A Comprehensive Analysis of Australian Consumer Law and Guarantees

This report provides a comprehensive analysis of the Australian Consumer Law (ACL), focusing on consumer guarantees and their implications. It begins by defining the scope of ACL and identifying who qualifies as a consumer under the law. The report then delves into specific consumer guarantees, such as acceptable quality, fitness for purpose, and sale by description, as outlined in sections 54, 55, and 56 of the ACL. It explores the concept of major failures and the remedies available to consumers in such situations, including rejection of goods, compensation, and actions against manufacturers. The report also examines the liabilities of suppliers and manufacturers, including potential penalties and injunctions for breaches of the ACL. A case study involving a wine purchase is analyzed to illustrate the application of these legal principles, assessing breaches of guarantees and the available remedies for the consumer. The report concludes by referencing relevant legislation and case law, providing a thorough understanding of consumer protection under Australian law.

Australian Consumer Law
Running Head: Australian Consumer Law
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Student’s Name

ACL 1
Contents
Question 1...................................................................................................................................................2
Question 2...................................................................................................................................................3
References...................................................................................................................................................5

ACL 2
Question 1
Australian Consumer Law is an area of law that protects the consumer from unfair trade
practices. The provisions of the subjective Law (hereinafter referred to as Australian Consumer Law) may
be found under schedule 2 of Competition and Consumer Act 2010 (Consumerlaw, 2019). ACL prescribe
some consumer guarantees with respect to the supply of goods as well as the supply of services. Here
this is necessary to state that only a consumer can avail these guarantees. Now in such a situation,
another issue is to check who is a consumer for ACL. This is to state that as per section 3 of ACL, a
person is known as a consumer when he/she who acquires some and value of such goods is no more
than $40000 (Australiancompetitionlaw, 2019). Further, the person is also treated as a consumer in
those cases where the value of such goods is more than $40000 but such acquisition has been made for
domestic or household purpose. In different words to say that if the value of purchased goods is more
than $40000 and such purchase has been made with the intention to resale then the purchaser cannot
be treated as a consumer and no protection will be granted to him/her under ACL.
The definition of consumer is quite broad and it also includes a person who receives goods in a
gift. As per section 266 of ACL, a consumer who acquire goods from a supplier and gift the same to other
people then such other person receives all the rights against supplier same as a consumer. In the case
provided hereby, James purchased the wine and in such a manner, he was the real consumer of the
case. Later on, he given the wine bottle to his mother Betty and also accepted reimbursement of the
same. Being the consumer James had the right to exercise guarantees mentioned under ACL in against
of Barossa Vally Mountain Wines Pty Ltd. As soon as he handed over the wine to his mother, all his
consumer rights also transferred to Betty. Betty in this manner has the right to exercise consumer
guarantees as she was the recipient of goods and even made payment for the same. Here the conduct of
James will not be treated as resale because the intention was not to carry any commercial activity.
Section 259 states that claim for damages for breach of guarantee must be made within 6 years
from the date of cause of action arising (Legislation, 2019). Further Section 273 of ACL states that
consumer may initiate an action against the manufacturer for recovery of damages within 3 years from
the date on which he/she becomes conscious that the guarantee to which his action relates has not
been complied with. As Betty becomes aware of the non-fulfillment of guarantee and supplier and
manufacturer is the same person, hence she has to bring the action within 3 years.

ACL 3
Question 2
Different consumer guarantees are mentioned under ACL with respect to the quality of goods.
Section 54 of the act is one of the lead consumer guarantee which emphasis on quality of goods. As per
this section, the quality of goods must be acceptable. Here acceptable quality refers to goods, which are
safe as well as durable, and free from any defects, finished and fit for the normal purpose for those
goods of that kind are supplied (Jose, Strickland & Lee, 2016). In the case of Dabid Jones Ltd v Willis
(1934), it was decided that consumer may initiate the action against supplier/manufacturer if goods are
not of merchantable value. The another important section is section 55, which outlines another
consumer guarantee. Many of the times, consumer wants to purchase goods for a specific purpose and
inform the same to the supplier. In such a situation, it becomes an implied guarantee that the goods
provided by the supplier would fulfill the purpose disclosed (Australiancontractlaw, 2019). Further,
sometimes, the supplier sells the goods by description. Such description can be verbal or written. In
those situations where supplier sale goods by description and the sale are not being made by way of the
auction then it becomes statutory assurance under section 56 of ACL that the goods sold by the supplier
would match the description provided by him. The guarantee has been confirmed in the case of Varley v
Whipp [1900] 1 QB 513. In the decision of this case, it was held that it becomes the liability of the
supplier to sell the goods as per description.
Section 260 of the act outlines some of the major failures with respect to consumer guarantees.
The section says that if goods are not fit for the purpose revealed by the consumer then such failure is
counted as a major failure for the purpose of deciding supplier’s liability (Kojevnikov & Edghill, 2012).
The section further says that if goods do not match with the description provided by the supplier then
also it is counted as a major failure. Lastly, providing unsafe goods to the consumer also establish a
major failure of a consumer guarantee under section 260 (Legalvision, 2016). The majority of failure is
required to check here in order to determine remedies available to the consumer. For a different kind of
failure, different remedies are available.
Section 259 (3) of ACL outlines the remedies with respect to major failures. As per this section,
in case of major failures, a consumer has right to reject the goods after notifying the same to supplier
and to recover the compensation for the reduction in the value of goods because of such failure.

ACL 4
Section 271 of ACL also prescribes certain liabilities for the manufacturer of goods. The section
says that a consumer has right to initiate the bring an action against the manufacturer of goods where
the goods manufactured by him/her fails to comply with the guarantee mentioned under section 54 of
the act and consumer suffer damages because of this (Hwlebsworth, 2019). It means if goods does not
meet the criteria of acceptable quality then action may bring under this section. The section further
confirms that where goods are sold by description but did not match with the same i.e. breaches
guarantee mentioned in section 56 then also consumer may held manufacturer liable by initiating action
against him/hers. Section 272 of ACL states that damages for a reduction in the value of goods can be
demanded. Further damages may also be asked for the loss suffers by the consumer if such loss was
foreseeable.
Apart from the provisions of remedies, penalty provisions are also there. Section 224 of the act
consist of a civil administrative penalty. As per this section, the court may impose a penalty up to $1.1
million on a body corporate where the same fails to fulfill the consumer guarantees (Australia, 2011).
Section 232 of the act states that in case of breach of ACL provisions mentioned under chapter 2,3, and
4, the court can also issue an injunction. Section 236 of the act further states that a person may ask
damages for the loss suffered as a result of a breach of ACL. Lastly, as per section 237 of the act, a court
has the power to award the compensation to the person injured because of consumption of goods
purchased.
Here in the given case, Barossa Valley breached the guarantees provided under section 54,55
and 56 of ACL. The wine provided by the same was not as safe as it made Betty ill. Secondly, James
clearly stated that the wine must not be too dry but with a hint of citrus. Nevertheless, in actual the
wine was very dry and lastly, the wine label indicated that the same met requirements mentioned by
James but was not in actual. Here applying the provisions of 259 (3) of the act, Betty can reject the
goods. Further, as Barossa Valley is also the manufacturer of wine hence Betty may sue the same for
damages occurred to her because of consumption of wine under section 272 of the act. It is assumed
that being the manufacturer of wine, the loss happened to Betty was foreseeable for the Barossa Valley.
Betty also has the right to ask for compensation under section 237 of the act.
Barossa Valley on the different side seems to be held liable for civil penalties under section 224
of the act. As consumer guarantee ate mentioned under chapter 3 hence court may also impose
injunction under section 232.

ACL 5
References
Australia. (2011). Australian Competition and Consumer Legislation 2011. Australia: CCH Australia
Limited.
Australian Consumer Law
Australiancompetitionlaw. (2019). Meaning of Consumer. Retrieved from:
https://www.australiancompetitionlaw.org/legislation/provisions/acl3.html
Australiancontractlaw. (2019). Schedule 2: Australian Consumer Law. Retrieved from:
https://www.australiancontractlaw.com/legislation/acl/acl55.html
Competition and Consumer Act 2010
Consumerlaw. (2019). The Australian Consumer Law. Retrieved from:
http://consumerlaw.gov.au/australian-consumer-law/legislation
Dabid Jones Ltd v Willis (1934)
Hwlebsworth. (2019). Market insights. Retrieved from: https://hwlebsworth.com.au/the-australian-
consumer-law-suppliers-and-manufacturers-who-is-ultimately-liable-to-consumers-for-
defective-goods/
Jose, C., Strickland, P., & Lee, F. (2016). The Long Arm Of The Australian Consumer Law Reaches
Offshore. Retrieved from: https://www.herbertsmithfreehills.com/latest-thinking/the-long-arm-
of-the-australian-consumer-law-reaches-offshore
Kojevnikov, J. & Edghill, K. (2012). Australia: Statutory Guarantees Under the Competition and Consumer
Act: A Can of Worms - Part 1. Retrieved from:
http://www.mondaq.com/australia/x/170794/Consumer+Law/Statutory+Guarantees+Under+th
e+Competition+and+Consumer+Act+A+Can+of+Worms+Part+1
Legalvision. (2016). What are the Consumer Guarantees? Retrieved from:
https://legalvision.com.au/what-are-the-consumer-guarantees/

ACL 6
Legislation. (2019). Competition and Consumer Act 2010. Retrieved from:
https://www.legislation.gov.au/Details/C2019C00149/Html/Volume_3
Varley v Whipp [1900] 1 QB 513