Applicability of Australian Consumer Law
1. Does the transaction fall within the operation of the Australian Consumer Law (‘ACL’)?
2. What implied guarantee/s could Sangita argue have been breached by Myers Stores Ltd?
3. What remedies, if any, could Sangita claim in relation to any breaches of the ACL?
4. Does the statement on each of Sangita’s receipts for the purchases have any legal effect, and if so, what is the effect?
In order for Australian Consumer Law (ACL) to be applicable, it is imperative that for a given transaction, the buyer must be recognised as a consumer. This is governed by section 3(1) of ACL. In according to s. 3(1), a buyer of goods would be considered as a consumer if any of the following conditions are fulfilled (Austlii, 2017).
- The total amount that has been paid for the acquisition of the good does not exceed $ 40,000; or
- The goods bought are the type which are usually acquired for household domestic or personal use; or
The given transactions need to be acquired in the background of the above section as the various rights and guarantees are available to a consumer. As a result, it is imperative that the buyer must be classified as a consumer for the provisions of ACL to be applicable.
Transaction 1: In this transaction, Sangita had bought a rice cooker for her Aunt Shindu. It is apparent based on the given information that the rice cooker was meant to be used for household or private purpose. Also, the price charged by the seller Myers for the rice cooker was $ 59.95. Clearly, Sangita would be considered as a consumer under s.3(1) since the product is meant for domestic use and also the price is lower than $ 40,000.
Transaction 2: In this transaction, Sangita had bought an electric drill for her uncle Ramdas who often wishes that he had a drill as he needs it for fixing things in his house. The item has been purchased from seller Myers for a price of $ 69.95. Clearly, Sangita would be considered as a consumer under s.3(1) since the product is meant for domestic use and also the price is lower than $ 40,000.
Transaction 3: In this transaction, Sangita had bought an electric toothbrush for her cousin Pooja who regularly brushes her teeth multiple times a day. The item has been purchased from seller Myers for a price of $ 49.95. Clearly, Sangita would be considered as a consumer under s.3(1) since the product is meant for domestic use and also the price is lower than $ 40,000.
Hence, from the above discussion, it would be fair to conclude that Sangita for the above three transactions would be considered as consumer within the aegis of ACL and hence the underlying provisions of ACL would be applicable to the underlying transactions.
Implied Consumer Guarantees for the given transactions
The various implied consumer guarantees are outlined under s. 51- s. 59 of the ACL and the relevant ones for the situation at hand are highlighted below.
- It is imperative that the goods sold by the supplier and the manufacturer must be of acceptable quality (s.54 ACL) (Austlii, 2017). This typically implies that a reasonable consumer would find the good acceptable in terms of finish and acceptance, defect free, safe to use, durable and fit for the purpose that such a good should be commonly used for. This implies that the good sold should be of merchantable quality as highlighted in the Medtel Pty Ltd v. Courtney [2003] FCAFC151 case (Gibson and Fraser, 2014).
- Additionally, there is an implied warranty from the suppliers and manufacturers in relation to the goods adhering to the description that has been either catalogued or advertised (s.56 ACL) (Austlii, 2017). In the event of this not being done or alternations in size, colour contrary to the description, the consumer would have a remedy for the same. Also, in such cases, the supplier or the manufacturer cannot argue that it was the fault of the consumers who should have verified and inspected the good on sale before buying and hence should have pointed any aberrations with the description (Davenport and Parker, 2014).
- It is essential that the underlying good must be fit for the specific purpose which the consumer might have mentioned at the time of purchasing (s.55 ACL) (Austlii, 2017). There is an implicit guarantee on the part of the supplier to ensure that the goods sold should meet the purpose when the following conditions are satisfied as highlighted in Ryan v Great Lakes Council [1999] FCA 177 case.
- The consumer has stated expressly to the supplier that the underlying good has to be suitable for this particular use
- The consumer has banked or relied on the supplier’s expertise or knowledge with regards to judging if the underlying product will be suitable for the underlying purpose
- It was reasonable on consumer’s end to rely on the knowledge and expertise of the supplier
The given situations need to be analysed in the wake of the above implied guarantees that are available to the consumers.
Transaction 1: In this transaction, consumer Sangita has bought a rice cooker which was on display. However, when the parcel arrived it was found that even though the box on the outside said “rice cooker” but inside an electric fry pan was available. The implied consumer guarantee that has been breached in the given case is related to the goods not being consistent with their description. It is apparent that Sangita had ordered a rice cooker. Also, the box received in the parcel describes the content as rice cooker while inside there is a fry pan. Thus, the good sold is not as per the description given in the box which leads to breach of this implied consumer guarantee.
Transaction 2: In this transaction, consumer Sangita has bought an electric drill for household drilling purpose. However, as soon as his uncle Ramdas uses the same, there was a burning smell followed by the drill becoming very hot which eventually led to the drill becoming dysfunctional. It is apparent that the product manufactured and supplied is not of merchantable quality. This is apparent from the fact that drill has some defects owing to which it has stopped functioning despite Ramdas not having used the same. Thus, clearly in this instance, there has been a breach of the good being sold failing to match the requisite quality standards expected from such a product.
Transaction 3: In this transaction, consumer Sangita has bought an electric toothbrush for her cousin. Based on the available information, it is apparent that she has clearly stated in her interaction with the online sales assistant that she would want that the item chosen by her should support both battery and main power operating mode. This was because the end user (Pooja) would want to carry the electric brush with her. The online sales assistant provided assurance to Sangita that the electric toothbrush could be operated through batteries as well as main power. However, when the product finally arrived, it was noticed that the product could not run on batteries. Thus, based on the above facts, it is apparent that in this case there is a breach of implied consumer guarantee of product being fit for the use that has been stated by the consumer. In this case, Sangita in her interaction with the online sales assistant had clearly highlighted the need for electric brush to the operated through batteries. Further, there was assurance in this regards by the online sales assistant and also Sangita had reason to rely on the expertise of the online sales assistant especially considering the circumstances where she was doing online shopping. Hence, it is evident that there has been a breach of implied consumer warranty as highlighted in s. 55 of ACL.
Available Remedies
On the basis of the above discussion, it is apparent that for each of the transactions highlighted above, there has been a breach of the implied consumer guarantee in wake of which it imperative to analyse the available remedies.
For the breach of implied consumer guarantee, remedies are available to the consumer which would depend on the fact whether there is possibility of breach being remedied or if the breach can be termed as “major failure” (s. 259-s. 264, ACL) (LegalVision, 2016).
If the breach is of a kind that can be remedied and hence does not constitute a “major failure”, then the consumer has the statutory right whereby this can be demanded through repair, replacement or refund. In case there is failure to remedy, then incremental measures are available. In case of non-remedy or breach or the occurrence of a major failure, the consumer can either reject the underlying good or choose between replacement and refund (Austlii, 2017).
A major failure would occur in the following scenario (LegalVision, 2016)
- The goods purchased would not have been bought had the consumer been made aware of the problem
- The departure from the description of good is significant
- There is a safety hazard associated with the good
Further, the above remedies would not be available if the consumer or user is responsible for the damage caused to the good.
The given transactions would be analysed in wake of the above remedies that are available for breach of the implied consumer guarantee.
Transaction 1: In this transaction, it is apparent that the goods supplied deviated significantly from the description that was given on the box. This is because the box mentioned rice cooker while the content contained inside was an electric fry pan. This can be termed as a major failure and thus, Sangita can either demand refund for the item or demand that a rice cooker be sent instead of the electric fry pan provided.
Transaction 2: In this transaction, it is apparent that the electric drill does not meet quality standards and has inbuilt technical snag considering it is faulty from the very beginning. Hence, this would be termed as a major failure since if the consumer was aware of the fault, the product would not have been bought. Thus, Sangita can either demand refund for the item or demand that a new electric drill be sent as a replacement to the faulty piece sent.
Transaction 3: In this transaction, it is apparent that the toothbrush was not fit for the purpose. Also, it seems reasonable to derive that had the online sales assistant told Sangita that electric toothbrush cannot operate on batteries, she would not have bought the same. Hence, a major failure is constituted in the given case. As a result, Sangita can either demand refund or the desired toothbrush with battery operating as the replacement.
Based on the above discussion, it is apparent that significant rights are available to Sangita in all the three scenarios.
In accordance with s. 64 of ACL, any contractual term would be considered void in regards to the term purporting exclusion, restriction or modification of the rights conferred to the consumer as a result of ACL or the potential liability of the seller and/or manufacturer applicable for breach of implied consumer guarantees (LSCSA, nd).
The following exclusion clause printed on online sale receipts issued by Myers need to be analysed in wake of the above section.
“Myers Stores offer no refund, exchange or replacement for items purchased online.”
It is apparent that the above term would be void as it seeks to modify and restrict the rights available to consumers in case of breach of implied consumer guarantees.
References
Austlii (2017) COMPETITION AND CONSUMER ACT 2010 – SCHEDULE 2 The Australian Consumer Law [online] Available at https://www7.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/caca2010265/sch2.html [Accessed May 11, 2018]
Davenport, S. & Parker, D. (2014) Business and Law in Australia 2nd ed. Sydney: LexisNexis Publications.
Gibson, A. & Fraser, D. (2014) Business Law 8th ed. Sydney: Pearson Publications.
LegalVision (2016) What Happens if I Don’t Meet the Consumer Guarantees? [online] Available at https://legalvision.com.au/breaching-consumer-guarantees/ [Accessed May 11, 2018]
LSCSA (nd) Exclusion Clauses and the Australian Consumer Law [online] Available at https://www.lawhandbook.sa.gov.au/ch10s02s06s01.php [Accessed May 11, 2018]
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