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Consumer guarantees under the Australian consumer law

01/11/2010

By virtue of the Trade Practices Act 1974,  consumer contracts are taken to contain terms that goods will comply with applicable standards and match their description.  There is an implication that goods will be of merchantable quality and fit for their purpose.  Finally, there is an implied term in all contracts that goods are free from faults and defects.

The  Australian Consumer Law will replace those implied terms with ‘consumer guarantees’.  The content of the guarantees will be a little different.  The ‘merchantable quality’ warranty has been replaced with a guarantee that goods are of ‘acceptable quality’.  A new guarantee requires compliance with any pre-contractual representations and statements given by suppliers or manufacturers about the supply or promotion of goods.  ‘Express warranties’ are defined very broadly and will include many s that are made in connection , and it will not be possible to exclude liability for those representations.

If the consumer guarantees are breached, the new law will provide remedies to consumers against suppliers and manufacturers.  The remedies against suppliers distinguish ‘major’ failures from ‘non-major’ failures.   Consumers can reject goods and require either a replacement or refund in case of a major failure.  Consumers can also recover reasonably foreseeable losses arising from breaches of consumer guarantees as well as, in some cases, compensation for the reduction in the value of the goods.

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