As noted in the introduction to this Chapter, the ACL’s consumer guarantees are similar to the SGA’s implied terms both in scope and in function. The main difference from a theoretical perspective; is, while implied terms are viewed as forming part of the contract in question, the consumer guarantees are imposed upon the contractual parties without forming part of the contract as such.

On a practical level, the consumer guarantees are interesting for two main reasons. First, while they overlap to a great extent with the SGA’s implied terms, they are somewhat different and, in some respects, broader than the implied terms. Second, while the parties, as noted above, can contract out of the SGA’s implied terms, they cannot contractually avoid the application of the consumer guarantees.

2.6.1 When are the Consumer Guarantees applicable?

Consumer guarantees apply to goods and services bought on or after 1 July 2021 by a consumer from a supplier or manufacturer in the course of trade and are:

1) goods or services costing up to $100,000; or

2) goods or services exceeding $100,000 which are normally used for personal, domestic or household purposes; or a

3) vehicle or trailer acquired for use principally in the transport of goods on public roads; the cost of which is irrelevant.

Consumer guarantees also apply to goods and services acquired before 1 July 2021, but on or after 1 January 2011, if they are:

1) goods or services costing up to $40,000; or

2) goods or services exceeding $40,000 which are normally used for personal, domestic or household purposes; or a

3) vehicle or trailer acquired for use principally in the transport of goods on public roads; the cost of which is irrelevant.

Goods purchased from one-off sales by private sellers, garage sales, fetes and by way of auction are not covered by the consumer guarantees.

Upon a breach, a consumer may rely on any of the relevant guarantees, even without the guarantees being expressly included within the contract of sale. Consumer guarantees are in addition to any express guarantees given by the supplier or manufacturer to the consumer.

2.6.1.1 Consumer

Like the TPA before it, the ACL gives an extraordinarily lengthy, complex and broad meaning to the term “consumer”. The definition found in s. 3 of the ACL is reproduced below:

As is obvious, ACL s. 3 is expressed in a manner describing when a person is classed as a consumer. However, the presumption in favour of persons being classed as consumers (subsection 10), means that the burden of proof will always rest on the party arguing that the other party is not a consumer. In practical terms, anyone arguing to be entitled to be classed as a consumers need only allege that she/he is a consumer. It is then for the other party to disprove this by reference to the criteria found in ACL s. 3.

In the light of that, it may be more suitable to approach the matter by examining what needs to be shown to conclude that a particular person is not a consumer. From that perspective, we can summarise the key features of how s. 3 defines a consumer in the following ‘Rule’:

From the perspective of comparative law, it is interesting to note how corporations may fall within the definition of “consumer”. Such a wide definition is rare both in other jurisdictions,^[1] and in international instruments.^[2]

In any case, to understand the application of ACL s. 3, it is necessary to explore what is meant by “goods … of a kind ordinarily acquired for personal, domestic or household use or consumption”. Case law illustrates that a wide range of goods may fit that description. As pointed out in Peter Crago v Multiquip Pty Ltd:^[3] “goods may be of a kind ordinarily acquired for personal, domestic or household use or consumption even if goods of that same kind are in many cases, perhaps even a majority of cases, acquired for business use”.^[4]In that case, the applicant had purchased egg incubators from the first respondent for the purposes of incubating ostrich eggs. Due to some fault with the incubators, most of the eggs did not hatch and the applicant sought relief for their losses.

Indeed, goods may be classed as being “of a kind ordinarily acquired for personal, domestic or household use or consumption” even where they are purchased expressly for commercial purposes. In other words, the test of whether goods are regarded as being “of a kind ordinarily acquired for personal, domestic or household use or consumption” is an objective one as focus is placed on the purpose for which the goods typically are acquired. No attention is given to the acquirer’s subjective intentions. In Carpet Call Pty Ltd v Chan,^[5] the defendant had purchased a heavy-duty carpet to be used in a nightclub.  The price of the carpet was over the prescribed amount, so the question for the Court to decide was whether the carpet was goods “of a kind ordinarily acquired for personal, domestic or household use or consumption”. Justice Thomas noted that:

“In my view “carpet” is a commodity, or goods, ordinarily acquired for domestic consumption, and it does not lose that description by reason of a commercial rating, or some quality which makes it last longer than other carpet normally supplied for use in a domestic setting.”^[6]

In contrast, in Atkinson v Hastings Deering (Qld) Pty Ltd,^[7] a second-hand tractor purchased for $150,000 was held to plainly fall outside the definition of “goods … of a kind ordinarily acquired for personal, domestic or household use or consumption”. The Court did not even discuss the purpose for which the tractor was purchased.

Furthermore, while s. 3 speaks of a consumer as one who “acquired” goods or services, and while it mentions the “amount paid or payable” as a relevant factor, it has been held that a person otherwise classed as a consumer is still a consumer where the goods or services were a gift. In Peter Geoffrey Webber Clarke v New Concept Import Services Pty Ltd,^[8] the defendant was giving away unsafe balloon-blowing kits prohibited under the TPA, and the Court concluded that the relevant section – aimed to protect consumers – was applicable even though the balloon-kits were gifts.

Finally, while (as is expressed in ACL ss. 3(1) and (2)) in the case of goods, an intention to use the goods “in trade or commerce” excludes the acquirer from being classed as a consumer, no similar limitation is placed on an acquirer of services. Thus, for example in ACCC v Maritime Union of Australia,^[9] the operators of commercial vessels engaged in bulk trades were “consumers” in relation to the organisers of cleaning services for the cargo holds.

This distinction between the extent to which an acquirer of goods and an acquirer of services can be classed as a consumer is based on a logical foundation. However, in some instances it lacks precision and accuracy in its application. Imagine that a person pays $5,000 and in return gets exclusive access to a jumping castle for one year. During that year, the person, having gained exclusive access to the jumping castle, invites other people to use the jumping castle at the cost of $50 per 24 hours. In such circumstances, the person acquiring exclusive access to the jumping castle would presumably not be classed as a consumer as the situation could be seen to involve re-supply.

Imagine further that the same person instead of acquiring exclusive access to the jumping castle acquires exclusive access to a news website and invites other people to use the news website at the cost of $50 per 24 hours. In this latter case, as there is no re-supply limit in relation to services, the person acquiring exclusive access to the news website would presumably be classed as a consumer, even though this is a clear case of commercial re-supply.

2.6.1.2 Supply and Supplier

ACL s. 2 defines the term supplier as anyone, including a trader or retailer, who in trade or commerce supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase and any service provider which provides a service to a consumer.

Section 5(1)(a) of the ACL makes it clear that a donation of goods or services is not treated as being issued by a supplier unless the donation is for promotional purposes.

ACL s. 2(1) defines the term supply:

2.6.1.3 Manufacturer

As is clear above, s. 7 of the ACL provides quite a broad definition of a manufacturer. In essence, a manufacturer is a person or business that makes or puts goods together or has their name on the goods. It includes the importer, if the maker does not have an office in Australia.

2.6.1.4 Goods

The ACL does not seek to define the term “goods”. It merely extends the ordinary meaning of goods to a range of matters we might not instinctively think of as goods. ACL s. 2(1) states that:

It could thus be said that the ACL’s definition of “goods” includes all those matters we would instinctively consider as being goods, as well as those matters mentioned in s. 2(1)(a)-(g).

2.6.1.5 Services

ACL s. 2(1) defines the term “services” in the following manner:

Thus, like several of the terms defined in the ACL, the term “services” is given a rather broad interpretation. Importantly, however, it excludes one common type of service – that of an employee doing services for her/his employer – from its scope.