The Australian Consumer Law

Consumers across Australia will soon be able to insist upon the same legal rights, no matter the state or territory in which they live. From 1 January 2011, the Australian Consumer Law will replace 17 state and territory Acts and the consumer provisions of the Trade Practices Act 1974.

Suppliers, whether they are a retailer, manufacturer or service provider, will need to quickly understand the effect of these new laws on the way they do business with consumers and others.

What’s covered?

The new ACL will cover a whole range of matters including:

  • Misleading and deceptive conduct
  • Unconscionable conduct
  • Banning unfair contract terms
  • Safety of consumer products.

There will also be specific provisions dealing with matters such as:

  • Unfair practices, for example, supplies of goods consumers have not requested and pyramid schemes
  • New laws guaranteeing consumer rights when they acquire goods and services
  • Lay-bys
  • Information standards, and
  • Liability of manufacturers.

Consumer guarantees

Perhaps the most innovative approach adopted in the ACL is the use of the statutory consumer guarantees. The ACL prescribes certain guarantees on which consumers will now rely and if they are breached, obtain remedies from the supplier. The list ranges across guarantees as to:

  • title
  • undisturbed possession
  • undisclosed securities
  • acceptable quality
  • fitness for any disclosed purpose
  • goods corresponding to their description, sample or model
  • repairs and spare parts
  • complying with manufacturers’ warranties.

The consumer guarantees replace the old regime that required consumers to enforce their rights as breaches of contract, for example, a breach of the implied term that goods were fit for the purpose for which they were intended. Now, the ACL sets out the remedies applicable to each breach of a consumer guarantee.

For consumers the benefit is that they do not need to understand the somewhat arcane “law of contract” to enforce their rights arguing whether a term is implied, a condition or a warranty. All they need to show is that a supplier breached the relevant statutory guarantee and the remedy automatically follows.

Lay-by agreements

In NSW lay-bys are already regulated. However, the ACL now sets out five basic rules about lay-by agreements. The rules govern how the agreement must be recorded and how it may be terminated. It sets out both the consumer’s and supplier’s rights to terminate.

The agreement must be in writing and a copy given to the consumer. While a consumer may cancel a lay-by agreement, they may be required to pay a termination charge. That charge must not be any more than an amount equal to the supplier’s reasonable costs.

Administration and enforcement

The ACL will be administered by the Australian Competition and Consumer Commission together with current state agencies such as the Office of Fair Trading. The NSW and other state and territory governments will apply the National ACL to ensure that while the ACL is a federal law, it has the most widespread application possible and retailers and manufacturers cannot avoid it by not trading through a company.

Retailers, manufacturers and service providers to consumers must all quickly learn and understand what the ACL means to them. There are offences and a suite of national enforcement powers that may be used by the state and federal consumer agencies. They are able to draw upon a full range of remedies to enforce the law including:

  • Civil pecuniary penalties
  • Injunctions
  • Damages, and
  • Compensation orders.

Next steps

We have only given the briefest of outlines of the scope and effect of the ACL. The Act itself runs to hundreds of pages. It is a comprehensive and detailed approach to consumer protection. Draft regulations have been released for consultation in the lead up to 1 January 2011.

All retailers, manufacturers and others who supply services to consumers should acquaint themselves with the ACL. They will need to understand how it affects their business and consider the changes, if any, required to ensure they comply with the new regime when it starts. Compliance manuals, policies and procedures should all be reviewed.

Please contact Hadyn Oriti should you require any further information.
Hadyn Oriti
October 2010
P: +61 2 6583 0449
E: horiti@dohlaw.com.au

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