Consumer rights Reforming statutory implied conditions and warranties

Remedies

As with the implied terms in the TPA, the remedies for breach of these provisions in state and territory legislation are the remedies available for breach of a term of a contract, rather than damages or other remedies arising out of a contravention of the provisions of the legislation.

However, there are some additional statutory remedies available to consumers. The key differences are as follows:

• 
  The TPA and the WA, SA, Victorian and NT FTAs all provide an additional statutory right of rescission for the breach of an implied condition. However, the procedure set down for rescission under the SA CTA has rigid time limits.
  
• 
  The breach of an implied term in respect of services under the Victorian FTA will be the breach of a condition and consumers will be entitled to treat the breach as a repudiation.
  

Consumers in SA, NSW or the NT or covered by the TPA have additional rights to recover from manufacturers and importers (discussed above).

4 International approaches⁴¹

Overall, laws implying baseline standards for supply of goods and services to consumers are substantially similar in the countries considered as part of our review, with some variations.

Relevant variations observed include the following:

• 
  New Zealand — In NZ, implied warranties and conditions are expressed as statutory guarantees, with the formulation of guarantees more closely tracing the laws adopted in the UK. NZ consumer protection legislation relies to a large extent on consumers taking action for themselves.
  
• 
  United Kingdom — Warranties and conditions implied into consumer transactions in the UK were traditionally consistent with those in Australian law. However, the overlay of the law of the European Union with domestic consumer law has resulted in confusion and a push for reform.
  
• 
  European Union — The Consumer Sales Directive differs from the Australian law slightly in that it approaches the issue of supply of goods from the perspective of ‘conformity with contract’ rather than ‘merchantable quality’. While the directive seeks to enforce a unified approach to the sale of consumer goods in Europe, it has not been strictly transposed into the domestic law of all Member States. The directive does not cover supply of services as distinct from the supply of goods. Therefore, supply of services to consumers is governed by the domestic laws of each Member State.
  
• 
  United States — State based laws governing implied warranties and conditions are augmented by the Federal Uniform Consumer Code and the Magnuson Moss Warranty Act (MMWA). The Act is aimed at providing consumers with access to reasonable and effectual remedies, where there is a breach of warranty on a consumer product. The Act also provides for alternative dispute settlement procedures. Unlike any other model, one of the essential aids to the effectiveness of the MMWA is that a prevailing plaintiff may recover reasonable costs of suit, including attorney fees. So, although it is left to consumers to enforce their rights, there is some incentive to ensure that consumers are adequately represented.
  
• 
  Canada — Each of the common law Provinces and Territories has substantially similar legislation with respect to implied warranties and conditions. All are broadly consistent with the laws in Australia. An exception is the implied warranty that services be of ‘reasonably acceptable quality’. This more simplified formulation does not include concepts of ‘due, care skill and diligence’, as applied in Australia. The law is also substantially similar in the civil law of Quebec. However, Québécois law recognises concepts of ‘latent’ or ‘hidden’ defects rather than distinguishing between ‘warranties’ and ‘conditions’.
  
• 
  South Africa — Due to social political issues the consumer law in South Africa has remained, until very recently, fragmented and in need of reform. However, the Consumer Protection Act 2008 was assented to earlier this year. This Act provides consumers with ‘fundamental consumer rights’.
  

The following table summarises the key differences between Australian and international approaches.

Table 4.1 — Summary of key differences between international approaches

	United Kingdom	European Union (CSD)	United States (Federal Regime)	Canada (Ontario)	New Zealand	Australia (TPA)
Terms can be excluded
Liability can be limited
Apply to supply of goods by hire, lease or exchange
Apply to auctions
Apply to goods and services
Statutory or enhanced remedies
There is direct liability against manufacturers

Further detail on each of these international approaches is outlined in Appendix H.