantees.

S 60 Suppliers guarantee their services are provided with due care and skill. This means they must:
• use an acceptable level of skill or technical knowledge when providing the services and
• take all necessary care to avoid loss or damage when providing the services.

S 61 Suppliers guarantee that services will be reasonably fit for any purpose specified by the consumer
and any products resulting from the services are also fit for that purpose.

S 62 A contract or agreement for the supply of services usually states when the services will be provided
and the date they will be completed.
If not, the supplier guarantees they will supply the service within a reasonable time.

Consumer Guarantees ss 51-62 ACL

Note: there could be several applicable consumer guarantees to one particular case.
AUSTRALIAN CONSUMER LAW – COMMERCIAL LAW WEEK 11
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Manufacturer’s liability

Section 7 (1) ACL provides that the term manufacturer. Start with defining who a
manufacturer is.

Part 3.5 outlines the liability of manufacturers for goods with defects.

Section 138 ACL provides that a manufacturer of goods is liable to compensate an

individual if:

• The manufacturer supplies goods in trade or commerce; and

• The goods have a safety defect; and

• The individual suffers injuries because of the safety defect.

Section 139 ACL covers liability for loss or damage by a person other than the injured
individual.

Section 140 ACL covers liability for loss or damage to goods if they are destroyed or
damaged.

Section 141 ACL covers liability for loss or damage to land, buildings and fixtures.

Section 142 ACL outlines possible defences.

Remedies

Ss 224-231 various pecuniary (that is, monetary) penalties

Ss 232-235 various types of injunction
S 236 an order that the business pay damages to any person who has suffered
loss because of the contravention
S 237-241 a compensation order for injured persons (on application by either the
injured person or the ACCC) or non-party consumers (on application by the
ACCC)
S 243 an order declaring a contract void, varying a contract, refusing to enforce a
contract, ordering a refund, ordering compensation, ordering repair of the
goods, ordering the provision of services, or ordering execution of an
instrument relating to land
S 246 various non-punitive orders including an order directing the business to
perform a community service, an order directing the business to establish
compliance and education programs for its employees, an order requiring
the business to disclose information, and an order requiring the business to
place an advertisement
AUSTRALIAN CONSUMER LAW – COMMERCIAL LAW WEEK 11
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S 247 an adverse publicity order

S 248 an order disqualifying a person from managing a corporation

Misleading or deceptive conduct

Section 18: A person must not, in trade or commerce, engage in conduct that is misleading
or deceptive or is likely to mislead or deceive.

To determine whether this requirement has been breached, 2 tests are applied:

- The target audience must be identified and

- The question must be asked as to whether the most naïve or gullible among them is
likely to be misled or deceived.

If the answer is yes, s18 has been breached.

Defective Products

Sections 271 – 272 provide for a claim in damages from manufacturer for breach of s 54 or
56 by the retailer. If there is a breach of either s 54 or s 56 or both by the retailer, the
consumer or an affected person may sue the manufacturer for damages.

The exclusion clause is void under s 276.

Safety Defects

Sections 138 – 141 deal with loss incurred by the consumer or an affected person in the
event of a product having a safety defect.

The exclusion clause is void under s 150.

Specific prohibitions

S 29 False A business must not make a false representation:

Representation
s - That its goods are of a particular standards, quality, value,
grade, composition, style or model or have had a particular
history or particular previous use.
- That its goods are new

- That it has a sponsorship, approval or affiliation it does not

have, with respect to the price of its goods or services,

- Concerning the availability of facilities for the repair of its

goods or of spare parts for its goods,

- Concerning the place of origin of its goods, or

- Concerning the existence, exclusion or effect of any condition,

warranty, guarantee, right or remedy.

S 35 Bait A business must not engage in bait advertising.

Advertising
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A business engages in bait advertising when it advertises a product at

a price that is likely to attract buyers to its premises when it knows or
should know that is likely to run out of stock very quickly.

S 36 Wrongfully A business must not accept payment from a buyer when it either does
accepting not intend to supply the product or it knows or should know that it will
payment be unable to provide the product within the specific time or a
reasonable time.

S 40 Assertion Inertia selling is sending an unsolicited product to a person and then

of right to pressuring the person to pay for that product;
payment for
unsolicited No right exists to assert payment unless seller reasonably believes
goods that it in fact has a right to payment.

S 41 After the expiry of a certain period, the product becomes the property
of the person, free of charge.

S 44 Pyramid - A person is prohibited from participating in, or inducing others

Schemes to participate in, a pyramid selling scheme.
- A pyramid scheme is a type of product distribution scheme
whereby a participant makes a profit or receives a commission
for the sale of each product to a buyer;
- the participant is rewarded for the introduction of other
participants to the scheme, usually by receiving a commission
for each new participant.

Section 21 of the ACL prohibits unconscionable conduct in trade or commerce, in

connection with the supply or acquisition of goods or services.

Section 22 of the ACL assists in determining whether a person has breached section
21 by providing a list of matters a court may take into account in deciding whether a
person has behaved unconscionably.

Implied Terms
AUSTRALIAN CONSUMER LAW – COMMERCIAL LAW WEEK 11
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Section 18: Sale by description

A seller will have breached the statutory implied terms regarding sale by description if the
goods are sold by description and they have failed to correspond to the description.

Section 19 (a): Implied Condition of Fitness for Purpose

A seller will have breached the statutory implied term regarding fitness for purpose if:

- The contract is for the sale of goods

- The seller normally sells goods of that description
- The buyer has either expressly or by implication told the seller the purpose for which
they were buying the goods
- The buyer has relied on the seller’s expertise
- The goods are not fit for the stated purpose, and
- The buyer has not requested the particular goods by name

Section 19 (b): Implied condition of merchantable quality

A seller will have breached the statutory implied term regarding merchantable quality if:

- The contract is for the sale of goods

- The buyer has relied upon a description of the goods
- The seller normally sells goods of that description
- The goods are not of merchantable quality; and
- The buyer has not examined the goods or, if they have examined the goods, the
defect is not one that would have been revealed by the examination