LAW2447 - Week 10 - Australian Consumer Law - Specific Protections

RMIT Classification: Trusted
Week 10:
AUSTRALIAN CONSUMER LAW
(ACL) SPECIFIC PROTECTIONS
Recap
o General Protections:
sections 18, 20, 21, and 23.
o Specific protections
2
1. Intended Learning Outcomes
1. Recognize consumer guarantees in
• Consumer goods contract
• Consumer services contract
2. Recognize different types of remedies.
3. Apply consumer guarantees into hypothetical cases.

1. Consumer Guarantees
(Statutory Implied Terms)
4
Consumer Guarantees
(Statutory Implied Terms)
• Contracts generally have express terms & implied terms
Included into the

Contract by the court
or by statute. Negotiated &
Included into the
 Parties don’t need to contract by the
negotiate them. parties.
The ACL implies/inserts

certain terms into ALL
consumer goods/services Why?
contracts.
Consumer Guarantees (Statutory Implied

Terms)
• Does the insertion of certain terms into consumer

goods/services contract depend on the intention
of the parties ?
• Yes or no ?
• If the terms were not negotiated – are they inserted ?
• If the terms were intentionally excluded – are they inserted ?
• Breaching a term implied by the ACL is not a

breach of the contract. True or false ?
Let’s look at this scenario…
• John enters a local store, telling the salesperson that he needs a

42 inch flat screen TV which can connect to all Apple devices.
• The salesperson responds that “You should buy Samsung UN40
which has 42 inch flat screen and is compatible with all Apple
devices”.
• John signs a basic contract to buy the TV. The contract only
mentions the model, price and parties’ name.
• When John gets home, he discovers that
• the TV has only 32 inch screen,
• it is incompatible with his MacBook.
• the TV also stops working completely after a few days.

• Did the parties include a term about

• the matching of the TV to the description ?
• the fitness of the TV for the disclosed purpose ?
• the acceptable quality ?
• No
• Can the store still be held responsible for these

problems ?
• What if the contract contains a disclaimer ?
• What if the contract says “ACL does not apply to this

contract” ?
1.1 Guarantees for Consumer Goods

Contracts
a) What is a consumer goods contract ?
b) Which terms/guarantees are inserted into a

consumer goods contract?
a. Consumer Goods Contracts (section 23(3))
 For a consumer guarantee to be applied, there must be a consumer goods

contract.
 3 requirements
1) A business supplies a good to a consumer (section 2)– a physical, tangible
product, not a service.
2) The business is in trade or commerce (section 2), e.g., supplying the good
as part of its ongoing business.
3) The good is a consumer good - Section 3.
a. Price - $100,000 or less (this was $40,000 prior to 1 July 2021); or
b. ordinarily acquired for personal, domestic, or household use; OR
c. a vehicle or trailer
 The goods are;
o NOT acquired for re-supply;
o NOT acquired for using or transforming them, in trade or commerce:
(i) in a process of production or manufacture; or
(ii) in repairing or treating other goods.
Tips
• Before applying a consumer guarantee (discussed

later), you should prove that there is a consumer goods
contract!
• This is important because a person can only use a

consumer guarantee if that person is a consumer !
Guarantees for Consumer Goods

Contracts
 9 guarantees (sections 51 – 59)
 Most significantly,
• Goods must be of acceptable quality - s 54;
• Goods must be fit for any disclosed purpose - s 55;
• Goods must match the description - s 56;
• Goods must match the sample or demonstration model s 57;
 Can they be excluded by the parties ?

Section 54
Guarantee that the goods are of acceptable quality

• If a supplier supplies goods to a consumer, there is a guarantee that the goods are
of acceptable quality.
• The goods are of acceptable quality if they:
o Do all the things that the goods are commonly used for;
 a phone – can normally do what ?
 a camera ?
 a USB ?
o are acceptable in appearance and finish; and
o are safe, durable, and free from defects.

Exercise
 A consumer buys a television. 1 month later, it does not turn

on.
o Is the TV of acceptable quality ?
o Would a reasonable consumer expect a TV to last much
longer than 1 month ?
 What if the television breaks down after 10 years ?

o Is it of acceptable quality in this case ?
14
Section 55
Guarantee that the goods are fit for any disclosed

purpose
• If the consumer discloses (expressly or by an implication) to the supplier a
particular purpose for which he/she needs the goods,
• there is a guarantee that the goods are fit for the disclosed purpose.
• Examples:
o I need a vacuum cleaner that can work on a wet surface
o I need a camera that can work under water
o I need a motorbike that can cross deep water

Exercise
• A consumer goes to a furniture store looking to buying a

bookcase.
• The consumer tells the seller that each shelf must be able
to hold at least 50kg. The seller recommends a special
model.
• The consumer buys the bookcase and finds out that it is

just a normal bookcase and each shelf can only hold 5
kg.
• Is the bookcase fit for the disclosed purpose?
• Is the bookcase of acceptable quality ? 16

“I want to order a bike which has a

basket to carry my puppy”
You are sent a bike without a basket
Is the bike fit for the disclosed purpose ?

Section 56
Guarantee that the goods match the description

• If a consumer buys goods based on a description of the good by the supplier,
• there is a guarantee that the goods match the description.
• Example:
o Huck orders a jacket from Lazada.vn which is described as “Dark Grey”
o He is then delivered a pink jacket.
o Any breach of section 56 ?

Section 56
Guarantee that the goods match the description
• The description may be
o on a website or a catalogue,
o on a label or packaging
o a verbal description, e.g., a salesperson

describes a used car as a 1975 BMW.
Exercise
• Tom buys a wallet which is described as
“genuine crocodile leather” on the store’s
website.
• However, when it is delivered, Tom finds that it is

actually plastic.
• Also Tom cannot put his credit cards into the

wallet because the wallet is too small.
• Which section(s) has/have been breached ?

21
Section 57
Guarantee that the goods match the sample

• If a consumer buys goods based on/by looking at a sample or demonstration model
that the consumer was shown by the seller,
• there is a guarantee that the goods match the sample in quality, state or condition;
• What is a sample or demonstration model ?

The goods must match the sample

(sec. 57)
• Consumers have a chance to look at the real products.
• However, the products that they look at are only the samples or
demonstration models, not the ones that they are actually going to buy.
Exercise
• Ben test drives a demonstration car BMW i8, which has a
3L engine.
• He then signs a contract to buy a BMW i8.
• When the car is delivered, Tom finds that it only has a 1.3 L
engine.
• Does the car match the demonstration model ?
24
Breach or no breach ?
For each scenario below you must do two

things:
o DISCUSS whether the ACL has been breached
o If breached, DISCUSS which section(s) have

been breached
1. Bob buys a new pair of jeans. He takes them home and his
girlfriend laughs at him because they are too tight. He
decides he does not like them any more and takes them back.
2. Sarah buys a microwave. It seems to be working fine but

when she removes the food it is hot on the outside but still
cold on the inside.
3. Page bought a brand-new TV from a local shop. After four

and a half years the TV stops working.
4. Jonas buys a 10 speed road bike to help him get to

school on time. One day he is running late and takes a
short cut down a dirt track. He hits a bump and
buckles the front wheel.
5. Leon asks for some glue to fix his model aeroplane. He

is told by the salesperson that a glue called “U Fix It”
will do the job. However he finds out latter that it won’t
and he has been sold the wrong type of glue.
6. Sandy buys a digital camera. When she opens the box she is
disappointed to see that it is pink when the picture on the box is
silver.
7. Neil buys an IPOD from the Warehouse. A week later it stops

working. He takes it back to the Warehouse and they say it is not
their fault and Neil should contact the manufacturer.
8. Sue buys a skirt through a mail order catalogue. It is described

as being 300cm long. However when it arrives it is only 100cm
long and far too short.
1.2) Guarantees for consumer

services contract
a) What is a consumer services contract ?
b) Which terms/guarantees are implied into a

consumer services contract by the ACL?
a) Consumer Services Contracts (section 23(3))
3 requirements:
1) The business supplies a service to a consumer (section

2) – e.g., cleaning carpets, washing motorbikes, babysitting,
painting houses.
2) In trade or commerce (section 2) – as part of its ongoing

business activities – for profit – not for fun or for a friend.
3) The service is a consumer service (section 3) – either
a) $100,000 or less (this was $40,000 prior to 1 July 2021);

OR
b) ordinarily acquired for domestic, household, or personal use

b) Guarantees for Consumer Services

Contracts
 3 guarantees….
• the services will be carried out with due care and

skill - s 60;
• the services will be fit for any disclosed purpose -

s 61;
• the services will be supplied to the consumer

within a reasonable time - s 62.
 Generally, these guarantees cannot be excluded.

Guarantees for Consumer Services Contracts
 Guarantee that the service will be carried out with due care and
skill - s 60.
• If a business supplies services to a consumer,
• there is a guarantee that the services will be carried out with due
care and skill.
 Would an auto repair shop breach section 60 if it installs a wrong

tire into your car ?
 Would a law firm breach section 60, if it gives careless and

inaccurate legal advice ?
 Would a hairdresser breach section 60 if he/she uses a wrong

chemical to colour a customer’s hair ?
Guarantees for Consumer Services Contracts
 Guarantee as to fitness for a disclosed purpose – S 61

• If the consumer (expressly or by implication) discloses to the supplier a particular
purpose for which he/she needs the service,
• there is a guarantee that the services, and any product resulting from the
services, will be reasonably fit for that purpose.
 Example:
• A consumer contracts with a gardener to landscape his backyard. The consumer

tells the gardener that he wants to leave sufficient space to build a swimming
pool.
• However, the gardener ignores this and plants a lot of expensive trees throughout
the garden.
• The garden looks great but the consumer is unhappy.
• Is the landscaping fit for the disclosed purpose (s 61) ?
• Any breach of s 60 ?
Guarantees for Consumer Services
Contracts
 Guarantee as to reasonable time for supply – S 62.
• If the contract does not specify a time frame for the services to be
completed,
• There is a guarantee that services must be completed within a reasonable

time.
• What is ‘reasonable’ will depend on the type/nature of services and other

relevant factors such as weather and availability of parts.
o A contract for internet service – What should be a reasonable time ?
o A contract for painting a house – What should be a reasonable time?

What if it rains ?
o A contract to fix the sewage system – What should be a reasonable

time ?
• Ian signs up for a gym membership. He is amazed

when he finds out latter that the gym fees are twice that
of any other gym in Christchurch.
• Noah and his wife decide to remove a wall between

their kitchen and dinning room. They employ a builder
to do the job. The wall is removed but the builder forgot
to install a supporting beam for the ceiling so after three
weeks the ceiling begins to sag down.
35
Breach of Contract ?
Tips
When you are trying to prove a breach of a contract, there are
3 places that you should look for the term that might be
breached.
o Inside the contract itself
o Outside of the contract – That means you will need to

Incorporate
o Implied Terms – mainly ACL

2. REMEDIES
Remedies for Contravention of ACL
Two types of remedies:
 Remedies for breach of general

protections
 Remedies for breach of consumer

guarantees
38
Contravention of General Protections
 For a breach of general protections (Ss. 18, 20, 21 and

23), a consumer may sue the business, and require the
court to…
 award damages - section 236(1)
 grant injunctions - section 233
 terminate the contract - section 237
o Available for a breach of sections 18, 20, or 21.
 declare a contract void, in whole or in part - section
237
o Available for a breach of section 23.
 No criminal penalty. 39
Contravention of Consumer Guarantees

Remedies depend on whether the breach is a minor or a major failure.
1) Minor failure (section 259):

 If the failure is a minor one,
• The consumer may require the supplier to remedy the failure within a
reasonable time;
The supplier can remedy the failure by repairing the goods; replacing the
goods; or providing a refund.
• If the supplier does not do so within a reasonable time, the consumer may
 Reject the goods;
 Require a refund; and/or
 Sue the business before the court to recover all reasonable loss
(Sections 259(1), (2); section 261)

40
2) Major failure (section 260):
 A major failure occurs where
• a reasonable consumer who is fully aware of the nature and extent of the
failure would not buy the goods (section 260).
Major or minor ?
• the goods depart significantly from the description ?
• the goods are substantially unfit for a common purpose ?
• the goods are unfit for a disclosed purpose ?
• the goods are unsafe ?
 If the failure is a major one, the consumer may immediately
• reject the goods, require a refund, and/or

• sue the supplier to recover any reasonable loss.
41
(Section 259(3), 259(4))
Disclaimer
Disclaimer is generally not effective under the

ACL (section 64)
Pair-Share
• Time for Pair-Share.
• Please grab a partner and

discuss the following questions
Major or minor failure ?

• A consumer buys a ski jacket and pants which are described
as ‘100% waterproof’.
• After a few runs, the consumer realises that the jacket and
pants are not waterproof and he cannot wear them while
skiing.
• The ski jacket and pants don’t match the description given to
them.
• Is this a major or a minor failure ? What should be the

remedies ?
• What if the ski jacket and pants were waterproof but the jacket
had some minor loose stitching ? 44

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RMIT Classification: Trusted

1. Intended Learning Outcomes

1. Recognize consumer guarantees in

• Consumer goods contract

• Consumer services contract

2. Recognize different types of remedies.

3. Apply consumer guarantees into hypothetical cases.

Included into the

The ACL implies/inserts

Consumer Guarantees (Statutory Implied

• Does the insertion of certain terms into consumer

• If the terms were not negotiated – are they inserted ?

• If the terms were intentionally excluded – are they inserted ?

• Breaching a term implied by the ACL is not a

Let’s look at this scenario…

• John enters a local store, telling the salesperson that he needs a

• it is incompatible with his MacBook.

• the TV also stops working completely after a few days.

• Did the parties include a term about

• the fitness of the TV for the disclosed purpose ?

• the acceptable quality ?

• Can the store still be held responsible for these

• What if the contract contains a disclaimer ?

• What if the contract says “ACL does not apply to this

1.1 Guarantees for Consumer Goods

a) What is a consumer goods contract ?

b) Which terms/guarantees are inserted into a

a. Consumer Goods Contracts (section 23(3))

 For a consumer guarantee to be applied, there must be a consumer goods

• Before applying a consumer guarantee (discussed

• This is important because a person can only use a

Guarantees for Consumer Goods

• Goods must be fit for any disclosed purpose - s 55;

• Goods must match the description - s 56;

• Goods must match the sample or demonstration model s 57;

 Can they be excluded by the parties ?

Guarantee that the goods are of acceptable quality

• The goods are of acceptable quality if they:

 a phone – can normally do what ?

o are acceptable in appearance and finish; and

o are safe, durable, and free from defects.

 A consumer buys a television. 1 month later, it does not turn

 What if the television breaks down after 10 years ?

Guarantee that the goods are fit for any disclosed

o I need a vacuum cleaner that can work on a wet surface

o I need a camera that can work under water

o I need a motorbike that can cross deep water

• A consumer goes to a furniture store looking to buying a

• The consumer buys the bookcase and finds out that it is

• Is the bookcase fit for the disclosed purpose?

• Is the bookcase of acceptable quality ? 16

“I want to order a bike which has a

You are sent a bike without a basket

Is the bike fit for the disclosed purpose ?

Guarantee that the goods match the description

• there is a guarantee that the goods match the description.

o Huck orders a jacket from Lazada.vn which is described as “Dark Grey”

o He is then delivered a pink jacket.

o Any breach of section 56 ?

Guarantee that the goods match the description

• The description may be

o a verbal description, e.g., a salesperson

• However, when it is delivered, Tom finds that it is

• Also Tom cannot put his credit cards into the