Tertiary education program

Nine consumer guarantees relating to goods

There are nine consumer guarantees relating to goods:

1. The seller has the right to sell the goods.

Any person or business who sells goods to a consumer guarantees that they have the right to sell them. This means they must be able to pass ownership to the consumer and there must be no restriction on this.

2. The consumer has the right to undisturbed possession of the goods.

Anyone who supplies goods to a consumer guarantees that the consumer has the right to undisturbed possession of the goods. For example, the supplier guarantees that no one has the right to repossess the goods, or stop the consumer from using them.

3. There are no undisclosed securities attached to the goods.

Anyone who sells a product to a consumer guarantees that it is, and will remain, free from any security or charge unless these were disclosed to the consumer in writing before they agreed to purchase the product; or were created with the consumer's express consent.

Example: The seller of a car must ensure any security over the car given by its previous owner, such as a secured car loan, has been discharged before selling the car to a new buyer.

4. The goods are of acceptable quality.

Anyone who supplies a good, in trade or commerce, to a consumer guarantees that their goods are of 'acceptable quality'. Section 54(2) provides that goods are of acceptable quality when a reasonable consumer would regard them as being:

  • fit for all of the purposes that goods of that kind are commonly supplied

  • acceptable in appearance and finish

  • free from defects

  • safe, and

  • durable.

When deciding whether goods have these qualities a reasonable consumer would have regard to:

  • the nature and price (if relevant) of the goods
  • any statements about the goods on their packaging or labelling
  • any representations made about the goods by the supplier or manufacturer, and
  • any other relevant circumstance relating to the supply transaction.

Case study: Contaminated food is not of acceptable quality.

See: Ryan v Great Lakes Council [1999] FCA 177

The consumer guarantee of acceptable quality does not apply, where the consumer was aware of the problem before acquiring the goods, or caused them to become of unacceptable quality. It also does not apply in instances where the consumer purchased the goods via auction.

5. The goods are reasonably fit for the consumer's particular purposes, as disclosed by the consumer to the supplier.

Suppliers guarantee that the goods are reasonably fit for any purpose disclosed by the consumer, or for which the supplier says the goods are reasonably fit. However, this guarantee will not apply if the consumer did not rely on the seller's expertise, or it was unreasonable for the consumer to do so. This provides businesses with some opportunity to protect their position by, for example, declining to select goods for the purpose indicated by the consumer, or by indicating they do not have the required expertise.

This guarantee does not apply if the consumer bought the goods at an auction.

Case study: Second-hand farming equipment was not fit for the purpose for which it had been acquired when, because of a number of defects, it soon became unworkable, which is contrary to what a reasonable purchaser would expect in the circumstances.

See: Zuvela & Anor v Geiger [2007] WASCA 138

6. The goods match the description given to them.

Suppliers and manufacturers guarantee that the goods will correspond with any description they give them. For example, if a promotional catalogue says the goods have certain features and the consumer relies on the catalogue when buying them, the business responsible for the catalogue will be liable if the goods do not have the features described. This will be so even though the goods are otherwise fit for purpose and of acceptable quality. This guarantee does not apply to goods purchased at auctions.

7. The goods don't differ from any sample or demonstration model shown to the consumer.

Suppliers supplying goods by reference to a sample, or demonstration model, guarantee that:

  • the goods will correspond with the sample or demonstration model in quality, state or condition

  • the consumer will have a reasonable opportunity to compare the goods with the sample

  • the goods are free from any defect that would not be apparent on a reasonable examination of the sample, or demonstration model, and which make the goods of unacceptable quality.

Example: If a hobby (i.e. not professional) farmer purchased a small tractor for less than $40 000 after being shown a demonstration model in the dealer's showroom, there would be a guarantee that the tractor would have all the features shown on the demonstration model and that there would be an opportunity to compare the tractor with that model.

This guarantee also does not apply when goods are purchased via auction.

8. Repair facilities and spare parts are reasonably available.

Manufacturers guarantee that repair facilities and spare parts for their goods will be reasonably available to consumers for a reasonable time after the goods are sold. This guarantee applies unless the manufacturer notifies consumers that repair facilities or spare parts will not be available, or will be available only until a specified time. This guarantee does not apply if the consumer purchased the product in an auction.

9. Any additional express warranties provided will be complied with.

Suppliers and manufacturers who give additional express warranties about their goods guarantee that they will comply with them.

Business suppliers also have obligations if they volunteer a warranty that the goods will be free from defects, or will be repaired, replaced, or the consumer compensated if they are defective. Such a warranty must be in writing and contain certain prescribed information. It is an offence not to comply with these obligations and fines can be imposed should this occur.

Examples:

  • A retailer says it will not be beaten on price. This is an express warranty and section 59 of the ACL creates a consumer guarantee that the supplier will comply with that warranty.
     
  • A retailer says it will replace or repair any of its goods if they are defective. This is a warranty against defects and the retailer must comply with the warranty and prescribed formalities.

This guarantee does not apply to auctioned goods.