You are responsible for understanding your legal obligations.
Australia’s consumer protection agencies now have more enforcement powers and bigger penalties apply if you break the law.
Handling major problem with goods
For a major failure with goods, the consumer can:
- reject the goods and get a refund;
- reject the goods and get an identical replacement or one of similar value if reasonably available; or
- keep the goods and get compensation for the drop in value caused by the problem.
The consumer gets to choose, not the business.
A major failure with goods is when:
- A reasonable consumer would not have bought the goods if they had known about the problem. For example, no reasonable consumer would buy a washing machine if they knew the motor was going to burn out after three months.
- The goods are significantly different from the description, sample or demonstration model shown to the consumer. For example, a consumer orders a red bicycle from a catalogue, but the bicycle delivered is green.
- The goods are substantially unfit for their normal purpose and cannot easily be made fit, within a reasonable time. For example, a ski jacket is not waterproof because it is made from the wrong material.
- The goods are substantially unfit for a purpose that the consumer told the supplier about, and cannot easily be made fit within a reasonable time. For example, a car is not powerful enough to tow the consumer’s boat because its engine is too small – despite the consumer telling the supplier they needed the car to tow a boat.
- The goods are unsafe. For example, an electric blanket has faulty wiring.
Handling minor problems with goods
If the problem is not major and can be repaired within a reasonable time, the consumer cannot reject the goods and demand a refund.
They can ask you, as the supplier, to fix the problem. You may choose to:
- provide a refund;
- replace the goods;
- fix the title to the goods, if this is the problem; or
- repair the goods.
It is your responsibility to return goods to the manufacturer for repair. If the cost of repairing the goods is more than the value of the goods, you could offer the consumer a replacement instead.
When a consumer rejects or returns goods
A consumer must tell you if they intend to reject goods, and explain why. They must:
- return the rejected goods to the supplier; or
- ask the supplier to collect the rejected goods, if the goods cannot be returned without significant cost to the consumer.
Sometimes, faced with a major failure, a consumer may agree to or request a repair of the goods – for example, because they did not know they were entitled to a refund or replacement.
If so, the consumer does not lose their right to a refund or replacement. The problem with the goods is still ‘major’, so they may still reject the goods at any time and ask for a refund or replacement.
A consumer cannot reject goods when:
- the goods have been thrown away, destroyed, lost or damaged through no fault of the supplier, after delivery to the consumer;
- the goods have been attached to other property and cannot be removed without damage. For example, removing wallpaper will damage it;
- too much time has passed. The right to reject the goods runs from the date of supply to the consumer, until the fault or problem would reasonably be expected to appear. This depends on:
- the type of goods;
- how a consumer is likely to use the goods;
- the length of time the goods could reasonably be used; and
- the amount of use the goods could reasonably be expected to tolerate before the problem or fault became apparent.
Even if the consumer has lost the right to reject the goods, they may still keep the goods and ask for compensation for any drop in the goods’ value.
Who is responsible for returned goods?
When the consumer tells you they are returning the goods, the goods become your property.
The consumer must return the goods to the supplier unless the cost of returning, removing or transporting them is significant. For example, due to the:
- size or height of the goods, or the way the goods are installed (if any); and
- type of problem with the goods. For instance, a consumer would not usually be able to remove a light fitting that has melted and stuck to a wall.
If the cost to the consumer would be significant, you must collect the goods at your own expense and within a reasonable time.
Examples of goods you would have to collect:
- a 127 cm LCD TV;
- a bed;
- a swimming pool filter connected to a pool by fixed pipes; and
- an extension ladder stuck in the extended position.
When the consumer is not entitled to a remedy
A consumer is not entitled to a remedy when you do not meet one of the consumer guarantees due to something:
- someone else said or did (excluding your agent or employee); or
- beyond human control that happened after the goods or services were supplied. For example, a hurricane damages the goods.
Sometimes, a manufacturer may recall goods in order to fix a potential safety issue – for example, a car manufacturer may recall a car because of a suspected brake defect.
If so, the potential safety issue with the good does not automatically amount to a major failure on the basis that the car is unsafe. Each of the goods subject to the recall would need to be considered individually.
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