Consumer rights Reforming statutory implied conditions and warranties

A lemon law for Australia?

On balance, CCAAC considers that a case has not been made for the introduction of a lemon law in Australia, whether for new motor vehicles or more generically. Even the most enthusiastic supporters of lemon laws acknowledge that the current laws in respect of implied terms cover the supply to consumers of motor vehicle lemons. There is no evidence to suggest the implied terms themselves would benefit from the addition of an implied term dealing with lemons, whether in contracts for motor vehicles or in consumer contracts more generally.

The aspects of the current regime which appear most in need of change in order to address problems associated with lemons are the lack of clarity in the implied terms, uncertainty or lack of awareness about the law and the remedies available, and the inaccessibility of mechanisms for redress. These are the same chief difficulties associated with the application of implied terms to generic consumer products.

However, CCAAC recognises that motor vehicles constitute a special class of product. In particular, they are often the second most expensive purchase for consumers outside the family home. They may be particularly difficult for consumers to understand as compared with other consumer products, and when they fail they are likely to cause significantly more detriment to consumers than do other consumer products. For these reasons, it is appropriate that the dispute resolution and redress mechanisms for consumer guarantees create some uniform facility for dealing specifically with motor vehicle complaints.

Further, CCAAC believes that the introduction of consumer guarantees as statutory rights independent of the law of contract — as well as a move away from the somewhat archaic language of the current TPA provisions — will provide much needed clarity for consumers dealing with motor vehicle lemons. Nevertheless, it may emerge that problems with motor vehicle lemons persist after the introduction of a new, clearer consumer guarantee regime. If evidence emerges over time to indicate that consumers continue to suffer as a result of the supply of motor vehicle lemons notwithstanding clarification of the law, it may be appropriate to reconsider the need for a lemon law at that time.

As Mr Griggs notes, ‘[t]he ‘acceptable quality’ definition [of] the Consumer Guarantees Act 1993 (NZ) may well provide a starting point for consideration with this embellished by elements of time, cost and downtime’.²⁰⁰ CCAAC agrees that it is best to begin with a generic law governing ‘acceptable quality’, and consider at a later time whether the generic law may require industry specific embellishments.

Findings 9.1 CCAAC does not consider the case for the introduction of a separate ‘lemon law’ for motor vehicles to have been made at this time. However, Australian governments should monitor the effectiveness of the national statutory consumer guarantees as they apply to motor vehicles, including gathering data about the number and nature of complaints and disputes about statutory consumer guarantees involving new and used motor vehicles.

9.2 The new national statutory consumer guarantees should cover new and used motor

9.3 Australian consumer agencies should provide clear, consistent information about the application of statutory consumer guarantees to motor vehicles, particularly about consumers’ rights, businesses’ obligations and the options for resolving disputes about statutory consumer guarantees as they relate to motor vehicles.

9.4 State and Territory governments should give active consideration to the appointment of specialist adjudicators and assessors to deal with disputes involving motor vehicles and statutory consumer guarantees.

10 The online environment

Key points There has been strong growth in the use of the Internet as a means of retailing goods to consumers over recent years. Unique issues for consumers who purchase goods and services online include jurisdictional issues when goods are purchased from overseas, the inability to physically examine goods, payment security and limited after sales support. The TPA and the state and territory FTAs generally provide the same protections for online transactions as are provided for other consumer transactions involving goods and services. Some overseas jurisdictions provide additional protections for online transactions, such as cooling off periods. CCAAC does not consider that a case has been made, as yet, for online transactions to be subject to different laws compared to other transactions.

Online sales

Online transactions are continuing to grow in popularity as another channel for goods and services to be sold and purchased. For instance, in 2006, 5.9 million Australians were using the Internet to shop online, with transactions totalling over $11 billion.²⁰¹ The Internet offers a convenient way for consumers to shop and to compare prices, brands and models at any time without having to physically visit a store. The Internet also gives consumers access to both domestic and international markets, as well as allowing consumers located in remote or regional areas to access goods and services not otherwise available to them locally.

Unique issues facing online sales

While online shopping offers benefits that include choice, convenience and variety, at the same time there are particular issues associated with online shopping which are not similarly faced by consumers shopping ‘offline’, in a store and in person.²⁰² Such issues include difficulties in identifying or contacting the supplier for pre sale enquiries and after sale support; the inability to physically examine goods; payment security; and privacy concerns.²⁰³ Consumers are often left to rely on information that is disclosed by the supplier on its website to answer queries such as suitability of the product or the refund policy about the goods or services.

The risks associated with online transactions present a difficulty not usually encountered with store purchases. Such risk is something that consumers balance against the convenience and other benefits of buying products over the Internet.

Overseas purchases

A significant advantage of using the Internet is that consumers have access to goods and services in the global market. However, as well as the other risks associated with online shopping in general, there is an additional level of complexity and risk. This may be evident when the supplier or its agent is not located or registered in Australia and enforcement challenges could occur.

For consumers, it can be challenging to resolve complaints about an overseas purchase. Depending on the choice of law, consumers in Australia may not enjoy the same protections they have for domestic purchases. Further, it can be complicated and costly for the consumer to obtain redress (refund, repair or replacement) where the supplier is located overseas.