Consumer guarantees under the Australian Consumer Law
Businesses supplying goods or services to consumers in Australia must meet the consumer guarantees in Part 3-2 of the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)). These guarantees cannot be excluded. The consumer threshold is $100,000 unless the good is of a kind ordinarily acquired for domestic use. This guide covers the 10 core obligations.
Coverage
Every business that supplies goods or services to consumers in Australia, including B2B suppliers where the customer is a "consumer" under the ACL (e.g. purchase under $100,000 or ordinarily for personal use).
Legal basis
Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) Parts 3-2, 5-4 and 5-5. ASIC Act 2001 (Cth) for financial services consumer guarantees equivalents. State Fair Trading Acts.
The obligations
Guarantee acceptable quality
Goods must be of acceptable quality — safe, durable, fit for common purposes, with acceptable appearance and free from defects having regard to price and description.
Guarantee fitness for disclosed purpose
If a consumer makes known a purpose for the goods, or relies on the supplier's representation, the goods must be reasonably fit for that purpose.
Match description and sample
Goods supplied by description or sample must correspond with the description, sample and any express promise about condition.
Guarantee services with due care and skill
Services must be rendered with due care and skill, reasonably fit for purpose and completed within a reasonable time where no time is fixed.
Never exclude the guarantees
Do not purport to exclude, restrict or modify the consumer guarantees — such terms are void and may amount to a misleading representation under s 29.
Offer remedies proportionate to the failure
Provide the correct remedy: repair, replacement or refund for major failures at the consumer's choice, and repair or replacement for minor failures.
Comply with warranty against defects requirements
Any express warranty against defects must include the mandatory warning text, business details and obligations set out in the ACL and Consumer Law Regulations.
Avoid misleading representations about rights
Do not misrepresent the existence or effect of a consumer guarantee, a warranty or a right to a refund — this is a civil penalty contravention under s 29.
Honour supplier indemnities from manufacturers
Suppliers and manufacturers share liability — suppliers can claim indemnity from manufacturers where goods do not meet the guarantees under s 274.
Train staff on consumer guarantees
Train customer-facing staff so in-store, online and call-centre scripts accurately explain the consumer's remedies and the business's obligations.
What happens if you do not comply
Civil penalties under the ACL can reach the greater of $50 million, three times the benefit or 30% of adjusted turnover for corporations, and up to $2.5 million for individuals. Class actions and ACCC injunctions are common for systemic breaches.
Reporting requirements
No routine reporting, but businesses must respond to ACCC substantiation notices, ACL undertakings, and representative proceedings commenced by the ACCC or state fair trading regulators.
What firms should do today
- Update terms and conditions, returns policies and receipts to reflect the ACL
- Include the mandatory warranty against defects wording on every warranty document
- Train frontline staff and contact centres on major vs minor failures
- Maintain an ACL complaint log and root-cause analysis
- Flow supplier indemnities through to manufacturer agreements
Compliance with Quillio
Quillio reviews terms and conditions, warranty documents and scripts to make sure consumer guarantees are not excluded and warranty wording meets ACL requirements. See /resources/security.
This guide is general information about consumer guarantees in Australia — not legal advice. Businesses should confirm specific applications with a lawyer and the ACCC guidance material.
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