Main Body
2.6.2 What are the Consumer Guarantees?
2.6.2.1 Guarantee as to title s. 51
Australian Consumer Law, s. 51
(1) If a person (the supplier) supplies goods to a consumer, there is a guarantee that the supplier will have a right to dispose of the property in the goods when that property is to pass to the consumer.
(2) Subsection (1) does not apply to a supply (a supply of limited title) if an intention that the supplier of the goods should transfer only such title as the supplier, or another person, may have:
(a) appears from the contract for the supply; or
(b) is to be inferred from the circumstances of that contract.
(3) This section does not apply if the supply is a supply by way of hire or lease.
ACL s. 51 provides a statutory guarantee to consumers that the supplier has a right to sell the goods, and to pass title of the goods to the buyer. This guarantee does not apply if the supplier expressly disclosed to the consumer before the sale that the goods only had limited title and that clear title would not be passed to the consumer upon purchase.
Further, this guarantee does not apply to hired or leased goods.
2.6.2.2 Guarantee as to possession s. 52
Australian Consumer Law, s. 52
(1) If:
(a) a person (the supplier) supplies goods to a consumer; and
(b) the supply is not a supply of limited title;
there is a guarantee that the consumer has the right to undisturbed possession of the goods.
(2) Subsection (1) does not apply to the extent that the consumer’s undisturbed possession of the goods may be lawfully disturbed by a person who is entitled to the benefit of any security, charge or encumbrance disclosed to the consumer before the consumer agreed to the supply.
(3) If:
(a) a person (the supplier) supplies goods to a consumer; and
(b) the supply is a supply of limited title; there is a guarantee that the following persons will not disturb the consumer’s possession of the goods:
(c) the supplier;
(d) if the parties to the contract for the supply intend that the supplier should transfer only such title as another person may have—that other person;
(e) anyone claiming through or under the supplier or that other person (otherwise than under a security, charge or encumbrance disclosed to the consumer before the consumer agreed to the supply).
(4) This section applies to a supply by way of hire or lease only for the period of the hire or lease.
ACL s. 52 provides a statutory guarantee that the consumer who acquires goods has a right to undisturbed possession of the goods except where prior to sale:
(1) the supplier disclosed to the consumer any security interest over the goods; or
(2) the consumer had knowledge that the supplier only had limited title in the goods.
This guarantee applies to leased and hired goods for the period of the lease or duration of the hire.
2.6.2.3 Guarantee as to undisclosed securities s. 53
Australian Consumer Law, s. 53
(1) If:
(a) a person (the supplier) supplies goods to a consumer; and
(b) the supply is not a supply of limited title; there is a guarantee that:
(c) the goods are free from any security, charge or encumbrance:
(i) that was not disclosed to the consumer, in writing, before the consumer agreed to the supply; or
(ii) that was not created by or with the express consent of the consumer; and
(d) the goods will remain free from such a security, charge or encumbrance until the time when the property in the goods passes to the consumer.
(2) A supplier does not fail to comply with the guarantee only because of the existence of a floating charge over the supplier’s assets unless and until the charge becomes fixed and enforceable by the person to whom the charge is given.
(3) If:
(a) a person (the supplier) supplies goods to a consumer; and
(b) the supply is a supply of limited title;
there is a guarantee that all securities, charges or encumbrances known to the supplier, and not known to the consumer, were disclosed to the consumer before the consumer agreed to the supply.
(4) This section does not apply if the supply is a supply by way of hire or lease.
ACL s. 53 provides a statutory guarantee that the consumer who purchases goods does so free from any hidden securities or charges, and will remain so, unless the security or charge was either:
(1) brought to the consumer’s attention prior to the purchase of the goods; or
(2) placed on the goods with the consumer’s permission.
This guarantee does not apply to goods hired or leased.
2.6.2.4 Guarantee as to acceptable quality s. 54
Australian Consumer Law, s. 54
(1) If:
(a) a person supplies, in trade or commerce, goods to a consumer; and
(b) the supply does not occur by way of sale by auction; there is a guarantee that the goods are of acceptable quality.
(2) Goods are of acceptable quality if they are as:
(a) fit for all the purposes for which goods of that kind are commonly supplied; and
(b) acceptable in appearance and finish; and
(c) free from defects; and
(d) safe; and
(e) durable;
as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3).
(3) The matters for the purposes of subsection (2) are:
(a) the nature of the goods; and
(b) the price of the goods (if relevant); and
(c) any statements made about the goods on any packaging or label on the goods; and
(d) any representation made about the goods by the supplier or manufacturer of the goods; and
(e) any other relevant circumstances relating to the supply of the goods.
(4) If:
(a) goods supplied to a consumer are not of acceptable quality; and
(b) the only reason or reasons why they are not of acceptable quality were specifically drawn to the consumer’s attention before the consumer agreed to the supply; the goods are taken to be of acceptable quality.
(5) If:
(a) goods are displayed for sale or hire; and
(b) the goods would not be of acceptable quality if they were supplied to a consumer;
the reason or reasons why they are not of acceptable quality are taken, for the purposes of subsection (4), to have been specifically drawn to a consumer’s attention if those reasons were disclosed on a written notice that was displayed with the goods and that was transparent.
(6) Goods do not fail to be of acceptable quality if:
(a) the consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and
(b) they are damaged by abnormal use.
(7) Goods do not fail to be of acceptable quality if:
(a) the consumer acquiring the goods examines them before the consumer agrees to the supply of the goods; and
(b) the examination ought reasonably to have revealed that the goods were not of acceptable quality.
ACL s. 54 provides a statutory guarantee that goods supplied to a consumer are of an “acceptable quality”. The test is whether a reasonable consumer, fully aware of the goods’ condition (including any defects) would find them:
- fit for the purpose for which they are commonly supplied;
- free from defects;
- of acceptable appearance and finish; and
- safe and durable.
Second-hand goods sold in trade or commerce are covered by this guarantee, but age, price and condition are be taken into account.
The guarantee does not apply to:
- goods examined by the consumer prior to accepting them and that examination ought reasonably to have revealed the position; or
- goods damaged by abnormal use; or
- contracts of insurance; or
- goods which contain hidden defects where the supplier has alerted the consumer to the defects. A consumer is assumed to be aware of defects if a written notice setting out the defects was displayed with the goods.
The ACL does not define ‘abnormal use’. However, examples of abnormal use may include: a mobile phone dropped in water; a television broken by an object hitting the screen or a laptop picked up by the corner of its screen, which then cracks down the middle.
This guarantee provides a right of action against both the supplier and the manufacturer of the goods, except where the consumer was alerted to the defects prior to the sale, and those particular defects later cause problems with the goods. However, the consumer may have a right of action for a different fault in the goods, which the consumer was not previously alerted to.
2.6.2.5 Guarantee as to fitness for disclosed purpose s. 55
Section 55 of the ACL contains two guarantees that ought to be approached as separate matters. First, where a consumer has a particular purpose for which the goods will be used (a disclosed purpose), there is a guarantee that the goods are reasonably fit for that purpose. Second, where the supplier represents that the goods are reasonably fit for a particular purpose, there is a guarantee that the goods are indeed reasonably fit for that particular purpose.
Australian Consumer Law 2011 (Cth) s. 55
(1) If:
(a) a person (the supplier) supplies, in trade or commerce, goods to a consumer; and
(b) the supply does not occur by way of sale by auction;
there is a guarantee that the goods are reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit.
(2) A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that:
(a) the consumer makes known, expressly or by implication, to:
(i) the supplier; or
(ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or
(b) the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a)(ii).
(3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier, the person referred to in subsection (2)(a)(ii) or the manufacturer, as the case may be.
ACL s. 55 provides a statutory guarantee that goods supplied to a consumer, other than by auction, are fit for any purpose that the consumer has made known to the supplier, either expressly or by implication. Whether or not the supply occurs by way of sale by auction may potentially be a complex matter, not least in the context of some sales occurring through online platforms. A sale by way of auction was originally exempt from this consumer guarantee because traditionally, consumers were able to inspect goods prior to the sale by auction. This has become a complex question in recent years as the number of online auctions, which do not allow for prior inspection of goods, has increased. However, sales conducted through online platforms such as eBay are not considered an auction because eBay does not act as an agent on behalf of the seller.[1] Although a review of the ACL by the Consumer Affairs Australia and New Zealand (CAANZ) led to their proposal to modify the ‘sale by way of auction’ exemption to ensure that consumer guarantees apply to all online auctions,[2] the Australian Ministers for Consumer Affairs agreed to maintain the current framework.[3]
Unless in the circumstances, it was unreasonable for the consumer to have relied on the supplier’s knowledge or expertise, the fitness for disclosed purpose guarantee will also apply if prior to buying the goods the consumer relied on the supplier’s knowledge or expertise when deciding whether the goods were suitable for the intended use.
2.6.2.6 Guarantee relating to goods supplied by description s. 56
Australian Consumer Law, s. 56
(1) If:
(a) a person supplies, in trade or commerce, goods by description to a consumer; and
(b) the supply does not occur by way of sale by auction;
there is a guarantee that the goods correspond with the description.
(2) A supply of goods is not prevented from being a supply by description only because, having been exposed for sale or hire, they are selected by the consumer.
(3) If goods are supplied by description as well as by reference to a sample or demonstration model, the guarantees in this section and in section 57 both apply.
ACL s. 56 provides a statutory requirement that suppliers and manufacturers guarantee that the description of goods (for example, in a catalogue or television commercial) is accurate.
A supplier or manufacturer cannot argue that the consumer inspected the goods before purchase and should have picked up any errors in the description.
2.6.2.7 Guarantee for goods supplied by sample or demonstration s. 57
Australian Consumer Law, s. 57
(1) If:
(a) a person supplies, in trade or commerce, goods to a consumer by reference to a sample or demonstration model; and
(b) the supply does not occur by way of sale by auction; there is a guarantee that:
(c) the goods correspond with the sample or demonstration model in quality, state or condition; and
(d) if the goods are supplied by reference to a sample—the consumer will have a reasonable opportunity to compare the goods with the sample; and
(e) the goods are free from any defect that:
(i) would not be apparent on reasonable examination of the sample or demonstration model; and
(ii) would cause the goods not to be of acceptable quality.
(2) If goods are supplied by reference to a sample or demonstration model as well as by description, the guarantees in section 56 and in this section both apply.
ACL s. 57 provides a statutory guarantee that goods supplied to a consumer by reference to a demonstration model, or by sample, correspond with the sample or demonstration model in quality, state and condition and free from any defect not apparent on reasonable examination of the sample or demonstration model that would cause the goods not to be of an acceptable quality.
For example, in the event that a sample of fabric is used to sell a couch however, the couch delivered to the consumer is a different colour from the sample. The consumer has a right of action to pursue a remedy.
Where the goods are supplied by sample, there is a guarantee that the consumer will have a reasonable opportunity to compare the goods with the sample; this does not apply to demonstration models.
2.6.2.8 Guarantee as to spare parts and repairs s. 58
Australian Consumer Law, s. 58
(1) If:
(a) a person supplies, in trade or commerce, goods to a consumer; and
(b) the supply does not occur by way of sale by auction;
there is a guarantee that the manufacturer of the goods will take reasonable action to ensure that facilities for the repair of the goods, and parts for the goods, are reasonably available for a reasonable period after the goods are supplied.
(2) This section does not apply if the manufacturer took reasonable action to ensure that the consumer would be given written notice, at or before the time when the consumer agrees to the supply of the goods, that:
(a) facilities for the repair of the goods would not be available or would not be available after a specified period; or
(b) parts for the goods would not be available or would not be available after a specified period.
ACL s. 58 requires manufacturers to take “reasonable action” to provide spare parts and repair facilities for goods supplied to consumers for a “reasonable period” after purchase.
The period of time that is considered reasonable will depend on the type of goods. For example: it would be reasonable to expect that tyres for a new car will be available for many years after its purchase. However, it may not be reasonable to expect that spare parts for an inexpensive children’s toy are available.
Manufacturers may exclude their liability under this section by taking “reasonable action” to advise the consumer at the time of sale that either:
(1) repair facilities or spare parts would not be available; or
(2) that they would not be available after a specified period of time.
2.6.2.9 Guarantee as to express warranties s. 59
Australian Consumer Law, s. 59
(1) If:
(a) a person supplies, in trade or commerce, goods to a consumer; and
(b) the supply does not occur by way of sale by auction;
there is a guarantee that the manufacturer of the goods will comply with any express warranty given or made by the manufacturer in relation to the goods.
(2) If:
(a) a person supplies, in trade or commerce, goods to a consumer; and
(b) the supply does not occur by way of sale by auction;
there is a guarantee that the supplier will comply with any express warranty given or made by the supplier in relation to the goods.
ACL s. 59 provides a statutory guarantee that any express warranties (extra promises about such things as quality, state, condition, performance etc) given by the supplier or manufacturer to the consumer are complied with.
For example, if a supplier tells the consumer that a bed will last for ten years, and the bed only lasts for six years, the consumer will be entitled to a remedy.
- See e.g., Queensland Government, ‘Buying Goods at Private Sales or Auction’ (Web Page, 30 October 2020) <https://www.qld.gov.au/law/your-rights/consumer-rights-complaints-and-scams/buying-products-and-services/guarantees-warranties-refunds/buying-at-private-sales-or-an-auction>. ↵
- Consumer Affairs Australia and New Zealand, Australia Consumer Law Review (Final Report, March 2017) 70. ↵
- Australian Consumer Law, Meeting of Ministers for Consumer Affairs (Meeting 10, 26 October 2018) <https://consumerlaw.gov.au/consumer-affairs-forum/communiques/meeting-10-0>. ↵
