Chapters

The remedies available under the legislation are much more generous than under the law of contract. A person complaining of misleading conduct may:

  • seek compensatory damages (s236);
  • seek an injunction (principally applicable to advertising cases) (ss232-235); or
  • seek various other remedies (a long list of options available to a court, including rescission of contract in whole or in part, modification of a contract and ‘such order or orders as (the court thinks appropriate’) (ss237 and 243), including: 
    infringement notices, substantiation notices, public warning notices, disqualification notices, non-party consumer redress.

It is not possible to claim damages in respect of misleading or deceptive conduct if the person misled suffered personal injuries or death (ss137C137D and 137E, CCA). This measure was introduced in the wake of the so-called insurance crisis after the collapse of HIH. There is no such limitation under the Australian Consumer Law 2010 (Tas).

Remedies against the retailer

The ACL sections 259-277, which came into effect on 1 January 2011, brought about very major changes to the remedies available to consumers when goods or services are unsatisfactory, that is, they do not conform to the consumer guarantees. The following remedies are available.

In respect of defective goods, the consumer may:

  • reject the goods for a major failure and obtain a refund;
  • ask for repair of the goods;
  • ask for replacement of the goods;
  • sue for damages.

In respect of defective services the consumer may:

  • ask for defective services to be remedied;
  • terminate the services contract if response is unsatisfactory;
  • claim damages.

An important concept is that of ‘major failure’ in respect of goods and services (s260 (goods) and s268 (services)). A major failure is where:

  • goods or services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
  • goods depart in one or more significant respects
    (i) if they were supplied by description—from that description; or
    (ii) if they were supplied by reference to a sample or demonstration model—from that sample or demonstration model; or
  • goods or services are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
  • goods or services are unfit for a disclosed purpose that was made known to
    (i) the supplier of the goods; or
    (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made;
    and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
  • in the case of services
    (i) the services, and any product resulting from the services, are not of such a nature, or quality, state or condition, that they might reasonably be expected to achieve a result desired by the consumer that was made known to the supplier; and
    (ii) the services, and any of those products, cannot, easily and within a reasonable time, be remedied to achieve such a result; or
  • the goods or services are not of acceptable quality because they are unsafe.

Goods - rights to repair, replace, or reject and refund and damages

Where a defect in goods can be remedied and the defect is not a major failure (see above), the customer, or a person to whom the customer has given purchased goods (s266), can require the retailer to remedy the defect within a reasonable time (s259(2)) so long as the defect was not due to some independent event that occurred after the goods left the retailer’s control. This means that the retailer must (s261):

  • repair the goods;
  • replace the goods; or
  • refund the price.

If the retailer refuses, or fails to respond within a reasonable time, the consumer may (s259(2)):

  • have the goods repaired elsewhere and recover the cost from the retailer; or
  • reject the goods.

If the defect cannot be remedied or the defect is a major failure, the customer, or a person to whom the customer has given purchased goods (s266), can either reject the goods or claim damages measured by the difference between the price paid and the value of the defective goods (s259(3)).

It is also possible for the consumer to sue the retailer for damages for any consequential losses incurred because of the defective goods (for example, if a defective toaster caused a fire) (s259(4)). However, because of the definition of ‘consumer’, business purchases under $40,000 are covered and it is permitted under section 64A for a business to limit its liability to the cost of replacement or repair in respect of goods purchased for business and not domestic purposes.

The consumer may take action under against the retailer whether or not the goods are in their original packaging (s259(7)).

Whenever goods are replaced, the same consumer guarantees apply to the replacement goods (s264).

Rejection of goods

The consumer may reject the goods if they have a major failure, they cannot be repaired or the retailer has not responded by offering repair or replacement.

To do so, the consumer must return the goods explaining why they are being rejected (s259(3)(a) and s263(2)  ACL) or must notify the retailer to come and collect them if the goods are not transportable (s263(2)(b)). The retailer must then refund the price of the goods or replace them (s263(4)). The retailer cannot require the consumer to buy other goods in lieu of a refund (s263(5)).

Defective goods cannot be rejected (s262) if:
(a) the rejection period (see below) for the goods has ended; or
(b) the goods have been lost, destroyed or disposed of by the consumer; or
(c) the goods were damaged after being delivered to the consumer for reasons not related to their state or condition at the time of supply; or
(d) the goods have been attached to, or incorporated in, any real or personal property and they cannot be detached or isolated without damaging them.

The rejection period is the period within which it would be reasonable to discover the defect having regard to:
(a) the type of goods; and
(b) the use to which a consumer is likely to put them; and
(c) the length of time for which it is reasonable for them to be used; and
(d) the amount of use to which it is reasonable for them to be put before such a defect becomes apparent.

If goods are rejected and a refund is paid, then any service contract that goes with the goods can be terminated (s265). The customer should notify the service provider if that party is a separate entity from the retailer. The customer is then entitled to a refund representing the remainder of the unused services.

Services - remedies

If the defective services can be remedied and the defect does not constitute a major failure, the customer can require the service provider to remedy the failure (s267(2)(a)). If the service provider fails to respond or respond within a reasonable time, the customer can have the defective services remedied by another service provider and recover the cost from the original service provider (s267(2)(b(i)) or terminate the service contract (s267(2)(b)(ii)).

If the defective services cannot be remedied or they constituted a major failure, the customer can terminate the services contract or recover damages measured by the difference between the price paid and the value of the defective services (s267(3)). The customer can also recover damages for any consequential losses, for example, a fire caused by defective installation of roof bats (s267(4)).

To terminate the contract the customer should, so far as possible, notify the service provider. Once terminated, the customer is entitled to a refund of the price for any unused services (s269(3)).

If a services contract is terminated any associated contract for goods can be terminated also. The goods must be returned to the supplier (or, if too difficult to transport, the supplier should be notified to come and collect them) and a refund must be paid by the supplier (s270).

Remedies against the manufacturer

Minimum standards for goods are enforceable against manufacturers. The ACL provides a right of action to a ‘person affected’ (which means the purchaser or a person who has received the goods as a gift) against a manufacturer who supplies faulty products, that is, goods that are not of acceptable quality, do not conform to a description, do not have spare parts or repair facilities or are in breach of an express manufacturer’s warranty (s271). Under the law of contract the purchaser has no rights directly against a manufacturer because there is no contract with the manufacturer. The legislation provides a statutory right to enforce minimum standards of quality against the manufacturer.

‘Manufacturer’ is extensively defined in section 7 and includes an importer and a supplier whose brand appears on the goods.

The person affected can seek damages against the manufacturer (ss271-2) or, if the manufacturer has given an express warranty (usually a 12-month warranty), require the manufacturer to replace or repair the goods. If this does not happen, then the person can sue for damages for breach of the express warranty. The damages claimable include the cost of returning the goods to the manufacturer. The right to damages may be sought whether or not the goods are in their original packaging (s271(7)).

When goods have been purchased for business purposes, the manufacturer’s liability to pay damages to the business consumer is not limited in the way that the retailer may be able to limit its damages, namely, to the cost of replacement or repair.

A claim for damages must be brought within three years of the date on which the defect became obvious or should have been detected (s273). Note this is not within three years of purchase.

Any attempt by the manufacturer to exclude these provisions is void (s276).

If a retailer has to incur expense to meet a claim, the retailer has a right of indemnity against the manufacturer (s274). If the indemnity claim relates to goods not of a kind ordinarily acquired for personal, domestic or household use or consumption, the manufacturer’s liability to the retailer is limited to the cost of replacement or repair of the goods unless such limitation of liability would not be fair or reasonable in the circumstances (s276A).

A separate Part of the ACL provides rights against a manufacturer in respect of dangerous goods that cause injury, death or property damage.

The right to claim against a manufacturer is usually not very useful because the manufacturer may not be close to hand whereas the retailer will usually be in the locality. So it is usually simpler to complain of faulty goods or services to the company that supplied them.

Rights against Manufacturers in respect of Dangerous Goods (product liability)

Part 3-5 (ss138-150) of the ACL deals with liability of manufacturers and importers for goods which have a safety defect that causes injury. In contrast to the consumer guarantees discussed above, Part 3-5 is about dangerous goods rather than goods that do not perform properly. Section 9 defines goods as having a safety defect if their safety is not such as persons generally are entitled to expect, having regard to such matters as their marketing, packaging, price, instructions that come with the goods and their normal use.

Who can claim?

An individual who has suffered personal injuries (s138) or a person dependant on the injured person (s139) can claim against a manufacturer (which includes an importer) for damages. In addition if goods are defective and cause damage to a person’s goods (s140) or real property (s141) an action for damages can be brought. If a person dies as a result of injuries caused by defective goods, the cause of action survives for the benefit of his or her estate under State and Territory legislation (s145).

If the injuries are covered by worker’s compensation, then no liability arises under these provisions (s146).

Unknown manufacturer

If the manufacturer is unknown, the consumer can require the retailer to provide the name of the manufacturer. If the retailer fails to do this, then the retailer is taken to be the manufacturer (s147).

Defences

The manufacturer may defend a claim in the following ways (s142):

  • the defect did not exist at the time of supply by the manufacturer;
  • the defect existed only because there was compliance with a mandatory standard for the goods;
  • the state of scientific or technical knowledge at the time when they were supplied by their manufacturer was not such as to enable the defect to be discovered;
  • the goods were incorporated as part of other goods and those other goods were defective.

If the reason why the goods were defective was because of compliance with a Commonwealth mandatory standard, the Commonwealth can be made liable for damages (s148).

Damages may be reduced to the extent that the injured party was at fault in failing to safeguard his or her own safety (s137ACCA).

Time limits

An action must be brought within three years of the plaintiff becoming aware, or ought reasonably to have become aware, of the alleged loss, the defect and the identity of the person who manufactured the goods (s143(1)). A claim cannot be brought more than 10 years after the supply by the manufacturer of the goods (s143(2)).

No exclusion

Any attempt to exclude or modify the operation of Part 3-5 is void (s150).

© 2013 Hobart Community Legal ServiceFeedbackDisclaimer