Law for Commerce: Comprehensive Report on Consumer Guarantees

This report provides an analysis of consumer guarantees within the framework of the Australian Competition and Consumer Act 2010 (Cth), also known as the ACL. It defines the term "consumer" under the Act, specifying criteria related to the nature of goods and their intended use, and outlines the applicability of consumer protection laws. The report explores the core principles of acceptable quality and fitness for purpose, as mandated by sections 54 and 55 of the Act, and examines the implications of these guarantees for both consumers and sellers. It also covers the consumer's right to goods that match the description provided. The report further discusses the exclusion of consumer guarantees and the remedies available for non-compliance, differentiating between "major failures" and other breaches, and emphasizing the importance of consumer rights in commercial transactions. The report also provides a list of the relevant sections of the ACL and a reference list of the course materials.

Running head: LAW FOR COMMERCE
LAW FOR COMMERCE
Name of the Student
Name of the University
Author Note

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Consumer Guarantees
“Consumer” under the Competition and Consumer Act 2010 (Cth) (“the ACL”)
Schedule 2 of the Competition and Consumer Act 2010 (Cth) embodies the consumer
protection laws in force within the jurisdiction of the Australian commonwealth. In this part of
the act the term “consumer” is defined under Section 3 (1) of Schedule 2 as a purchaser of goods
that are required for personal, household or domestic purposes. In such purchases the amount
should not exceed $40,000 and this also includes any vehicle employed for transportation of the
goods. Section 3 (2) of the act provides that the good so purchased should not be bought for the
purpose of resupply or for use in production or repair of other goods. Thus for an individual to be
considered as a consumer and for the application of this to a transaction the goods in question
must be of a personal or domestic nature and it must not be purchased for the purpose of
reselling it or for enhancing or producing other goods. In all other circumstances the provisions
of the act would not apply as the individual would not be considered a consumer.
Rule that goods must be of acceptable quality
In transactions of sale of consumer goods, the good in question must be of a quality that
is acceptable to the consumer. This requirement is statutorily provided for in Section 54 of the
act. Section 54 (2) of the act mandates that the goods sold to a consumer must be safe for the use
of the consumer. Section 54 (3) of the act mandates durability of goods sold in such a transaction
to consumers. This means that in case the goods sold do not embody these qualities they would
not be considered acceptable and hence would be in contravention of the provisions of this act.
This position has also been stated in E v Australian Red Cross Society (1992) 31 FCR 299. Thus
in case of such a contravention of the act the person in question would be in breach of the terms

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of the act and can be legally pursued by the consumer in court. There would be liabilities as
provided for in the act and the consumer would be entitled to compensation.
Rule that goods must be fit for the described purpose
There are other requirements for fitness as prescribed under Section 55 of the act. This
section mandates that when the purpose for the goods purchased are made clear to the seller or
manufacturer, such a seller or manufacturer has an obligation to ensure that the goods supplied
are fit for the purpose stated by the consumer. This position has also been reiterated in the
judgment in Merck Sharp & Dohme (Australia) Pty Ltd v Peterson (2011) 284 ALR 1. Section
56 also states that if the goods in question are sold by virtue of description the goods sold must
correspond to the description given. Thus in contravention of such a position the seller or
manufacturer in question would be in breach of his statutory duties and maybe legally pursued
by the consumer for the same. The court can award damages as provided for in the act to
compensate the consumer for any such misleading or deceptive behaviour regarding the fitness
of the goods that are provided to the consumer.
Exclusion of Consumer Guarantees
The Competition and Consumer Act 2010 (Cth) provides for a wide range of consumer
guarantees that are offered to all consumers who transact with sellers or manufacturers. These
guarantees are:
 As provided for in section 51 of the act the consumer has a guarantee as to the title of the
goods thus the goods sold have good title and the same is transferred to the consumer
when the purchase is made.

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 The consumer also has a guarantee of undisturbed possession of then goods and has a
guarantee against prevailing securities interest in the goods as provided in Section 52 and
53 of the act.
 Section 54 of the act provides that the goods so supplied would be of acceptable quality.
Section 55 gives the consumer the protection against supply of good that are not fit for a
specified purpose that was made clear to the seller. Section 56 provides for a protection
against supply of goods that do not match the description agreed upon when goods are
bought by virtue of description.
There are consumer guarantees relating to supply of services as well these are:
 Section 60 of the act provides that services rendered must be delivered with due care and
skill.
 Section 61 provides that the services rendered must be fit for the purpose specified by the
consumer when transacting with the seller.
 Section 62 provides for a protection that the services rendered must be delivered at a
reasonable time if no time is specified.
These guarantees are a part of every transaction that deals with consumers and thus
cannot be avoided. Section 64 of the Competition and Consumer Act 2010 (Cth) provides that
consumer guarantees cannot be avoided even by execution of a contract to the contrary. Thus by
executing a contract with the consumer the manufacturer or seller cannot absolve himself of the
responsibilities provided for by consumer guarantees embodied in the act. In such a case the
manufacturer or seller can be legally pursued by the consumer and the Australian Crime
Commission (ACC).

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Remedies for non-compliance with the consumer guarantees provided for in the
ACL
The Competition and Consumer Act 2010 (Cth) provides for two kinds of remedies for
non-compliance with the consumer guarantees provided for by the act based on the nature of the
contravention. The first is for a “major failure” to observe the consumer guarantees provided for
in the act. As provided for in Section 259 (3) of the act in case the goods supplied are not
acceptable as provided for in the act the consumer has the right to reject the goods and
additionally can recover compensation for a reduction in value. Section 259 (4) of the act also
provides for compensation for any reasonably foreseeable loss or damage. The second is when
the non compliance is “not a major failure”. Section 259 (2) and (3) provide that in case the
failure is not major the seller is given an opportunity to remedy the situation within a reasonable
period of time. If such a breach is not remedied within a reasonable period of time the consumer
in question has the right to reject the goods and additionally recover all reasonable costs required
to remedy the situation. Thus, the consumer’s rights are protected as the first priority in
transactions relating to goods purchased from manufacturers and seller. The act places statutory
obligations on the seller to ensure that consumer guarantees embodied in the act are observed
with utmost strictness. This means that in every situation the claims of the consumer are given
priority and the seller must supply good that meet the standards required by the consumer and in
doing so observe the obligations guaranteed under this act. In case of failure the act provides for
criminal liabilities and the manufacturer or seller can be legally pursued by the consumer and the
Australian Crime Commission (ACC).

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Reference List:
MLC101 Law for Commerce class materials.