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Implied conditions

The Australian Consumer Law incorporates certain terms into consumer contracts. Unless otherwise stated, all references below are to the Competition and Consumer Act 2010 (Cth) Schedule 2 (“the Australian Consumer Law”).

That the Seller has the Right to Sell

A consumer buying goods assumes that the supplier/seller transfers ownership of the goods to the them. Sometimes a person in possession of goods purports to sell the goods when in fact they have no right to do so. If someone who is the true owner seeks to obtain the goods from the consumer after sale, the consumer can bring a claim against the supplier/seller on the basis this implied condition has been breached [Competition and Consumer Act 2010 (Cth) Schedule 2 s 51].

Goods are Fit for the Purpose for which they are Sold

Where a supplier is made aware, either expressly or implicitly, of the particular purpose for which the buyer requires the goods, there is an implied condition that the goods will be reasonably fit for that purpose [Competition and Consumer Act 2010 (Cth) Schedule 2 s 55 and Sale of Goods Act 1895 (SA) s 14]. The definition of ‘particular purpose’ used by the Australian Consumer Law is broader and extends to any purpose made known to the supplier (expressly or implicitly) whether or not it is a purpose for which the goods are commonly supplied [s 55]. However, where it can be shown that the consumer did not rely on, or it was unreasonable for the consumer to rely on, the skill or judgment of the supplier the implied condition will not occur.

Goods are of acceptable (merchantable) quality

When goods are sold there is an implied condition that the goods are of acceptable quality. This means that they must be fit for the purpose for which goods of that kind are commonly bought, as is reasonable to expect having regard to any description applied to them, the price (if relevant) and all other relevant circumstances [s 54]. See also Sale of Goods Act 1895 (SA) s 14.

This does not cover those defects that the consumer was aware of or should have found having had a chance to inspect the goods before purchase [s 54(7)].

Goods should fit their description

Goods are sold by description where a consumer does not see the actual item purchased. For example, the consumer examines only a display model, an illustration on a container or a catalogue. To breach this condition it must be shown that the goods do not comply with the description or identity of the goods, rather than non-compliance with quality. For example, a bowl that sold by description as black when it is in fact white [s 56]. See also Sale of Goods Act 1895 s 13.

Sale by sample

Not many consumers buy by reference to a sample of goods. It might happen if a consumer is buying a wool carpet from a sample. Where goods are sold by reference to a sample either where it states so in the contract, or it can be implied that the goods are supplied by reference to a sample, the contract is subject to three conditions [ s 57]:

  • that the goods will match with the sample (or demonstration model) in quality
  • that the consumer will have a reasonable opportunity of comparing the goods with the sample
  • that the goods will be free from any defects making them not of acceptable quality and that would not be apparent on a reasonable examination of the sample.

For example, if the sample of wool carpet referred to above turns out to be a blend of wool and synthetic, the buyer can reject the carpet. It is important that the buyer rejects the goods as soon as the defect is discovered as it may not be possible to return the goods. Under s 15 of the Sale of Goods Act 1895 (SA) similar provisions exist.

Implied conditions  :  Last Revised: Thu Mar 24th 2011
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