Appendices
A Terms of reference
CCAAC is to undertake a review of the adequacy of existing laws on implied conditions and warranties in the TPA and state and territory FTAs and SGAs legislation.
Context
The PC Review of Australia’s Consumer Policy Framework recommended that the adequacy of the existing laws on implied warranties and conditions should be examined as part of the development of the new national consumer law, which was agreed to by the Council of Australian Governments (COAG) on 2 October 2008.
On 23 May 2008 MCCA agreed that the Commonwealth should initiate a comprehensive review of the TPA, state and territory FTAs and Sale of Goods legislation, with the aim of developing a clear codified law to be applied nationally. On 15 August 2008, MCCA further agreed that the review should cover so called ‘lemon laws’.
Background Implied conditions and warranties
The statutory conditions and warranties implied into contracts by the TPA and state and territory FTAs are designed to provide consumers with basic and guaranteed levels of protection in relation to the goods and services they acquire.
Part V, Division 2 of the TPA provides for certain non excludable, implied conditions and warranties into contracts for the supply of goods and services, as follows:
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consumers will have the right to title and quiet possession of the goods;
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goods will be free from encumbrance;
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goods will comply with their description or sample;
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goods will be of merchantable quality and fit for purpose; and
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services will be rendered with due care and skill and any material supplied with the services will be fit for the purpose.
Further, in all jurisdictions (except for Queensland, Tasmania and the Australian Capital Territory) statutory warranties cannot be excluded from a contract by the seller.
The PC Report’s recommendation 8.1 stated:
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Australia’s consumer agencies should:
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raise awareness among consumers and suppliers about the statutory rights and responsibilities conferred by the implied warranties and conditions in the generic consumer law; and
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where appropriate, take specific enforcement action against misleading marketing and sale of extended warranties.
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The adequacy of existing legislation related to implied warranties and conditions should be examined as part of the development of the new national generic consumer law.
Lemon laws -
The term ‘lemon law’ refers to legal measures that are available to consumers who purchase goods that repeatedly fail to meet expected standards of performance and quality, such as motor vehicles.
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Lemon laws exist, for example in most US states, but not in Australia.
Extended warranties -
Extended warranties are service or insurance contracts offered by suppliers to provide repair and maintenance for a specific period, and offered typically on purchases such as whitegoods and large electronics.
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The PC Report noted that, there may be a legitimate role for extended warranties in the market place. However, the apparent lack of understanding by consumers of their statutory rights in relation to implied warranties and the proliferation of extended warranty offerings across a broad spectrum of consumer goods could provide a case for a stronger policy response in the future.
Scope of study
CCAAC is to examine the existing laws on implied conditions and warranties in the TPA and state and territory FTAs and, in particular, consider:
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the adequacy of the current laws on implied conditions and warranties;
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the need for any amendments to the current laws on implied conditions and warranties and, if so, how those amendments would improve existing laws and better empower consumer agencies to ensure compliance with those laws;
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the need for ‘lemon laws’ in Australia to protect consumers who purchase goods that repeatedly fail to meet expected standards of performance and quality;
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the existence of extended warranties in the market place and their interaction with laws on implied conditions and warranties; and
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other means for improving the operation of existing statutory conditions and warranties in Australia.
In conducting the review, CCAAC shall:
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perform a review of existing Australian literature, including conclusions and recommendations made in relevant Australian reviews;
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consider relevant international research and models for implied conditions and warranties adopted in other countries;
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have regard to the rights and obligations of consumers and businesses under contracts for the sale of goods and services and, in particular, those contracts entered into on the internet; and
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have regard to the intended objectives of the new national consumer law, which were agreed to by the Council of Australian Governments on 2 October 2008.
CCAAC is to undertake a targeted consultation process with industry stakeholders.
CCAAC will report to the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs by 31 July 2009.th
B Consultation process
CCAAC, under its terms of reference, examined the existing laws on implied terms in the TPA and state and territory fair trading and goods legislation. An Issues Paper, Consumer rights: Statutory implied conditions and warranties, was released for public comment on 26 July 2009 by the Minister for Competition and Consumer Affairs, the Hon Dr Craig Emerson MP. A range of stakeholders were invited to comment on the issues paper. Submissions closed on 24 August 2009.
A parallel consultation process was conducted with a roundtable held on 21 August 2009 with state and territory consumer agencies. The roundtable discussion was facilitated by Professor Stephen Corones, Ms Deborah Healey and Mr Ray Steinwall
In addition, a targeted consultation was undertaken based on written submissions led by Professor Corones and Ms Healey. They met stakeholders on 7 September 2009 in Canberra and 8 September 2009 in Melbourne, with additional discussions held via teleconference on 16 and 17 September 2009.
CCAAC also had discussions with the NZ Ministry of Consumer Affairs, ASIC and the ACCC on specific consumer policy issues.
Consultations were augmented by 33 written submissions from a range of interested parties. Written submissions are available at www.treasury.gov.au/contentitem.asp?NavId=066&ContentID=1614. At the request of CCAAC some stakeholders were invited to provide additional information to support their submissions. For a list of all stakeholder submissions refer to Appendix C.
Participant
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Date
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Canberra
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Australian Competition and Consumer Commission (ACCC)
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7 September 2009
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Federal Chamber of Automotive Industries (FCAI)
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7 September 2009
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Motor Traders Association of Australia (MTAA)
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7 September 2009
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Veda Advantage
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16 September 2009
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Melbourne
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Australian Automotive Aftermarket Association (AAAA)
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8 September 2009
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Royal Automobile Club of Victoria (RACV)
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8 September 2009
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Wesfarmers
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8 September 2009
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Teleconferences
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Australian Securities and Investments Commission (ASIC)
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13 August 2009
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BSR Group
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17 September 2009
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IC Frith
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7 September 2009
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Ministry of Consumer Affairs (New Zealand)
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17 August 2009
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C List of submissions
Stakeholder submissions
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Australian Competition and Consumer Commission (confidential) (ACCC)
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Association of Consulting Engineers
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Australian Automotive Aftermarket Association (AAAA)
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Australian Chamber of Commerce and Industry
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Australian Finance Conference
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Australian Industry Group
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Australian Institute of Architects
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Australian Retailers Association (ARA)
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Ms Jenny Buchan, University of NSW
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CHOICE
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Consumer Action Law Centre (CALC)
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Federal Chamber of Automotive Industries (FCAI)
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Ford Australia (confidential)
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Freehills
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IC Frith (confidential)
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Mr Lynden Griggs, University of Tasmania
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Mr Nick Guden
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GM Holden (confidential)
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Hunt & Hunt
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Ms Madeline Kingston
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Motor Trades Association of Australia (MTAA)
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Motor Trades Association of Queensland
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Dr Luke Nottage, University of Sydney
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Retailers Association (confidential)
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Retail Traders Association of WA inc.
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Royal Automobile Club of Queensland Limited
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Royal Automobile Club of Victoria (RACV)
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Mr Hank Spier, Spier Consulting
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Mr Gary Stevens
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Trade Practices Committee of the Business Law Section of the Law Council of Australia (LCA)
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Veda Advantage
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Victorian Automobile Chamber of Commerce (VACC)
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Wesfarmers (confidential)
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