Defective Goods

The Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) provides consumers with a guarantee under s 54 that goods will be of acceptable quality. This includes being:

  • fit for all purposes of which goods of that kind are commonly supplied; and
  • acceptable in appearance and finish; and
  • free from defects; and
  • safe; and
  • durable.

Acceptable quality is determined in relation to:

  • the nature of the goods; and
  • price; and
  • any statements made on packaging or labels; and
  • any representation made about the goods by the supplier or manufacturer; and
  • any other relevant circumstances relating to the supply of the goods.

Action against manufacturer or supplier?

Where defective goods have been provided, consumers have the right under the Australian Consumer Law to take action against either the supplier/retailer [s 259] or the manufacturer [s 271]. See also Guarantees.

What remedies are available?

The remedies available against a supplier of goods are determined by whether the failure to comply with guarantees provided under the Australian Consumer Law is a major or non-major failure.

A major failure is defined as a failure to comply with a guarantee under the following sections

  • 51 (title);
  • 52 (undisturbed possession);
  • 53 (undisclosed securities);
  • 54 (acceptable quality);
  • 55 (fitness for any disclosed purpose);
  • 56 (supply by description); or
  • 57 (supply by sample or demonstration).

If:

  • the goods would not have been acquired by a reasonable consumer fully advised of the nature and extent of the failure; or
  • the goods depart in one or more significant respects from description (if supplied by description) or sample (if supplied by sample); or
  • 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
  • the goods are unfit for a disclosed purpose that was made known to the supplier, etc and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
  • the goods are not of acceptable quality because they are unsafe.

[Competition and Consumer Act 2010 (Cth) Schedule 2, s 259]

Where a major failure can be demonstrated the consumer may reject the goods (subject to the limitations imposed in s 262) or seek compensation for any reduction in value of the goods below the price paid for them [s 259(3)].

A non-major failure is not defined specifically by the legislation but would appear to be anything falling outside the definition provided of a major failure.

In the event of a non-major failure, the consumer is limited to requiring the supplier to remedy the failure within a reasonable time [s 259(2)]. If the supplier refuses or fails to comply with this requirement the consumer may have the failure remedied themselves and then recover all reasonable costs incurred from the supplier or, under s 262, notify the supplier that they reject the goods and the ground or grounds for rejection.

Defective Goods  :  Last Revised: Tue Jan 4th 2011
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