Consumer guarantees – information for businesses

Acceptable quality

As a supplier or manufacturer, you guarantee that goods are of acceptable quality when sold to a consumer. This means you guarantee the goods will be:

• safe, durable and free from defects
• acceptable in appearance and finish, and
• do the job that type of thing is usually used for.

The test is whether a reasonable consumer, fully aware of the goods' condition – including any defects – would find them:

• fit for purposes for which goods of that kind are commonly supplied, for example, a toaster must be able to toast bread
• acceptable in appearance and finish, for example a new toaster should be free from scratches
• free from defects, for example, the toaster's timer knob should not fall off when used for the first time
• safe, for example, sparks should not fly out of the toaster
• durable, for example, the toaster must function for a reasonable time after purchase, without breaking down.

This test considers:

• the nature of the goods, for example, a major appliance such as a fridge is expected to last longer than a mobile phone
• the price paid for the goods, for example, a cheap toaster is not expected to last as long as a top-of-the-range one
• any statements about the goods on any packaging or label on the goods, for example, the toaster box shows a special defroster function
• any representation you made about the goods, for example the supplier said, the crumb tray was easy to detach and clean
• any other relevant circumstances relating to supply of the goods.

Secondhand goods

Secondhand goods sold in trade or commerce are covered by the guarantee of acceptable quality, but age, price and condition must be considered.

Leased or hired goods – acceptable quality

Consumer goods leased or hired to a consumer must also be of acceptable quality.

This guarantee does not apply when you alert the consumer to any hidden defects

Some goods may not be of acceptable quality due to problems you already know about - for example, goods with cosmetic defects sold as seconds. Defective goods can be sold, usually for lower prices, if the consumer is alerted to the defects before sale by:

• telling the consumer before selling the goods, or
• displaying a written notice with the goods. This must be clearly presented, legible and expressed in plain language.

It is not enough to simply describe the goods as seconds, sale items or 'as is'.

The consumer examines the goods

A consumer is not entitled to a remedy if they had an opportunity to examine the goods before purchase and did not find defects that they should have noticed.

The consumer uses the goods in an abnormal manner

Goods are not expected to be indestructible. A consumer's use of goods can affect the durability of those goods.

The guarantee of acceptable quality will not apply if the consumer:

• uses the goods abnormally
• causes the quality of the goods to become unacceptable
• fails to take reasonable steps to avoid the quality becoming unacceptable.

The law does not define abnormal use. However, examples of abnormal use include:

• a mobile phone is dropped in water or is left out in the rain
• a television is broken by an object hitting the screen
• a laptop is picked up by the corner of its screen, which then cracks down the middle.

If a business provides a warranty they have additional responsibilities under the ACL.

Fit for purpose

As a supplier, you guarantee that goods will be reasonably fit for the purpose that you specify. This guarantee does not apply to goods bought at auction.

Consumer specifies purpose of goods

A consumer may seek goods for a specific purpose that is different from the typical purpose of the product. A guarantee as to fitness for this specific purpose applies if prior to buying the goods, the consumer:

• told you what they wanted to use the goods for, and
• relied on your knowledge or expertise when deciding whether the goods were suitable for that use or purpose.

This guarantee does not apply when:

• the consumer did not rely on your skill or judgment when buying the goods
• under the circumstances, it was unreasonable for the consumer to have relied on your skill or judgment (or lack of it)
• if the goods were bought at an auction.

Goods match description or sample guarantee

As a supplier or manufacturer, you guarantee that the description of goods – for example, in a catalogue or television commercial - is accurate. If the goods do not match the description, the consumer is entitled to a remedy. You cannot argue that the consumer inspected the goods before purchase and should have picked up any errors in the description. This guarantee does not apply to goods bought at auction.

Matching sample or demonstration model

You also guarantee goods will match any sample or demonstration model shown to the consumer.

Hidden defects

Goods sold by relying on a sample or demonstration model must not have any hidden defects.

Reasonable time to compare the goods

You must give the consumer a reasonable amount of time to compare the goods with the original sample. This does not apply to demonstration models. If you show a sample or demonstration model to the consumer and give a description of the goods, the goods must match both.

Title possession and securities guarantee

As a supplier, you guarantee you have the right to sell the goods (clear title), unless you alerted the consumer before the sale that you had limited title. If goods are sold with limited title, any other person with ownership rights – for example, a person owed money by the previous owner – can ask a court for permission to take the goods back from the consumer.

Undisturbed possession of goods

You guarantee that no one will try to repossess or take back goods bought by a consumer, or prevent the consumer from using those goods, except when:

• the consumer has not met their obligations under the sale, hire or lease contract
• before the sale, you told the consumer that another person had a security interest over the goods
• the consumer hired or leased the goods, and the hire or lease period has ended
• at the time of buying the goods, the consumer was aware you only had limited title.

No undisclosed securities on goods

You guarantee that goods bought by a consumer are free of any hidden securities or charges and will remain so, unless the security or charge was either:

• placed on the goods with the consumer’s permission
• brought to their attention in writing before they bought the goods.

Consumer guarantees under ACL also include the guarantee for manufacturers to take reasonable steps to provide spare parts and repair facilities for a reasonable time after purchase.