A Guide to Consumer Guarantees for Small Business Owners
Every small business owner needs to have a deep understanding of consumer laws under the Australian Consumer Law (ACL), which ensure that goods and services sold are of good quality, fit for purpose and match the description given.
Consumer guarantees are automatic legal protections that operate regardless of any warranties given by the seller. This means that a business cannot exclude, restrict or modify consumer guarantees through contract terms, such as “no refunds” signs or disclaimer clauses. Any such terms are void under the ACL. There are multiple consumer guarantees in the ACL. This article will outline seven key guarantees.
Guarantee #1: Acceptable Quality
Acceptable quality means that goods must be safe, durable and free from defects. They should have an acceptable appearance and finish, and be fit for all purposes for which goods of that kind are commonly supplied. What constitutes “acceptable quality” depends on factors including the nature of the goods, the price paid, and any statements made about the goods.
Guarantee #2: Fit for Purpose
Goods or services must be reasonably fit for any purpose that the consumer makes known to the supplier (either expressly or by implication), or for the purpose for which goods or services of that kind are commonly supplied. The remedies available to consumers depend on whether the failure is major or minor, and may include repair, replacement, refund, or compensation. For services, consumers may need to provide evidence that the service was not fit for the disclosed purpose, which could include expert opinions or other supporting documentation depending on the circumstances.
Guarantee #3: Match Description
If businesses sell goods or services based on a description, sample or demonstration model, then the goods or services supplied must match that description, sample or model. The goods must correspond with the description, sample or model in relation to quality, state, condition, performance and other characteristics.
Guarantee #4: Due Care and Skill
This guarantee applies to services only. This means services must be carried out with the degree of care and skill that would reasonably be expected from a competent service provider in that field. The service provider should take reasonable care to avoid causing loss or damage.
Guarantee #5: Express Warranties
If a business makes an express warranty (an extra promise) about goods or services, that warranty must be complied with. Express warranties are in addition to, and do not replace, the consumer guarantees. For example, a warranty might promise that goods will work properly for a specified period, that defects will be repaired free of charge, or that parts will be replaced within a certain timeframe. It’s important to note that businesses cannot use warranties to limit or exclude consumer guarantee rights.
Guarantee #6: Undisturbed Possession
Businesses must guarantee that consumers will have undisturbed possession of the goods, meaning no one will attempt to repossess or take away the goods, and the consumer’s use of the goods will not be interfered with. However, this guarantee is subject to any security interest or encumbrance that was disclosed in writing before the sale, or any right of a supplier to repossess goods under a credit arrangement if the consumer defaults on payment.
Guarantee #7: No Undisclosed Securities
Goods must be free from any undisclosed security interests or charges. If there is a security interest or charge on the goods, the business must disclose this to the consumer in writing before the sale. Note that this guarantee applies to goods only, not services.
If you have any questions about consumer law obligations for your business, or need advice on compliance with the Australian Consumer Law, please do not hesitate to contact our firm. We are here to help.
DISCLAIMER: This article is for informational purposes only and does not constitute legal advice.