Consumer rights Reforming statutory implied conditions and warranties

Glossary

ACCC Australian Competition and Consumer Commission

ASIC Australian Securities and Investments Commission

ASIC Act Australian Securities and Investments Commission Act 2001

CCAAC Commonwealth Consumer Affairs Advisory Council

COAG Council of Australian Governments

FTA Fair Trading Act

MCCA Ministerial Council on Consumer Affairs, made up of ministers responsible for consumer affairs from the Australian, New Zealand and State and Territory governments

NEIAT National Education and Information Advisory Taskforce

NZCGA Consumer Guarantees Act 1993 (NZ)

PC Productivity Commission

SGA Sale of Goods Act

TPA Trade Practices Act 1974

Findings

Reforming the law (Chapter 5)

Findings 5.1 The current range and lack of uniformity of Australian laws on implied conditions and warranties leads to confusion and uncertainty for consumers about their rights. It also leads to confusion and unnecessary costs for businesses in complying with the law.

5.2 In developing the Australian Consumer Law, current laws on implied conditions and warranties should be amended to increase consumer and business understanding and to harmonise differences between existing national, state and territory laws.

5.3 The Australian Consumer Law should include a single set of consistent statutory consumer guarantees that are simple and clear. The new law should, at a minimum, provide: in respect of goods: a guarantee that the supplier has the right to sell the goods; a guarantee that the goods are free from any undisclosed security; a guarantee that the consumer will have undisturbed possession of the goods; a guarantee that goods are of ‘acceptable quality’, which would replace the concept of ‘merchantable quality’, and which includes a detailed definition of ‘acceptable quality’, so that the goods are: fit for the purposes for which the goods are commonly supplied; acceptable in appearance; free from both major and minor defects; safe; and durable;

Findings (continued) as a reasonable consumer fully acquainted with the state and condition of the goods, including any hidden defects, would regard as acceptable, having regard to: the nature of the goods; the price (where relevant); any statements made about the goods on any packaging or label on the goods; any representation made about the goods by the supplier or the manufacturer/importer; and all other relevant circumstances of the supply of the goods;

a guarantee that the goods are fit for a particular purpose made known to the supplier by the consumer; where goods are sold by description, a guarantee that goods comply with that description; where goods are sold by sample, a guarantee that goods comply with that sample; where goods are first supplied to a consumer in Australia, a guarantee that the manufacturer/importer will take reasonable action to ensure that facilities for repair of the goods and supply of parts for goods are reasonably available for a reasonable period after the goods were supplied;

These guarantees should be enforceable against both the manufacturer/importer and the retailer of any goods supplied. in respect of services: a guarantee that they will be carried out with reasonable care and skill; a guarantee that, where the actual purpose of the services and any associated goods is made clear to the seller, the goods and services are fit for the particular purpose; and a guarantee that the services will be completed in a reasonable time, unless otherwise addressed by the contract for the supply of those services;

Findings (continued) clear remedies for each statutory consumer guarantee, including a right to recover loss or damage suffered as a result of failure to comply with a guarantee, which distinguish between: remedies for major and minor defects; and remedies against suppliers and manufacturers/importers.

These guarantees should be enforceable against both the supplier and intermediary of any services supplied.

a consistent approach to defining ‘consumer’ in the Australian Consumer Law, with the same definition to apply to statutory consumer guarantees. Furthermore, given that some business purchases are currently afforded protection by the provisions of Part V, Divisions 2 and 2A of the Trade Practices Act 1974, consideration should be given as to whether such purchases should remain covered by statutory consumer guarantees; that statutory consumer guarantees, except for the guarantee as to the supplier’s right to sell the goods, do not apply to the sale of goods by way of genuine auctions; that, as part of the development of the Australian Consumer Law, Part V, Divisions 2 and 2A of the Trade Practices Act 1974 (and similar legislation at state and territory level) will be repealed in favour of the new statutory consumer guarantees; and that the statutory right to rescission of contracts in section 75A of the Trade Practices Act 1974 (and similar legislation at state and territory level) be repealed in favour of the remedies available under the new statutory consumer guarantees.