Consumer Classification and Implied Guarantees under Australian Consumer Law

BUSINESS ETHICS AND LAW
AUSTRALIA CONSUMER LAW
STUDENT ID:
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Question 1
For any transaction to fall within the ambit of Australian Consumer Law (ACL), it is essential
that the buyer must be a consumer which has been outlined in s. 3(1) ACL. As per this, for a
buyer to termed a consumer, one of the following conditions must be adhered to by the
underlying transaction (Austlii, 2017).
 The product buying price which is borne by the buyer must not exceed $ 40,000
 The usage of the purchased product should be for personal purpose and must not be
used for commercial purpose.
In line with the information provided, it is evident that Sangita has entered into three
transactions which ought to be critically evaluated in the wake of the above section to
highlight whether Sangita is classified as consumer in these transactions. This step is quite
pivotal as this only would determine whether the transactions entered by Sangita would fall
within ACL or not.
Transaction A: As per the details provided in the context of this transaction, a rice cooker has
been purchased by Sangita which she would gift to her aunt named Shindu. This rice cooker
which Sangita has purchased would be used by her aunt for personal purpose such as
preparation of rice and other dishes for the family and no commercial use of the cooker is
expected. The purchase price of the rice cooker is $ 59.95 which is lower than the threshold
limit of $ 40,000. Thereby, in line with s. 3(1) ACL, it is fair to conclude that the underlying
transaction would fall under ACL since Sangita is a consumer.
Transaction B: As per the details provided in the context of this transaction, an electric drill
has been purchased by Sangita which she would gift to her uncle named Ramdas. This
electric drill which Sangita has purchased would be used by her uncle for personal purpose
such as household work and no commercial use of the drill is expected. The purchase price of
the electric drill is $ 69.95 which is lower than the threshold limit of $ 40,000. Thereby, in
line with s. 3(1) ACL, it is fair to conclude that the underlying transaction would fall under
ACL since Sangita is a consumer.
Transaction C: As per the details provided in the context of this transaction, an electric
toothbrush has been purchased by Sangita which she would gift to her cousin named Pooja.
This electric toothbrush which Sangita has purchased would be used by her cousin for

personal purpose and no commercial use of the brush is expected. The purchase price of the
electric drill is $ 49.95 which is lower than the threshold limit of $ 40,000. Thereby, in line
with s. 3(1) ACL, it is fair to conclude that the underlying transaction would fall under ACL
since Sangita is a consumer.
From the above discussion, conclusion can be drawn that in the context of the transactions
discussed, Sangita would be labelled as the consumer and hence the ACL provisions would
apply to all the purchases made by her.
Question 2
In order to protect the interest of the consumers, a host of implied consumer guarantees are
provided under ACL which are available under section 51 to 59. The relevant implied
consumer guarantees for the transactions enacted by Sangita are outlined below.
 Section 54 highlights that goods that are sold to customers should have merchantable
quality (Austlii, 2017). The various attributes which are covered under merchantable
quality have been highlighted in the Medtel Pty Ltd v. Courtney [2003] FCAFC151
case where these have been clearly outlined. Some of these include comprise defect
free nature of goods, safe usage, finish is acceptable and it should be fit for use for
the normal purpose that the underlying good is usually deployed (Gibson and Fraser,
2014).
 Section 56 places a implied guarantee on part of the manufacturers and suppliers with
regards to the description of the goods sold matching that of the related catalogues
and advertisements (Austlii, 2017). As a result, in case of deviation with regards to
product attributes such as colour or size, the consumer can either demand refund or
get the product exchanged with the desirable product. Further, in order to limit the
liability, the suppliers and manufacturers cannot take refuge citing the fact that the
consumer should have verified at the time of buying if there is perfect match between
description and the actual product (Davenport and Parker, 2014).
 Section 55 highlights that the underlying product which the seller provides should be
fit for the purpose that the client has stated that it intends to use the same for when
making the purchase (Austlii, 2017). A case which ought to be discussed is Ryan v
Great Lakes Council [1999] FCA 177 where for the above implied guarantee to be