Understanding Australian Consumer Law and Implied Consumer Guarantees

BUSINESS ETHICS AND LAW
AUSTRALIA CONSUMER LAW
STUDENT ID:
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Question 1
A key requirement for a transaction to be covered under the Australian Consumer Law (ACL)
is that the buyer must satisfy the definition of the consumer as has been indicated in s.3(1)
ACL. In accordance with this section, if the buyer satisfies the conditions listed below, then
he/she would be considered as buyer (Austlii, 2017).
 The purchase price of the product for which the buyer has paid should not be greater
than $ 40,000, or
 The product that has been purchased should be meant for personal usage instead of
commercial use
Three transactions have been entered into by Sangita and these need to be evaluated so as to
ascertain if Sangita for these transactions would be considered as consumer or not. The
significance of this lies in the fact that it would ascertain if the underlying transactions would
be covered by ACL or not.
Transaction A: Based on the given facts, it is known that Sangita has bought a rice cooker
which she intends to be used by Shindu (her aunt). Also, it is evident that the given rice
cooker purchased by Sangita would be sued for preparation of food for the family and hence
would not be deployed for any commercial purpose. Also, the price that Sangita has paid to
procure the rice cooker is $59.95. Hence, it may be appropriate to conclude that for the given
transaction, Sangita would be regarded as a consumer owing to good being cheaper than $
40,000 and meant for domestic use.
Transaction B: Based on the given facts, it is known that Sangita has bought an electric drill
which she intends to be used by Ramdas (her uncle). It is known that her uncle would use this
electric drill to conduct normal household repairs and this would not be used for any
commercial purpose. Also, the price that Sangita has paid to procure the electric drill is
$69.95. Hence, it may be appropriate to conclude that for the given transaction, Sangita
would be regarded as a consumer owing to good being cheaper than $ 40,000 and meant for
domestic use.
Transaction C: Based on the given facts, it is known that Sangita has bought an electric
toothbrush which she intends to be used by Pooja (her cousin). Also, it is known that the

given item would have only personal use and does not intent to be deployed for any
commercial purpose. Also, the price that Sangita has paid to procure the electric toothbrush is
$49.95. Hence, it may be appropriate to conclude that for the given transaction, Sangita
would be regarded as a consumer owing to good being cheaper than $ 40,000 and meant for
domestic use.
The discussion above clearly reflects that in all the three given transactions, Sangita succeeds
in complying the definition of consumer under s. 3 of ACL. The net impact is that the
underlying transactions would be covered by the applicable provisions of ACL.
Question 2
A key feature of ACL is that it provides a plethora of implied consumer guarantees which
cannot be denied. These are highlighted in s. 51-59. Only the ones that have been breached in
the light of the given transactions have been discussed in brief as indicated below.
 In accordance with s. 54, ACL, it is imperative that the suppliers must provide goods
of acceptable quality to consumers (Austlii, 2017). This implies that goods sold
should have merchantable quality. This concept has been dealt in detail in the
erchantable quality which has been explained during the case commentary related to
Medtel Pty Ltd v. Courtney [2003] FCAFC151 case. Amongst the various aspects that
are required include goods to be goods free, safe for usage, acceptable in finish and
should be appropriate in context of the purpose that the good would normally be used
(Gibson and Fraser, 2014).
 Another implied consumer guarantee is outlined in s.56 as per which it is essential for
the suppliers and manufacturers to ensure that the goods are in accordance with the
description that has been provided in the advertisements and product catalogues
(Austlii, 2017). For any deviation in terms of size or colour, it is possible that the
consumer can get the same exchanged with the desirable piece or demand refund.
Also, in this context, the liability of manufacturers and suppliers cannot be limited by
claiming that it is consumer’s duty to verify if the product insider matched with the
product description given in the catalogue and advertisement (Davenport and Parker,
2014).