LAW2101 CONTRACT A

AUSTRALIAN CONSUMER LAW

CONSUMER GUARANTEES

Lisa Di Marco
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Australian Consumer
Law
– introduction
Topics to be covered – Contract A
• Formation of Contract • Estoppel
– Agreement: Offer &
Acceptance • Terms and interpretation
– Consideration – Express Terms
– Intention to Creation Legal • Incorporation/
Relations identification
– Certainty • Construction
– Implied Terms
– Formalities – Australian Consumer Law
– Capacity
– Privity/ parties

4
Why are consumer and small business contracts a special case?

• Inequality of bargaining powers between trader/supplier and consumer (or small business)
– disparity of information, experience, expertise and resources

• Standard form contracts – ‘take it or leave it’ – no negotiation

– lack of viable alternative
– Consumer / small business time poor
– Consumer / small business ill-equipped to compare complex terms and conditions

• See further:
The Conversation – “Consumers don’t understand smartphone contracts” 3 October 2016, Paul Harriso
n

5
Discussion: T&Cs for seminar booking
• Clause 3 of the terms and conditions:

We may change the Speakers, the Hours, the Dates and/or the Location of the
Seminar Services for any reason by notifying you in writing of the change and
detailing substitute Speakers, Seminar Hours, Dates and/or Location and:

(a) we shall have no liability to you; and

(b) you shall make no claim against us (including for a refund), in respect of the same.

Bass Coast Resort Pty Ltd v Success Resources Australia Pty Ltd (Civil Claims) [2017]
VCAT 1217

6
Slowly the law evolved …
• Initially, common law and parliaments largely unconcerned about the fairness of terms
– laissez faire (free market); caveat emptor (buyer beware)
• In time, common law slowly responded
– fraud, misrepresentation, coercion, duress
– more difficult to incorporate terms into contracts
– Implied term of good faith into contracts
• From 1974 – 2010 - limited legislative intervention
– Commonwealth - Trade Practices Act 1974 (Cth) (“TPA”)
• implied certain terms into certain contracts between corporation and consumer (Part V)
• prohibited certain unfair practices (Part IVA)
– State/Territory – eg, in 2003 provisions dealing with unfair contract terms were inserted into Fair Trading Act
1999 (Vic.)
• 2010 - Australian Consumer Law (ACL)– comprehensive consumer protection
– Provides for mandatory Consumer Guarantees, and invalidates Unfair Contract Terms in standard form
Consumer Contracts - from 1 January 2011.
• 2016 - Unfair contract terms under ACL extended to cover “small business contracts”
– From November 2016

7
Australian Consumer Law – State/Federal issues
• Harmonised national legislative regime
– TPA replaced with Competition and Consumer Act 2010 (Cth) (“CCA”)
– Schedule 2 to the CCA is the Australian Consumer Law (“ACL”)
– Each state and territory passed legislation making ACL its own law
– CCA applies the ACL to the conduct of corporations
– State and territory laws apply the ACL to conduct of persons other than corporations

• In Victoria, the Australian Consumer Law and Fair Trading Act 2012 (Vic) applies the ACL in
Victoria. Section 8 states:
(1) The Australian Consumer Law text, as in force from time to time —
(a) applies as a law of this jurisdiction; and
(b) as so applying may be referred to as the Australian Consumer Law (Victoria); and
(c) as so applying is a part of this Act.”

8
Our focus is on …
• Unfair contract terms - Part 2-3 of the ACL; ss 23 - 28

– Invalidates unfair contract terms in standard form consumer contracts and small business
contracts. The provisions are generally raised as a defence to an action for breach of contract.

• Consumer guarantees - Part 3-2 (Division 1) of the ACL; ss 51 - 68

– Imposes statutory “guarantees” as to the quality of goods and services supplied to a consumer.

• Note: Each Part has a different concept of “consumer”! Although there is substantial
overlap, the two regimes apply to different categories of contract.

• The ACL is enforced and administered by the Australian Competition and Consumer Commission
(ACCC). This “regulator” has the power to take action against businesses that breach the ACL.
(Although note currently no civil penalties applicable re breaches of Parts 2-3 or 3-2 of ACL).

9
Consumer Guarantees:
– introduction;
- application
Topics to be covered – Contract A
• Formation of Contract • Estoppel
– Agreement: Offer &
Acceptance • Terms and interpretation
– Consideration – Express Terms
– Intention to Creation Legal • Incorporation/
Relations identification
– Certainty • Construction
– Implied Terms
– Formalities – Australian Consumer Law
– Capacity • Unfair contract terms
– Privity/ parties • Consumer guarantees

11
Summary of consumer guarantees - ACCC Guide
“When you buy goods or services and they break too easily, don’t
work or don’t perform as generally expected, you have rights
under the law.

The Australian Consumer Law (contained in a schedule to the

Competition and Consumer Act 2010) creates a basic set of
guarantees for consumers who acquire goods and services from
Australian suppliers, importers or manufacturers. These are
intended to ensure that you receive the goods or services that
you have paid for. When you have a problem and one of the
guarantees has not been met, you are entitled to a remedy.

The type of remedy depends on the circumstances but may

include a repair, replacement, refund or having the service
performed again.”

12
Consumer guarantees – why needed
• There is information asymmetry between supplier and consumers
– suppliers have superior knowledge about goods being sold; services being supplied
– consumer often not in a position to verify attributes of goods / services before
purchase

• Common law implied terms of fitness for purpose can be excluded by exclusion of
liability clauses. (eg L’Estrange v Graucob)

• ACL therefore imposes mandatory quality standards (Consumer Guarantees) into

contracts for supply of goods/ services to consumers
– now in Part 3-2, Division 1 of the ACL
– [previously were statutory implied terms under TPA]

13
Consumer guarantees – overview/checklist
• Only apply if there is an acquisition of goods or services by a consumer

• Most of the consumer guarantees only apply if the supply was in trade or commerce

• There are a number of specific exclusions/ types of transactions to which the CGs
do not apply.

• Need to identify which consumer guarantees apply.

• What is the effect of any exclusion clause?

• What remedies are available for a breach of a consumer guarantee?

14
Consumer guarantees – overview/checklist
• Only apply if there is an acquisition of goods or services by a consumer

• Most of the consumer guarantees only apply if the supply was in trade or commerce

• There are a number of specific exclusions/ types of transactions to which the CGs
do not apply.

• Need to identify which consumer guarantees apply.

• What is the effect of any exclusion clause?

• What remedies are available for a breach of a consumer guarantee?

15
Acquiring goods/services as a consumer – s3

Price ≤$100,000

OR –
goods/services of a
PDHUC type

AND - not acquired

for resupply or using
up in manufacture

16
X
Acquiring goods / services as a consumer – s 3
(1) A person* is taken to have acquired particular goods* as a
consumer if, and only if:
(a) the amount paid or payable for the goods**, as worked out
ie will be a supply to
under subsections (4) to (9), did not exceed:
consumer if:
[(i) $40,000; or]
(ii) if a greater amount is prescribed for the purposes of this • price is not more than
paragraph—that greater amount***; or $100k;
(b) the goods* were of a kind ordinarily acquired for personal,
domestic or household use or consumption; or OR
(c) the goods consisted of a vehicle or trailer acquired for use • goods/services were of a
principally in the transport of goods on public roads.
PDHUC kind
* “person” includes corporations so covers the acquisition of
goods or services by individuals and businesses
** services per s 3(3)
*** $100,000 prescribed for acquisitions from 1 July 2021

17
 Acquiring goods / services as a consumer – s 3
(1) A person* is taken to have acquired particular goods* as PDHUC - “ordinarily” means “regularly”, not
a consumer if, and only if: “principally” or “predominantly”
(a) the amount paid or payable for the goods**, as worked Goods ordinarily acquired for private use include:
out under subsections (4) to (9), did not exceed: • Industrial carpet
• Ute
[(i) $40,000; or] • Alarm system
(ii) if a greater amount is prescribed for the purposes of Goods not ordinarily acquired for private use
this paragraph—that greater amount***; or include:
(b) the goods* were of a kind ordinarily acquired for • Photocopy machine
personal, domestic or household use or • Prime-mover truck
• Large farming tractor
consumption; or
(c) the goods consisted of a vehicle or trailer acquired for (2) Subsection (1) does not apply if the
use principally in the transport of goods on public roads. person acquired the goods for the
purpose of re-supply; or for using them in
trade or commerce in the course of
* “person” includes corporations so covers the acquisition of production or manufacture; or in the course
goods or services by individuals and businesses of repairing or treating other goods or fixtures
on land.
** services per s 3(3)
*** $100,000 prescribed for acquisitions from 1 July 2021

18
Note: different consumer tests – consumer guarantees and unfair contract terms

• Each part has a different “consumer” test:

– Consumer guarantees – “acquiring goods or services as a consumer” (Part 3-2)
looks at kind of goods/services
– Unfair terms - “consumer contract” (Part 2-3) looks at the purpose of acquisition

• Example – purchase of tractor (for more than $100,000) for use in private garden:
– Do the consumer guarantees apply (Part 3-2)?
– Do the unfair contract terms apply (Part 2-3)?

• [Note – non PDHUC gateways have expanded under both regimes so of diminishing
significance (CG – 100K threshold; UCT – small business contracts)]

19
Consumer guarantees – overview/checklist
• Only apply if there is an acquisition of goods or services by a consumer

• Most of the consumer guarantees only apply if the supply was in trade or commerce

• There are a number of specific exclusions/ types of transactions to which the CGs
do not apply.

• Need to identify which consumer guarantees apply.

• What is the effect of any exclusion clause?

• What remedies are available for a breach of a consumer guarantee?

20
Supply in trade or commerce?

• Is it a contract between a consumer and:

– a supplier in trade or commerce - most guarantees will apply; or

– a supplier who is not in trade or commerce - e.g. a private sale of a car by a person
who is not in the business of selling cars - significantly less guarantees apply.
(Considered in more detail in Contract B when we look at misleading or deceptive
conduct).

21
Consumer guarantees – overview/checklist
• Only apply if there is an acquisition of goods or services by a consumer

• Most of the consumer guarantees only apply if the supply was in trade or commerce

• There are a number of specific exclusions/ types of transactions to which the CGs
do not apply.

• Need to identify which consumer guarantees apply.

• What is the effect of any exclusion clause?

• What remedies are available for a breach of a consumer guarantee?

22
Specific exclusions
• Is it a contract of a particular type that has been excluded from coverage under the
Australian Consumer Law?
– service guarantees are not implied into insurance contracts, or transportation
/storage of goods contracts for the purposes of a business, trade, or profession
(s.63)
– does not apply to financial products and services
• The ACL does not apply to financial products or services (s 131A CCA), which
are regulated by the Australian Securities and Investments Commission Act.
• The ASIC Act does not contain provisions reflecting the consumer guarantee
provisions in the ACL, but does imply some specific warranties into contracts for
the supply of financial services.
– [Also exclusion for recreational services (eg indoor rockclimbing). State law may
allow for limitation of liability. Not examinable]

23
 Consumer
Guarantees:
– the guarantees
Consumer guarantees – overview/checklist
• Only apply if there is an acquisition of goods or services by a consumer

• Most of the consumer guarantees only apply if the supply was in trade or commerce

• There are a number of specific exclusions/ types of transactions to which the CGs
do not apply.

• Need to identify which consumer guarantees apply.

• What is the effect of any exclusion clause?

• What remedies are available for a breach of a consumer guarantee?

25
The guarantees re goods
The guarantees re goods are set out in sections 51 to 59

Guarantees in ALL supplies of goods to consumer:

• s51: guarantee as to title - seller has a right to dispose of the goods
• s52: guarantee to undisturbed possession
• s53: guarantee of freedom from securities, charges, etc

26
The guarantees re goods
Guarantees in supplies of goods to consumer in trade or commerce other than by auction*:
• s54: goods are of acceptable quality (s 54) – defined in ss 54(2) – 54(7)
• s55: goods are fit for any disclosed purpose, and for any purpose for which the supplier
represents that they are reasonably fit (s 55)
• s56: goods correspond with their description (s 56)
• s57: goods correspond with sample; reasonable opportunity to compare goods with sample;
goods free from defects not apparent on examination of sample (s 57)
• s58: availability of repair facilities and spare parts (s 58)
• s59: compliance with any express warranty given by manufacturer or supplier (s 59)

* where sale by agent (not online auction sites like eBay where site is just a venue)

27
s54 - Guarantee of “acceptable quality” re goods
Section 54(2): Goods are of acceptable quality if they are as:
(a) fit for all the purposes for which goods of that kind are commonly supplied; and
(b) acceptable in appearance and finish; and
(c) free from defects; and
(d) safe; and
(e) durable;

as a reasonable consumer fully acquainted with the state and condition of the goods
(including any hidden defects of the goods), would regard as acceptable having
regard to the matters in subsection (3).

28
s54 - Guarantee of “acceptable quality” re goods
Section 54(3):

The matters for the purposes of subsection (2) are:

a) the nature of the goods; and
b) the price of the goods (if relevant); and
c) any statements made about the goods on any packaging or label on the goods;
and
d) any representation made about the goods by the supplier or manufacturer of the
goods; and
e) any other relevant circumstances relating to the supply of the goods.

29
s54 - Guarantee of “acceptable quality” re goods
s 54: Specific exceptions - goods will still be of acceptable quality if:
• defect was specifically drawn to buyer’s attention prior to purchase: 54(4),(5)
• buyer causes goods to become of unacceptable quality: 54(6)(a)
• goods are damaged by abnormal use: 54(6)(b)
• buyer examined goods prior to purchase and should have discovered defect: 54(7)

30
s55 - Guarantee of fitness for disclosed purpose
• s 55: fitness for any disclosed purpose

– guarantee that goods are fit for any disclosed purpose, and for any purpose for
which the supplier represents that they are reasonably fit

– does not apply if the circumstances show that the consumer did not rely on, or that it
was unreasonable for the consumer to rely on, the skill or judgment of the supplier

31
s59 - Guarantee of compliance with express warranty
• s59: compliance with any express warranty given by manufacturer or supplier

• S2 – definition of “express warranty”:

"express warranty" , in relation to goods, means an undertaking, assertion or representation:
(a) that relates to:
(i) the quality, state, condition, performance or characteristics of the goods; or
(ii) the provision of services that are or may at any time be required for the goods; or
(iii) the supply of parts that are or may at any time be required for the goods; or
(iv) the future availability of identical goods, or of goods constituting or forming part of a
set of which the goods, in relation to which the undertaking, assertion or representation
is given or made, form part; and
(b) that is given or made in connection with the supply of the goods, or in connection with the
promotion by any means of the supply or use of the goods; and
(c) the natural tendency of which is to induce persons to acquire the goods.

32
Consumer guarantees and pre contractual representations

Note how the Consumer Guarantees provide an avenue for pre-contractual

representations to have effect (in contrast to common law relating to incorporation of
statements during negotiations).

In particular:
• S59 – guarantee of compliance with express warranty;
• s 55 – guarantee that goods are fit for any disclosed purpose, and for any purpose for
which the supplier represents that they are reasonably fit; and
• s 54(3) – guarantee that goods are of acceptable quality – have regard to any
statements made about the goods by the supplier …

33
The guarantees re services
Guarantees in contracts for supply of services to consumer in trade or commerce:
• s60: services will be rendered with due care and skill
• s61: services will be fit for disclosed purpose / result
• s62: services will be supplied within a reasonable time

Exclusions:
• Ss 60 – 62 guarantees do not apply to the following services (per s 63):
– the transportation/storage of goods for the purposes of a business, trade, profession; or
– a contract of insurance.
• S61 (fit for disclosed purpose/result) does not apply to the supply of professional services
by a qualified architect or engineer

34
 Consumer
Guarantees:
– exclusion clauses
Consumer guarantees – overview/checklist
• Only apply if there is an acquisition of goods or services by a consumer

• Most of the consumer guarantees only apply if the supply was in trade or commerce

• There are a number of specific exclusions/ types of transactions to which the CGs
do not apply.

• Need to identify which consumer guarantees apply.

• What is the effect of any exclusion clause?

• What remedies are available for a breach of a consumer guarantee?

36
Consumer guarantees and exclusion / limitation of liability clauses – ss64 and 64A

• Cannot exclude consumer guarantees - Contractual clauses that purport to exclude,

restrict or modify the guarantees are void (s 64)

• But can limit liability re non PDHUC goods/services to cost of

repair/resupply/replacement - s64A

• Note overlap – other ACL breaches - clause excluding consumer guarantees may also
– Be void as an unfair contract term; and/or
– Amount to misleading or deceptive conduct (see eg ACCC v Valve [2016] FCA 196)
[Contract B]

37
Limiting liability for breach of CGs – s64A
• Not possible for 51-53 CGs – (guarantee re title) - liability under consumer
guarantees in ss 51-53 cannot be limited by contract

• Other CGs – non PDHUC goods – can limit liability to cost of repair or
replacement – s64A(1) – ie can limit liability to:
• replacing the goods or supplying equivalent goods;
• repairing the goods; or
• paying the cost of replacing, supplying equivalent, or repairing, goods

• Other CGs - non PDHUC services – can limit liability to cost of resupply –
s64A(2) – ie can limit liability to:
• supplying the services again; or
• paying the costs of having the services supplied again.

• BUT subject to s64A(3) limitation: not if consumer establishes that reliance on the
limitation of liability term is not fair or reasonable
38
 Consumer
Guarantees:
– remedies
Consumer guarantees – overview/checklist
• Only apply if there is an acquisition of goods or services by a consumer

• Most of the consumer guarantees only apply if the supply was in trade or commerce

• There are a number of specific exclusions/ types of transactions to which the CGs
do not apply.

• Need to identify which consumer guarantees apply.

• What is the effect of any exclusion clause?

• What remedies are available for a breach of a consumer guarantee?

40
Summary of remedies – ACCC guide
If a product or service you buy fails to meet a guarantee, you have a right to a remedy
such as:
• refund
• repair
• replacement or exchange
• compensation
• cancellation of contract
The remedy you are entitled to will depend on whether the
failure to comply with the guarantee is major or minor.

Australian Competition and Consumer Commission, Consumer guarantees – a guide

for consumers, 2013

41
Consumer Guarantees - remedies
• Remedies available for a breach of a Consumer Guarantee are set out in Part 5-4 of the
ACL.
• Relevant sections for Contract A: ss259 – 270; 276.
• The best way to learn about these provisions is to read them carefully.
• There are numerous exceptions and qualifications which are not set out in these slides
or in the text book.

42
Overview of Part 5-4 – Remedies relating to consumer guarantees

• Division 1 – Action against suppliers

– Subdivision A – Action against suppliers of goods (ss 259 – 266)
– Subdivision B – Action against suppliers of services (ss 267 – 270)

• [Division 2 – Action for damages against manufacturers of goods]

• Division 3 – Miscellaneous
– S 276 – This Part not to be excluded by contract

43
Division 1 – Subdivision A – Action against suppliers of goods

• 259 – Action against suppliers of goods

• 260 – When a failure to comply with a guarantee is a major failure
• 261 – How suppliers may remedy a failure to comply with a guarantee
• 262 – When consumers are not entitled to reject goods
• 263 – Consequences of rejecting goods
• 264 – Replaced goods
• 265 – Termination of contracts for the supply of services that are connected with
rejected goods
• 266 – Rights of gift recipients

44
s259 – Action against supplier of goods
• This is the key section setting out what remedies are available.
• If the failure is not a major failure: s259(2)
– The consumer may require that the supplier remedy the failure (ie repair or fix the goods);
– If the supplier fails to fix the goods, the consumer may either:
• Fix the goods itself and claim compensation for those costs; or
• Reject the goods

• If the failure is a major failure the consumer may either: s 259(3)

– Reject the goods; or
– Recover compensation for the reduction in value

• In addition, damages are available for failures (whether or not major): s 259(4)
• The key difference between a major and not major failure, is that for a major failure the
consumer has a right to reject the goods.
45
S259(4) – Damages claim against supplier of goods
• The consumer may, by action against the supplier, recover damages for any loss or
damage suffered by the consumer because of the failure to comply with the guarantee if
it was reasonably foreseeable that the consumer would suffer such loss or damage as
a result of such a failure.

• Examples: a consumer might recover:

– costs of water damage to a carpet cause by a faulty washing machine, or
– the costs of alternative transport where a bicycle bought to ride to work proved to be
defective. [PB 17.85]
260 – When a failure to comply with a guarantee is a major failure
(1) A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major
failure if:
• (a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and
extent of the failure; or
• (b) the goods depart in one or more significant respects:
– (i) if they were supplied by description--from that description; or
– (ii) if they were supplied by reference to a sample or demonstration model-- from that sample or
demonstration model; or
• (c) the goods are substantially unfit for a purpose for which goods of the same kind are commonly
supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a
purpose; or
• (d) the goods are unfit for a disclosed purpose that was made known to:
– (i) the supplier of the goods; or
– (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were
conducted or made;
and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
• (e) the goods are not of acceptable quality because they are unsafe.
(2) [Multiple non major failures may amount to a major failure.]
47
261 – How suppliers may remedy a failure to comply with a guarantee

• Effectively provides that if a consumer requires the supplier to remedy a failure that is
not major (ie under s259(2)(a)) the supplier may either:
– Repair the goods
– Replace the goods; or
– Provide a refund

48
262 – When consumers are not entitled to reject goods
• A right to reject goods cannot be exercised if:
– the “rejection period” has ended – this is the period from the time of supply until
the time it would be reasonable to expect the relevant failure to have become
apparent: 262(1)(a); and 262(2)

– The goods have been lost, destroyed or disposed of: s262(1)(b)

– The goods were damaged after delivery: 262(1)(c)

– The goods have been attached to or incorporated into other property and
cannot be isolated without damaging them: s262(1)(d)

49
263 – Consequences of rejecting goods
• If a consumer rejects goods:

– The consumer must return the goods to the supplier

• Unless they cannot be returned without significant cost, in which case the
supplier must collect them at the supplier’s expense: s263(2) and (3)

– The supplier must, at the consumer’s election: s263(4)

• Provide a refund (which cannot be via a credit note: s263(5)); or
• Replace the goods

50
Remedies for consumer guarantees - goods
• S265 – Consumer may terminate contracts for the supply of services connected
with rejected goods
– Example – if a consumer purchases a mobile phone with a bundled contract and the
phone is rejected because of a defect, the consumer could also terminate the phone
contract

• S266 – Rights of gift recipients

– If a consumer acquires goods and gives them to another as a gift, the other person
may exercise the same rights or remedies as available to the consumer

51
Division 1 – Subdivision B – Action against suppliers of services

• 267 – Action against suppliers of services

• 268 – When a failure to comply with a guarantee is a major failure
• 269 – Termination of contracts for the supply of services
• 270 – Termination of contracts for the supply of goods that are connected with
terminated services

52
S267 – Action against suppliers of services
• This is the main section providing remedies in relation to consumer guarantees for services:
• If the failure is not a major failure: s267(2)
– The consumer may require that the supplier remedy the failure;
– If the supplier fails to remedy the failure within a reasonable time, the consumer may either:
• Remedy the failure itself and claim compensation for those costs; or
• Terminate the contract for the services

• If the failure is a major failure the consumer may either: s 267(3)

– Terminate the contract for the services; or
– Recover compensation for the reduced value of the services

• In addition, damages are available for failures (whether or not major): s 267(4)
• The key difference between a major and not major failure, is that for a major failure the consumer
has a right to terminate the services contract.

53
S267(1)(c) – Action against suppliers of services – exclusions

• (1) A consumer may take action under this section if:

– (c) unless the guarantee is the guarantee under section 60--the failure to comply with
the guarantee did not occur only because of:
• (i) an act, default or omission of, or a representation made by, any person other
than the supplier, or an agent or employee of the supplier; or
• (ii) a cause independent of human control that occurred after the services were
supplied.

• This is a causation based exclusion for remedies in relation to the guarantees of:
– fitness for a particular purpose (s61), and
– supply within a reasonable time (s62).
(This exclusion does not apply in relation to the guarantee of due care and skill (s60)).

54
S268 – When a failure to comply with a guarantee is a major failure
(1) A failure to comply with a guarantee referred to in section 267(1)(b) that applies to a supply of services is a major failure if:
• (a) the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of
the failure; or
• (b) the services are substantially unfit for a purpose for which services of the same kind are commonly supplied and they
cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
• (c) both of the following apply:
– (i) the services, and any product resulting from the services, are unfit for a particular purpose for which the services
were acquired by the consumer that was made known to the supplier of the services;
– (ii) the services, and any of those products, cannot, easily and within a reasonable time, be remedied to make them
fit for such a purpose; or
• (d) both of the following apply:
– (i) the services, and any product resulting from the services, are not of such a nature, or quality, state or condition, that
they might reasonably be expected to achieve a result desired by the consumer that was made known to the
supplier;
– (ii) the services, and any of those products, cannot, easily and within a reasonable time, be remedied to achieve such
a result; or
• (e) the supply of the services creates an unsafe situation.

(2) [Multiple non major failures may amount to a major failure.]

55
S269 – Termination of contracts for the supply of services

• If a consumer terminates a contract under section 267:

– The termination takes effect when made known (by words or conduct) to the
supplier

– The consumer is entitled to a refund to the extent that services paid for have not
been consumed at the time of termination

56
S270 – Termination of contracts for the supply of goods that are connected with terminated
services

• If a consumer terminates a contract for services under section 267, and goods have
been supplied in connection with the services:

– The consumer is taken to have rejected the goods and must return them to the
supplier (or the supplier must retrieve them if significant cost to return them);

– The supplier must provide a refund for the goods.

57
S276 – This Part not to be excluded by contract
• A contractual term which excludes, restricts or modifies the remedies available for a
failure to comply with consumer guarantees is void.

58
Consumer guarantees – ACCC enforcement – misleading conduct

• S29(1) of the ACL specifically prohibits a person from making a misleading

representation about the existence or exclusion of the consumer guarantees.
– Eg – a supplier who displays signs saying that no refunds are available in any
circumstances would breach this provision.
• Civil pecuniary penalties apply for contraventions of this provision. (up to $3m).
• ACCC has relied on s29 to enforce the Consumer Guarantees.
– Eg Valve v ACCC (2017) - $3 million penalty imposed for misleading Australian
users of Steam, an online game distribution network, as to the applicability of the
consumer guarantees.
Consumer guarantees – what you need to know
• Scope of Part 3-2 Division 1 of the ACL.
• Definition of “consumer” in section 3.
• Consumer guarantees in relation to goods.
• Consumer guarantees in relation to services.
• Effect on exclusion clauses.
• Remedies available for breach of consumer guarantees.

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