Changes to the Australian Consumer Laws - Part 4 - Remedies for breach of consumer guarantees

Business Law: 23 March 2019

A number of changes have been made to the Trade Practices Act 1974 (Cth) (TPA) as Australian Consumer Law (ACL) reforms have been progressively implemented, with the final portion commencing on 1 January 2011. In addition to these changes the TPA has been renamed the Competition and Consumer Act 2010 (Cth) (CCA).This is the 4th a series of blogs summarising the changes and the implications for businesses operating in Australia.

Remedies for breach of consumer guarantees

Under the new ACL, consumers have the benefit of statutory remedies for a breach of the consumer guarantees, instead of relying on a breach of contract claim under the old provisions of the TPA. The remedies available when a guarantee is not met largely depend on whether the breach amounts to a major failure or a non-major failure. A major failure occurs where the relevant goods:

• Would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure;
• Are substantially unfit for their disclosed purpose and cannot easily be remedied within a reasonable time to make them fit for that purpose;
• Depart significantly from their description, sample or demonstration model;
• Are not fit for a purpose that was disclosed to the supplier; or
• Are unsafe or the supply of services creates an unsafe situation.

 A non-major failure is any failure to comply with a guarantee which can be remedied and is not a "major failure. Where the breach amounts to a major failure or where the defect in the goods cannot be remedied, the consumer is entitled to reject the goods by notifying the supplier of that fact and the supplier is obliged, in accordance with an election made by the consumer to either refund monies paid by the consumer or replace the rejected goods (ss259(3), s260 and s263 ACL). On the other hand, if the failure to comply with the guarantee can be remedied and is not a major failure, a consumer who wishes to pursue a remedy must first give the supplier the opportunity to remedy the failure and only if and when the supplier refuses or fails to so remedy the failure can the consumer reject the goods (s259(2) ACL). Whether any failure is major or not and can be remedied or not, the consumer is also entitled to recover from the supplier loss or damage suffered by the consumer because of the failure if it was reasonably foreseeable that the consumer would suffer such loss or damage.