Defined Terms and Documents       

The Australian Consumer Law

A guide to provisions

November 2010

ISBN 978-0-642-74589-7

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The Australian Consumer Law — A guide to provisions

iii

CONTENTS

Offences, remedies and penalties................................................................................................16

Consumer guarantees..................................................................................................................17

Unsolicited consumer agreements...............................................................................................20

Lay-by sales .................................................................................................................................26

Miscellaneous provisions .............................................................................................................27

Safety of services .........................................................................................................................30

Safety bans ..................................................................................................................................32

Product recalls..............................................................................................................................33

Safety warning notices .................................................................................................................34

Mandatory reporting of accidents.................................................................................................34

Offence provisions........................................................................................................................35

Remedies and penalties...............................................................................................................35

Enforcement relating to the safety of consumer goods and product-related services.................35

The Australian Consumer Law — A guide to provisions

v

ACCC Australian Competition and Consumer Commission

ACL Australian Consumer Law

ACL Regulations Trade Practices Amendment (Australian Consumer Law) Amendment

Regulations 2010 (No.1)

ASIC Australian Securities and Investments Commission

BRCWG Business Regulation and Competition Working Group

COAG Council of Australian Governments

FTA Fair Trading Act of a State or Territory

members of the Council of Australian Governments on 2 July 2009.

MCCA Ministerial Council on Consumer Affairs

MINCO Ministerial Council for Corporations

PC Productivity Commission

SCOCA Standing Committee of Officials of Consumer Affairs

The first Commonwealth Act

This Act received the Royal Assent on 14 April 2010. It includes

measures to implement:

The measures of this Act are incorporated into the schedule version of

the ACL. The Act also makes consequential amendments to the ASIC

Act. The Act took full effect on 1 July 2010.

The second

Commonwealth

Act or the Act

passed by both Houses of the Australian Parliament on 24 June 2010 and

received the Royal Assent on 13 July 2010.

Consumer Act 2010 from 1 January 2011.

The Australian Consumer Law — A guide to provisions

vii

the ACL.

This guide is intended to provide an accessible description of the contents of the ACL. It is

not intended to be, nor is it, a substitute for the Explanatory Memorandum and

This brief guide reflects the ACL as it is on 1 January 2011.

The Australian Consumer Law — A guide to provisions

viii

The ACL has been drafted in accordance with the requirements of plain language drafting.

been modified and reordered to make the law clearer and also to reflect changes in drafting

conventions since they were initially inserted into the TPA. With the exception of those areas

where there have been policy changes, these drafting changes are not intended to alter the

legal effect of these provisions.

For an explanation of plain language drafting, please refer to www.opc.gov.au.

ix

The ACL is a single, national law covering consumer protection and fair trading which

applies in the same way nationally and in each State and Territory.

For the first time, Australian consumers have the same protections and expectations about

business conduct wherever they are in Australia. Similarly, businesses have the same

obligations and responsibilities wherever they operate in Australia.

The Productivity Commission (PC) estimated that this reform could provide benefits to the

Australian community of between $1.5 billion and $4.5 billion a year.

The ACL:

clarifies understanding of the law for both Australian consumers and businesses;

law of its respective jurisdiction. This means that the same provisions apply across

Australia;

States and Territories; and

The Australian Consumer Law — A guide to provisions

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The ACL includes:

– a general ban on misleading and deceptive conduct in trade or commerce;

– a general ban on unconscionable conduct in trade or commerce and specific bans on unconscionable conduct in consumer and some business transactions; and

– a provision that makes unfair contract terms in consumer contracts void.

of business conduct. Specifically, Chapter 3 includes provisions on:

– banning specific unfair practices in trade or commerce;

– provisions dealing with consumer transactions;

– the safety of consumer goods and product-related services;

– the making and enforcement of information standards; and

– the liability of manufacturers for goods with safety defects.

Chapter 3.

relating to consumer law.

xi

The main changes being implemented in the ACL are:

currently used in the TPA (Chapter 1);

and additions which reflect existing provisions in State and Territory consumer laws

(Chapter 3, Part 3-1);

conditions and warranties (Chapter 3, Part 3-2, Division 1);

State and Territory laws on door-to-door sales and other direct marketing (Chapter 3,

Part 3-2, Division 2);

goods (Chapter 3, Part 3-4).

1

Chapter 1 of the ACL contains the definitions that apply to terms used in the ACL.

The definitions in the ACL are discussed, where relevant, in the parts of this guide that deal

with the provisions to which they mainly relate. However, further detail is set out below on

the definition of ‘consumer’, which has a broad application in the ACL.

Some provisions of the ACL are limited to a defined class of ‘consumers’, where there is a

policy reason to limit the extent of consumer protection to the acquisition of goods and

services to exclude certain commercial transactions.

The definition of ‘consumer’ in the ACL applies particularly to consumer guarantees,

unsolicited selling and lay-by agreements.

Section 3 of the ACL defines ‘consumer’. For the purposes of the ACL, a person is a

‘consumer’ if they acquire goods or services that are priced at less than $40,000. A person is

also a ‘consumer’ if they acquire good or services that are priced at more than $40,000 but

they are ‘of a kind ordinarily acquired for personal, domestic or household use or

consumption’. A person who acquires a vehicle for use in the transport of goods on public

roads, irrespective of price, is also considered to be a consumer for the purposes of the ACL.

and businesses, rather than being restricted to ‘consumers’ as defined, where the relevant

conduct is in trade or commerce.

3

Chapter 2 of the ACL deals with consumer protections which apply generally and which are

intended to create general standards of conduct in trade or commerce.

– A broad prohibition on misleading or deceptive conduct in trade or commerce.

– A broad prohibition on unconscionable conduct in trade or commerce plus more specific prohibitions on unconscionable conduct in consumer and certain business transactions.

– Unfair contract terms in standard form consumer contracts are void.

The Australian Consumer Law — A guide to provisions

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Section 18 of the ACL prohibits a person, in trade or commerce, from engaging in misleading

or deceptive conduct. This prohibition is not limited to the supply of goods or services and

creates a broad, economy-wide norm of conduct.

The ACL retains the general prohibition on misleading and deceptive conduct that existed in

section 52 of the TPA and all State and Territory fair trading Acts (FTAs). The drafting of

section 18 is in the same form as section 52 of the TPA, except for the reference to ‘persons’

rather than ‘corporations’.

The effect of section 18 remains unchanged and, accordingly, the existing jurisprudence on

section 52 and its State and Territory equivalents remains applicable under the ACL.

A contravention of the prohibition on misleading and deceptive conduct is subject to

remedies including injunctions, damages and compensatory orders, as set out in Chapter 5 of

the ACL.

Civil penalties and criminal sanctions do not apply to section 18, because of its very broad

scope. Section 18 of the ACL creates a norm of business conduct, and allows persons to seek

remedies for harm caused by breaches of that norm, rather than giving rise to a

contravention that attracts punitive sanctions. Other prohibitions against specific forms of

false or misleading conduct may also apply to instances of misleading conduct and have

specific penalties and criminal sanctions.

Chapter 2: General protections

5

Section 20 of the ACL prohibits unconscionable conduct within the meaning of the unwritten law, from time to time. This means that actions relating to unconscionable conduct, which is a concept that has developed in the common law and the principles of equity, may be commenced under the ACL and the remedies provided by the ACL may be applied to a breach of the provision.

Section 21 of the ACL prohibits unconscionable conduct in connection with the supply of goods or services to a person. Section 22 of the ACL prohibits unconscionable conduct in connection with the supply of goods or services, or the acquisition of goods or services, in business transactions.

The concept of unconscionable conduct in sections 21 and 22 of the ACL is not bound by the common law and equitable principles, and while courts may consider any relevant matters, the ACL specifies a guiding list of factors.

The content of Part IVA of the TPA is to remain, in substance, the same in the ACL.

Remedies applicable to the unconscionable conduct provisions of the ACL include injunctions, damages, compensatory orders and other remedies, such as non-punitive orders and adverse publicity orders. There are also civil pecuniary penalties with maximum penalties of $1.1 million for a body corporate and $220,000 for a person other than a body corporate, as well as disqualification orders, redress for non-parties and public warning notices.

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The ACL provides that unfair terms in consumer contracts are void. A ‘consumer contract’ is

a standard-form agreement for the supply of goods or services which is wholly or

predominantly for personal, domestic or household use or consumption.

A term is ‘unfair’ when it:

contract; and

A court must have regard to the transparency of the term and the contract as a whole in

determining whether a term is ‘unfair’.

Terms which relate to the main subject matter and upfront price of the contract are not able

to be challenged under these provisions. However, payments made under a contract which

are contingent on the occurrence or non-occurrence of an event are examinable under the

unfair contract terms provisions.

The unfair contract terms provisions are also included in a new Part 2, Division 2,

Subdivision BA of the ASIC Act, with respect to financial products and services. The ACL

provisions apply to all other consumer contracts, except for:

provisions do not apply to insurance contracts regulated by that Act. The Government is

This consultation closed on 30 April 2010 and the Government is considering this issue.

A non-exhaustive, indicative 'grey-list' of examples of types of terms that may be unfair is

included in the provisions. These examples are subject to the unfair terms test and provide

statutory guidance on issues of concern. They do not deem or presume particular types of

terms to be unfair. Further examples may be added to this list by regulation.

The unfair contract terms provisions are supported by consistent national guidelines on their

enforcement, developed by the national, State and Territory consumer agencies (available at

www.accc.gov.au). ASIC has also issued specific guidance on unfair contract terms and exit

fees for residential loans, available at www.asic.gov.au.

Chapter 2: General protections

7

Part 2B of the Victorian Fair Trading Act (FTA) currently regulates unfair contract terms.

These provisions have been replaced by the ACL provisions on unfair contract terms.

A contract term which is declared to be unfair is void and a person has access to any

remedies which may apply under the common law.

For the purposes of the ACL, certain other remedies are made available, namely:

Australian Parliament on 17 March 2010 and received the Royal Assent on 14 April 2010.

The unfair contract terms provisions commenced on 1 July 2010 at the Commonwealth

level, with mirror provisions applying from that date in Victoria and NSW until the

commencement of the entire ACL on 1 January 2011.

The second ACL Act simply changed the numbering of those provisions, compared with

those implemented by the first ACL Act.

From 1 July 2010, the unfair contract terms law applies in the Commonwealth, Victoria

and NSW to terms in new contracts, terms in renewed contracts and individual terms in

existing contracts that have been varied after that date. In all other jurisdictions the

provisions apply in the same way, from 1 January 2011.

9

Chapter 3 of the ACL prohibits specific forms of conduct and regulates specific practices in

consumer transactions.

These provisions support the general prohibitions in Chapter 2 of the ACL. They are based

on provisions in Part V, Divisions 1, 1AAA, 1A, and 2A of the TPA as well as provisions in

State and Territory fair trading Acts (FTAs).

– The ACL prohibits certain false or misleading representations, the supply of

unsolicited goods or services, participating in pyramid schemes, and practices

involving the display of prices, referral selling, harassment or coercion.

– Consumer guarantees

: The ACL provides guaranteed consumer rights for goods or services.

– Unsolicited consumer agreements

: The ACL introduces national rules for unsolicited sales transactions.

– Lay-by agreements

: The ACL sets out five basic rules for lay-by agreements.

– The ACL creates a new consumer product safety law and regulatory framework,

which applies nationally.

– The ACL creates a single national law that prescribes information standards for

consumer goods and for services.

– The ACL creates national rules governing the liability of manufacturers for safety

defects.

The Australian Consumer Law — A guide to provisions

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The ACL prohibits specific unfair practices in trade or commerce. These specific prohibitions

are based on those currently set out in Part V of the TPA and, in some cases, draw on

existing provisions in State and Territory consumer laws.

– Division 1 prohibits specific false or misleading representations, etc. about goods or

services, land and employment, and also prohibits specific conduct concerning the

offering of rebates, gifts or prizes, bait advertising, wrongly accepting payment and

other forms of conduct.

– Division 2 prohibits specific conduct relating to the unsolicited supply of goods and services, as well as unsolicited credit cards and debit cards.

– Division 3 prohibits participation in pyramid schemes, and inducing people to participate in pyramid schemes.

– Division 4 applies rules to pricing practices to ensure that the total price is always presented where possible, and to ensure that there is only one applicable sale price.

– Division 5 prohibits certain practices to do with referral selling and also harassment or coercion.

Some of the existing provisions of the TPA have been amended to reflect approaches that currently exist in one or more State and Territory’s consumer laws. In addition, there are also new provisions which draw on existing provisions in State and Territory consumer laws.

Chapter 3: Specific protections

11

Under section 29 of the ACL, a person is prohibited from making false or misleading

representations in connection with the supply, possible supply or promotion of goods or

services.

A false or misleading representation that:

have had a particular history or particular previous use;

testimonial, relating to goods or services;

uses or benefits;

remedy; or

equivalent to a statutory consumer guarantee or any other statutory right or benefit that

person may enjoy.

The types of representations above reflect those types that were already covered by

section 53 of the TPA. Two new types of representations are included which relate to areas of

concern for consumers — testimonials and statements about guarantees, conditions and

warranties for goods and services.

The Australian Consumer Law — A guide to provisions

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The ACL also specifically prohibits the following types of misleading representations or

conduct:

S ection Conduct prohibited

30 Certain types of false or misleading representations made in trade or commerce in connection with the

sale or grant of an interest in land.

31 Conduct liable to mislead a person as to the availability, nature, terms or conditions or any other matters in

relation to employment.

33 Conduct liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for

their purpose or the quantity of goods.

34 Conduct liable to mislead the public as to the nature, characteristics, suitability for their purpose or the

quantity of services.

37 False or misleading representations concerning the profitability, risk or other key aspect of certain

business activities.

Section 35 of the ACL prohibits a person from advertising goods or services at a specified

price if there are reasonable grounds for believing that the person will not be able to offer

reasonable quantities of the goods or services at that price for a reasonable period, having

regard to the advertisement and the nature of the market. A person who offers goods or

services at a specified price must also do so for a reasonable period and in reasonable

quantities, having regard to the advertisement and the nature of the market.

Clearly disclosing that there are only a certain number of items at a particular price, or that

the offer is only for a specific time period, can be important for compliance with this

provision.

Section 32 of the ACL prohibits a person from offering rebates, gifts, prizes or other free

items in connection with the supply or possible supply or promotion by any means of goods

or services:

specified, within a reasonable time.

Section 32 of the ACL expands the scope of section 54 of the TPA by requiring that provision

is timely. Section 32 also includes a defence for suppliers where the failure to provide was

not the fault of the supplier.

Chapter 3: Specific protections

13

Section 32 provides that a specified time for provision of the rebates, gifts, prizes or other

free items will be considered a reasonable time if communicated in the offer. Where no

time is specified before a transaction takes place, a ‘reasonable’ time will need to be

considered by a court or tribunal on a case-by-case basis, based on the nature of the gifts

and prizes offered and representations made about their availability.

Section 36 of the ACL prohibits a person from accepting payment or other consideration for

goods or services where the person:

aware, for believing the person will not be able to supply the goods in the time specified

or, if no time is specified, within a reasonable time;

and requires that the person deliver the goods or services within the specified time, or if no

time is specified, within a reasonable time after accepting payment. Reasonableness is based

on the court’s interpretation of what is reasonable in all the circumstances.

Section 36 of the ACL provides that if a person exercises due diligence and the failure to

supply within a reasonable time is beyond their control, they will not be liable under the

ACL. The ACL does not limit any specific other contractual liabilities the supplier might

have as a result of the failure.

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Section 39 of the ACL prohibits a person from sending a credit card or a debit card to another person unless it is at the written request of the other person.

Section 40 of the ACL prohibits a person from asserting a right to payment for unsolicited

goods or services.

Section 43 of the ACL prohibits a person from asserting a right to payment for unauthorised

entries, and extends this prohibition to assertions in respect of similar entries that are not

placed in a directory, as well as unauthorised advertisements.

Under section 10 of the ACL, a trader must include a prescribed warning statement in

documents that purport to be invoices for unsolicited goods or services, and for

unauthorised entries or advertisements.

The ACL Regulations specify that the warning statements for sections 10, 40 and 43 of the

ACL must include the text ‘This is not a bill. You are not required to pay any money’, and

this must be the most prominent text in the document.

Section 64 of the TPA does not apply to newspapers. This exclusion continues to operate in

section 43 of the ACL, and has been extended so that the provisions do not apply to

publications with a circulation audited by the Audit Bureau of Circulations of 10,000

copies or more per week.

The ACL Regulations also provide section 43 does not apply to a listed or large proprietary

corporation or its subsidiaries provided it has not previously been convicted for asserting a

right to payment for unsolicited goods or services.

Section 41 of the ACL provides that a person is not liable to pay for unsolicited goods

supplied to them, nor for any loss or damage to those unsolicited goods unless the loss or

damage is due to a wilful and unlawful action by the person. The supplier of the goods is

entitled to retrieve the unwanted goods from the person within a certain time period.

Chapter 3: Specific protections

15

Section 42 of the ACL provides that a person is also not liable to pay for unsolicited services

supplied to them, nor for any loss or damage as a result of the supply of the unsolicited

services.

Section 44 of the ACL prohibits a person from participating in a pyramid scheme or inducing

or attempting to induce a person to participate in one. Section 45 of the ACL defines a

pyramid scheme and various concepts associated with a pyramid scheme, including

participation payments, recruitment payments, and a new participant in a scheme. Section 46

provides guidance to the courts for differentiating between unlawful pyramid schemes and

legitimate multi-level marketing schemes.

The ACL provision operates in much the same way as the TPA provisions with some minor

amendments to clarify the issues the court must take into account.

Section 47 of the ACL provides that, where goods have more than one displayed price, they

must not be supplied at a price higher than the lowest displayed price. However, other

amounts such as a unit price per quantity are not ‘displayed prices’.

The section also applies to catalogues and advertisements in the geographical areas to which

they relate and for the period they cover. Mistakes in catalogues and advertisements will be

able to be overcome by publishing a retraction of a similar circulation to the original

representation.

To ensure that genuine pricing errors are not penalised by section 47, a business may sell

at the lowest displayed price, but the provision does not exclude their right to withdraw

the item from sale, correct the price and then offer it for sale again.

Section 48 of the ACL prohibits a person from representing a component of a price when

making a representation about the price of a good or service, without also prominently

specifying the single figure price a person must pay to obtain the good or service, to the

extent that a single figure price is quantifiable at the time of making a representation.

The Australian Consumer Law — A guide to provisions

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Section 49 of the ACL prohibits a person from inducing a consumer to buy goods or services

by representing that they will receive some benefit for assisting the person to supply goods

or services to other customers, when the receipt of this benefit is contingent on an event

occurring after the contract for the initial sale is made.

Section 50 of the ACL prohibits a person from using physical force, undue harassment or

coercion in connection with either the supply of goods or services to a person or payment by

a person for goods or services.

Offences , remedies and penalties

Breaches of the ACL’s criminal offences are subject to criminal fines of a maximum of

$1.1 million for a body corporate and $220,000 for person other than a body corporate for

many of the offences. These criminal fines are based on the amounts of fines in the TPA.

Contraventions of the unfair practices provisions of the ACL have remedies which include

injunctions, damages, compensatory orders and other remedies, such as non-punitive orders

and adverse publicity orders. There are also civil pecuniary penalties with maximum

penalties of $1.1 million for a body corporate and $220,000 for a person other than a body

corporate (except for $5,000 and $1,000 respectively for multiple pricing), as well as

disqualification orders, redress for non-parties and public warning notices.

Chapter 3: Specific protections

17

Cons umer guarantees

The ACL replaces the existing national, State and Territory laws on implied conditions and

warranties with a single national system of statutory consumer guarantees.

Where the pre-existing law required consumers to enforce their rights as breaches of

contract, the ACL sets out the remedies that apply to breaches of statutory consumer

guarantees. The approach in the ACL to the terms of consumer transactions will also

eliminate the distinction between ‘conditions’ and ‘warranties’.

Statutory consumer guarantees eliminate the need for consumers to understand contract law

in order to enforce their rights. Any failure by a supplier of a statutory consumer guarantee

is directly enforceable as a breach of the ACL.

The consumer guarantees provisions of the ACL are aligned with the New Zealand

these provisions and can be found on the website of the New Zealand Ministry of Consumer

Affairs — www.consumeraffairs.govt.nz.

Warranties for financial services provided by section 12ED of the ASIC Act continue to

apply.

The ACL creates a basic set of protections for consumers who acquire goods from Australian

suppliers, importers or manufacturers.

These guarantees apply if goods are supplied in trade or commerce. They do not apply to

private sales by individuals to other individuals or businesses. They also do not apply to

sales made by way of a traditional auction where an auctioneer acts as an agent for a person

to sell goods. They would, however, apply to sales made by businesses on the internet by

way of online ‘auction’ websites when the website operator does not act as an agent for the

seller. Second-hand goods are also covered by consumer guarantees.

The Australian Consumer Law — A guide to provisions

18

Guarantee Des cription

Guarantee as to title

S ection 51

Consumers have a guarantee that the supplier has the right to sell the goods to the

consumer.

Consumers should not be disadvantaged by claims that might be made against goods when

the seller has no right to sell the goods. In some cases, a supplier and a consumer might

agree to supply goods on the basis of ‘limited title’. This is where a supplier tells a buyer that

they cannot be sure of all claims that might be made over the goods and that they are selling

only the title that they personally have over the goods.

Guarantee as to

undis turbed pos s es s ion

S ection 52

Consumers have a guarantee of undisturbed possession of goods.

Consumers should not be inconvenienced by others seeking to reclaim the goods, for

example, because the goods have been pledged as security for a loan. If the consumer is told

about securities, charges or encumbrances that relate to the goods, the guarantee to

undisturbed possession does not apply.

If a supply is of limited title, the guarantee to undisturbed possession only applies to prevent

the supplier, or a person whose title the supplier is transferring (a deceased estate, for

example), from interfering with the goods. Other persons might still seek to repossess the

goods, for example, if they were owed money by the deceased and the goods were pledged

as security for the amount owing.

Guarantee as to

undis clos ed s ecurities

S ection 53

Goods must be free from any security, charge or encumbrance that was not disclosed to the

consumer or created with their consent.

A floating charge involves a borrower providing a lender with the right to possess all of the

goods of the borrower that fall into a particular category in the event that the borrower defaults

on the loan. A common example involves a retailer or manufacturer granting a floating charge

over its inventory of goods. The lender does not have a right to claim the goods under a

floating charge unless the borrower defaults on the loan and the charge becomes ‘fixed and

enforceable’. Accordingly, a buyer of the goods will not be adversely affected unless a default

has occurred.

Suppliers do not need to disclose floating charges in order to comply with their obligation to

provide a guarantee as to undisclosed securities.

Guarantee as to

acceptable quality

S ection 54

Goods must be of ‘acceptable quality’. Acceptable quality is defined in section 54(2) of the

ACL such that goods are of acceptable quality if they are:

• fit for all the purposes for which goods of that kind are commonly supplied;

• acceptable in appearance and finish;

• free from defects;

• safe; and

• durable.

This definition is subject to a ‘reasonable consumer’ test, such that goods are considered to

meet those standards if a reasonable consumer, who is fully acquainted with the state and

condition of the goods, would regard them as acceptable.

In determining whether goods are of ‘acceptable quality’, a number of issues need to be

considered: the nature of the goods, the price of the goods (if relevant), any statement made

about the goods on any packaging or label on the goods, any representation made about the

goods by the supplier or manufacturer of the goods and any other relevant circumstances

relating to supply of the goods.

Consumers often want to buy goods that have defects, particularly if goods are available for

lower prices due to those defects. Some stores specialise in selling ‘seconds’ — goods that

have minor defects that otherwise do not interfere with their usefulness to consumers.

Goods will be taken to be of ‘acceptable quality’ if the reason they are not of acceptable

quality was specifically drawn to the consumer’s attention.

In addition, where a repairer accepts goods for repair, the ACL Regulations provide that

notice must be given to the consumer if it is the repairer’s usual practice to use refurbished

parts and that, if relevant, user-generated data stored of a device being repaired may be lost.

Guarantee as to fitnes s

for any dis clos ed

purpos e

S ection 55

Goods must be reasonably fit for a purpose that a consumer, expressly or by implication,

makes known to the supplier or manufacturer.

There is an exception for situations in which it us unreasonable for the consumer to rely on

the skill or judgment of a supplier or manufacturer.

Chapter 3: Specific protections

19

Guarantee Des cription

Guarantee relating to

s upply of goods by

des cription

S ection 56

Goods must correspond with their description.

This guarantee applies irrespective of the fact that goods were displayed and selected by the

consumer.

Guarantees relating to the

s upply of goods by

s ample or demons tration

model

S ection 57

Where goods are supplied by reference to a sample:

• the goods must correspond with the sample;

• the consumer will be given a reasonable opportunity to compare the goods with the

sample; and

• the goods must be free from any defect that is not apparent from reasonable examination

of the sample.

Guarantees as to repairs

and spare parts

S ection 58

A manufacturer must take reasonable steps to make repairs and spare parts reasonably

available for a reasonable period after the goods are supplied.

The period of time that is reasonable will depend on the circumstances and the nature of the

goods.

Guarantee relating to

expres s warranties

S ection 59

A manufacturer must comply with an express (or ‘manufacturer’s’) warranty.

The ACL Regulations specify that must be included in any warranty against defects offered by

a supplier. A consumer must be given notice that all products come with statutory guarantees

that cannot be excluded by law as well as certain information about any express warranty,

including any requirements the consumer must fulfil for the warranty to be honoured, the

procedure for a consumer to claim under the warranty and contact details of the person who

is giving the warranty.

Guarantee Des cription

Guarantee as to due care

and s kill

S ection 60

Services must be rendered with due care and skill.

Exclusions, which already exist in the TPA, for transport and storage of goods for the

purpose of a business and contracts of insurance will be retained.

Guarantees as to fitnes s

for a particular purpos e

S ection 61

Services must be reasonably fit for a purpose that a consumer, expressly or by implication,

makes known to the supplier.

Services must also be of a nature, quality, state and condition such that they can be

expected to achieve a result that the consumer makes known to the supplier. There is an

exception for situations where it is not reasonable for the consumer to rely on the skill or

judgment of a supplier.

The current TPA exception for services of a professional nature provided by a qualified

architect or engineer from the guarantee as to fitness for purpose will be maintained, pending

a review of that exemption three years after the commencement of the ACL.

Guarantee as to

reas onable time for supply

S ection 62

Services must be provided to consumers within a reasonable time if the time is not otherwise

fixed in a contract or agreed between the consumer and supplier.

The time period that is reasonable would depend on the particular type of services and the

circumstances applicable to the agreement.

Guarantees not to be

excluded by contract

S ection 64

A person may not exclude any of the guarantees provided for in the ACL.

Suppliers may exclude liability in respect of personal injury or death that results from the

supply of recreational services. Recreational services include sporting activity or similar

leisure-time pursuit, or any other activity that involves a significant degree of physical

exertion or physical risk that is undertaken for the purposes of recreation, enjoyment or

leisure.

Application of consumer

guarantees to supplies of

gas , electric ity or

telecommunications

S ection 65

This provision allows the Minister to make regulations for exemption of supplies of gas or

electricity or telecommunication services.

Due to the special policy considerations that apply to these essential services,

industry-specific legislation has been developed at both the Commonwealth and State and

Territory levels to deal with consumer issues in relation to these supplies.

The Australian Consumer Law — A guide to provisions

20

Unsolicited cons umer agreements

The ACL includes a single national law covering unsolicited sales practices, including

door-to-door selling, telephone sales and other forms of direct selling which do not take

place in a retail context. This national approach replaces the eight State and Territory

regulatory regimes and simplifies the rules that apply to unsolicited sales.

The national unsolicited consumer agreements law is in Chapter 3, Part 3-2, Division 2 of the

ACL and contains the following key rules:

contract after the 10-day cooling-off period in various circumstances; and

advertising the supply of goods or services, sets out standards in four areas: the times

when a telemarketer may call a consumer; specific information a telemarketer must

provide during a call; termination of calls; and requiring telemarketers to enable calling

line identification.

requirements of the ACL concerning consumers’ and suppliers’ rights and obligations

under agreements formed through telemarketing calls, such as cooling-off periods, will

apply.

Australian Communications and Media Authority at www.acma.gov.au.

In November 2009, the Standing Committee of Officials of the Ministerial Council on

Energy released a second exposure draft of the National Energy Customer Framework

(NECF).

The NECF includes provisions governing marketing activities of energy retailers,

including permitted calling times and the conduct of marketers towards customers at the

customer’s premises. The industry-specific NECF complements the generic consumer

protections provided by the ACL.

Chapter 3: Specific protections

21

The ACL regulates the making of unsolicited offers to supply goods and services to a

consumer and the agreements arising from such offers.

Under section 69(1) of the ACL, an ‘unsolicited consumer agreement’ has four elements:

place other than the supplier’s place of business) or by telephone.

negotiations to supply goods or services.

An invitation to quote a price for a good or service is not taken to be an invitation to enter into such negotiations.

Providing contact details by entering competitions or contacting a supplier in response to a missed call or other

attempt by a supplier to contact a consumer is not taken to be an invitation to enter into such negotiations.

agreement is made.

There is a rebuttable presumption that an agreement (or a proposed agreement) is an

unsolicited consumer agreement (or would be one if it were made).

The ACL provides for regulations being made that specify that certain agreements are not

unsolicited consumer agreements. To the extent that a type of agreement is specified in the

regulations, the unsolicited selling provisions do not apply at all to those agreements.

The Regulations specify agreements that are not unsolicited consumer agreements.

Bus ines s contracts

R egulation 81(1)(a)

A business contract is an agreement for the supply of goods or services that are not of a kind

ordinarily acquired for personal, domestic or household use or consumption.

Examples of goods and services that would be covered by this exemption include supplies of

industrial chemicals and servicing of aircraft engines.

Dis continued negotiations

agreement

R egulation 81(1)(b)

A discontinued negotiations agreement is an agreement that results when a consumer

discontinues negotiations with a supplier but subsequently initiates negations with the same

supplier.

Party plan events

R egulation 81(1)(c)

An event is a party plan event if a person invites three or more consumers to attend the party

plan event for the purpose of negotiating for the supply of goods or services. The invitation

must include either an express or implied statement that the purpose of the event is for the

supply of goods or services. If the statement is implied, a reasonable consumer must

understand it to indicate that the purpose of the event is for negotiating for the supply of

goods or services.

During the party plan event the person who issued the invitations, or their representative,

must be present.

R enewable agreements of

the s ame kind

R egulation 81(1)(d)

A renewable agreement of the same kind is an agreement entered into whilst another

agreement remains in force, with the same supplier, for the supply of goods or services that

are of the same kind as the goods or services supplied under the existing contract.

Examples of renewable agreements include those for the supply of electricity and

telecommunications services.

S ubs equent agreements

of the s ame kind

R egulation 81(1)(e)

A subsequent agreement of the same kind is an agreement entered into for the supply of

goods or services of the same kind as those supplied under an earlier agreement between

the supplier and the consumer. This exemption applies if the subsequent agreement is

entered into within 3 months of the initial agreement. The total value of all agreements

entered into as subsequent agreements must not exceed $500.

The Australian Consumer Law — A guide to provisions

22

The provisions apply to all forms of unsolicited selling which take place in a non-retail,

face-to-face context, regardless of whether a supplier has a traditional ‘bricks and mortar’

business or trade premises. This includes business models such as selling on the doorstep,

from trucks or out of car boots.

The unsolicited selling provisions do not apply to situations where a consumer invites a

trader to their home or other premises for the purpose of supplying goods or services. For

example, the ACL does not apply to situations where a tradesperson comes to a home,

finds that a task they have been asked by the consumer to perform is more complex than

initially thought, and must provide additional services immediately.

The unsolicited selling provisions do apply to situations where a consumer invites a trader

to their home or other premises for a purpose other than to supply goods or services, and

the supplier enters into negotiations with the consumer for supply.

The ACL sets out express obligations about the way in which consumers are approached by

dealers for the purpose of negotiating an agreement (or for an incidental or related purpose)

and about the negotiation of agreements.

Who is a dealer?

S ection 71

The meaning of ‘dealer’ is based on whether the person who contacts a consumer intends to

make an agreement to supply goods or services. A dealer does not need to be the supplier of

the goods and services.

Is a s upplier liable for

contraventions by

dealers ?

S ection 77

A supplier is liable for breaches by a dealer of the express dealer obligations, in circumstances

where the dealer is not the supplier.

When can a dealer call

on a pers on?

S ection 73

The ACL sets out the default permitted hours for calling on (as opposed to telephoning) a

consumer:

• Monday to Friday—from 9am to 6pm; and

• Saturday—from 9am to 5pm.

Dealers are prohibited from calling on a consumer on a Sunday or a public holiday.

The permitted hours specified in the ACL are default times and may be varied by individual

States and Territories by regulation under their respective application laws.

What does a dealer need

to do in dis clos ing their

purpos e and identity?

S ection 74

R egulations 82 and 93(2)

A dealer who calls on a consumer must, prior to commencing negotiations, clearly advise their

purpose for calling, and provide information about their identity that is specified in the

regulations.

Regulation 82 specifies that a dealer must provide their name. The address of the supplier of

the goods or services must also be provided. If that address is the dealer’s address, it may be

a business/workplace address, post-office box address or any other address associated with

the dealer. If the dealer is not the supplier, the address must not be a post-office box.

From 1 January 2011 to 30 June 2011, a dealer or supplier is deemed to comply with

regulation 82 if they comply with a specified law of a State or Territory dealing with providing

information about their identity. The relevant State and Territory laws are specified in a table in

regulation 93(2). The relevant State and Territory laws are saved for the purpose of this

transitional provision. This transitional arrangement will provide businesses with time to adjust

to the new law.

Chapter 3: Specific protections

23

leave premis es on

reques t?

S ection 75

any person acting with the occupier’s authority, or the prospective consumer.

If such a request is made by the prospective consumer, that consumer must not be contacted

for a similar purpose for at least 30 days after the request was made, but only in relation to that

supplier.

What does a dealer need

to s ay about ‘termination

periods ’?

S ection 76

R egulations 83, 84 and

93(3)

Prior to making an agreement with a consumer, a dealer must give the consumer information

about:

• the consumer’s right to terminate the agreement during the termination periods;

• the way in which the person can exercise that right; and

• other matters specified in the regulations.

Regulation 83 specifies that a consumer must be provided with information about the

prohibition, in section 86 of the ACL, on accepting payment or supplying goods or services

during the 10 business-day cooling-off period. The method of providing this information is not

prescribed, to allow businesses flexibility in the way in which they comply. Regulation 84

specifies that information that must be provided in writing must be:

• attached to an agreement or agreement document;

• transparent, that is, it must be expressed in reasonably plain language, legible and

presented clearly; and

• in text that is the most prominent text in the document, other than the text setting out the

dealer’s or supplier’s name or logo.

From 1 January 2011 to 30 June 2011, a dealer or supplier is deemed to comply with

regulations 83 or 84 if they comply with a specified law of a State or Territory dealing with

information that must be provided in agreements made as a result of unsolicited selling. The

relevant State and Territory laws are specified in a table in regulation 93(3). The relevant State

and Territory laws are saved for the purpose of this transitional provision. This transitional

arrangement will provide businesses with time to adjust to the new law.

The ACL sets out the express disclosure obligations and other obligations about the making

of agreements.

R equirement to give

document to the

cons umer

S ection 78

A dealer must give the consumer either:

• if the agreement was made in person — a copy of the agreement after the agreement has

been signed by the consumer; or

• if the agreement was made by telephone — a document evidencing the agreement within

5 days after the agreement was made (or a longer period agreed by the parties). This

document can be given personally, by post or, with the consumer’s consent, by email.

R equirements for a valid

agreement

S ections 79, 80 and 81

R egulations 85, 86, 87

and 93(3)

There are formal requirements for a valid agreement. The documents that are required to be

given to the consumer under section 78 must comply with all of the requirements set out in

sections 79 and 81. If an agreement was made in person, section 80 provides that the

agreement given to the consumer must comply with additional requirements.

Regulation 85 provides that the front page of an agreement or agreement document must

include the following text:

Important Notice to the Consumer

You have the right to cancel this agreement within 10 business days from and including the

day after you signed or received this agreement.

Details about your additional rights to cancel this agreement are set out in the information

attached to this agreement.

Regulation 86 provides that the front page of an agreement must be signed and dated by the

consumer.

Regulation 87 provides for a termination notice being approved by the Commonwealth

Minister. This notice will be available from consumer protection agencies prior to

1 January 2011.

From 1 January 2011 to 30 June 2011, a dealer or supplier is deemed to comply with

regulations 85, 86 or 87 if they comply with a specified law of a State or Territory dealing with

requirements for agreements made as a result of unsolicited selling. The relevant State and

Territory laws are specified in a table in regulation 93(3). The relevant State and Territory laws

are saved for the purpose of this transitional provision. This transitional arrangement will

provide businesses with time to adjust to the new law.

The Australian Consumer Law — A guide to provisions

24

The ACL contains express consumer rights, including a 10-day cooling-off right and the right

to terminate an agreement after the 10-day cooling-off period in various circumstances, as

well as provisions outlining how consumers may exercise their termination rights and the

effect of termination.

S ection 82

Consumers have a right to terminate the agreement during four time periods:

• The consumer can cool-off on their decision to enter into the agreement within 10 business

days.

• If one or more of the obligations in Subdivision B and Subdivision C are contravened, the

consumer can terminate the agreement during either 3 months or 6 months, depending on

the obligation that is contravened.

• The consumer can terminate the agreement within a period stated by the agreement.

A consumer can terminate the agreement in each of the circumstances outlined above by

giving oral or written notice of termination to the supplier by using:

• the termination notice that the consumer is required to be given under section 79(c); or

• another form of written notice, regardless of its form or content.

A consumer can give the supplier written notice personally or by post, fax or email.

An agreement that is terminated is deemed to have been rescinded by mutual consent and any

related contract or instrument is void.

The agreement is terminated even if the supplier has not received the notice of termination, or

the consumer has used or consumed the goods and services.

A consumer will need to prove that they have sent a written notice of termination. Evidence to

support the consumer’s claim might include a post office receipt, a fax transmission record, a

copy of the email and/or a copy of the written notice of termination.

The ACL sets out the entitlements of a supplier and consumer in respect of returns and

payments for goods or services supplied prior to the termination date.

Suppliers have a number of post-contractual supplier obligations, including in respect of:

• prohibitions on supplying goods or services, or accepting any consideration (including

trade-ins or other payment) during the 10-day cooling-off period;

• repayment of payments received prior to and after termination; and

• prohibitions on recovering amounts after termination.

From 1 January 2011 to 31 December 2011, dealers and suppliers are deemed to comply with

sections 76(a)(iii), 86 and 179 of the ACL if they comply with pre-existing laws that deal with

prohibitions on supply and payment. The pre-existing prohibition on receiving payment and/or

suppling goods or services during the 10-day cooling-off period varied significantly between the

States and Territories of Australia. Regulation 94(3) provides a list of State and Territory laws

that prohibited payment and/or supply during the cooling-off period. The relevant State and

Territory laws are saved for the purpose of this transitional provision.

The unsolicited selling provisions prohibit supply and payment for goods and services for 10

business days from the time an unsolicited consumer agreement is entered into. In the

aftermath of a natural disaster, such as a cyclone or flood, tradespersons sometimes go from

place to place offering to assist persons affected by the disaster.

Chapter 3: Specific protections

25

The Regulations provide an exemption from the prohibition on supply and payment, and

associated information requirements, for emergency repairs that:

located;

the health and safety of persons on the person’s property or to prevent substantial

damage to the person’s property;

The Regulations provide an exemption from the prohibition on supply and payment for 10

business days for the supply of electricity or gas if the relevant service is not connected to a

premises or a premises is connected, but no electricity or gas is being supplied.

Offences , remedies and penalties

Contraventions of the express supplier obligations under the unsolicited consumer

agreements provisions of the ACL are subject to criminal fines of up to a maximum of

$50,000 for a body corporate and $10,000 for a person other than a body corporate.

Contraventions of the unsolicited consumer agreements provisions of the ACL can attract

injunctions, damages, compensatory orders, non-punitive orders and adverse publicity

orders. The provisions are also subject to civil pecuniary penalties (with maximum penalties

of $50,000 for a body corporate and $10,000 for a person other than a body corporate), as well

as disqualification orders, redress for non-parties and public warning notices.

The Australian Consumer Law — A guide to provisions

26

Lay-by s ales

S ection 96

A lay-by agreement must be in writing, a copy of which must be given to the consumer.

A lay-by agreement is one where goods are delivered to the consumer only when the

total price of the goods has been paid, and the transaction involves payments spread

over at least three instalments (including any deposit), unless both the consumer and

supplier agree that an agreement involving two payments is a lay-by agreement.

A consumer may cancel a lay-by agreement at any time, subject to the payment of a

termination charge, which must not be more than an amount equal to reasonable costs

incurred by the supplier.

S ection 98

A supplier may cancel a lay-by agreement only if:

• the consumer has breached a term of the agreement;

• the supplier is ceasing to engage in trade or commerce; or

• the goods are no longer available.

In the event of cancellation by either party, the consumer is entitled to a full refund of

amounts paid.

Where a consumer cancels a lay-by agreement, the supplier is entitled to recover a

reasonable termination charge. This amount may be withheld from any money repaid to a

consumer or recovered from the consumer if the total amount paid by the consumer

under the lay-by agreement is not enough to cover it.

The supplier is not otherwise entitled to recover any amounts other than as permitted

under section 99 of the ACL.

S ection 97(2)

In the event of cancellation by the consumer, the consumer may be required to pay a

cancellation charge reflecting the business’s reasonable costs.

Contraventions of the lay-by sales rules of the ACL are subject to criminal fines of up to

$30,000 for a body corporate and $6,000 for a person other than a body corporate.

Contraventions of the lay-by sales rules of the ACL can attract injunctions, damages,

compensatory orders, non-punitive orders and adverse publicity orders. There are also civil

pecuniary penalties, with maximum penalties of $30,000 for a body corporate and $6,000 for

a person other than a body corporate, and public warning notices.

Chapter 3: Specific protections

27

Mis cellaneous provis ions

Section 100 of the ACL provides that a consumer must receive a proof of transaction if the

total price of the goods or services supplied to them is $75 or more, or if the total price is less

than $75 and the consumer requests such proof, being:

supplier, if applicable;

Section 101 of the ACL provides the right for a consumer to request an itemised bill within

30 days of receiving a bill or account for services performed by a supplier. A supplier is not

permitted to charge a consumer for the preparation of an itemised bill. Such a bill must be

provided within seven days, be clear and legible, and must specify how costs to perform a

particular service are calculated, including, where applicable:

The GST law requires that a tax invoice include the ABN and name of the supplier, the

words ‘tax invoice’ stated prominently, the date of issue of the tax invoice, and the price and

description of the taxable supply. If the total amount on the tax invoice is $1,000 or more, it

must also include the ABN and name of the recipient, and a brief description and quantity of

the goods or services supplied.

Tax invoices provided under the GST law meet the requirements of a proof of transaction

under the ACL.

The Australian Consumer Law — A guide to provisions

28

Chapter 3, Part 3-3 of the ACL introduces a new national consumer product safety law for

Australia. It is based on the existing TPA, with changes to implement reforms agreed to by

COAG.

In July 2008, COAG agreed to create a national consumer product safety regulatory

framework, with the following characteristics:

provisions of the TPA;

permanent safety bans which will both apply nationally;

which will usually last for 60 days unless extended for up to a further 60 days; and

In addition, the national costumer product safety framework incorporates the following

installation and maintenance of consumer products;

reasonably foreseeable conditions of use, will or may cause injury to any person;

serious injury or death; and

be found to undertake the recall.

Chapter 3: Specific protections

29

In addition to the legislative reforms contained in the ACL, the Ministerial Council of

Consumer Affairs (MCCA) has charged Australia’s product safety regulatory agencies

with making significant administrative and operational improvements to product safety

regulatory arrangements based on recommendations of the PC in its 2006 Review.

been developed to provide consumers and businesses with access to regulatory

information concerning the safety of particular products and services.

approach. The clearing house will consist of a centrally managed database of incident

data and information from a range of sources, including Commonwealth, State and

Territory government agencies.

regulatory and enforcement activities is posted and discussions can take place between

regulators.

Understanding (MOU). The MOU sets out the administrative and enforcement

relationships and protocols between the agencies, including in relation to product

safety.

Part 3-3, Divisions 2, 3 and 4 of the ACL set out triggers under which safety bans, recalls or

warning notices may be issued in respect of particular goods or services.

These triggers apply to consumer products that appear as if: (i) they will or may cause injury

to any person; or (ii) a reasonably foreseeable use (including a misuse) of that product will or

may cause injury to any person.

The first part of this test simply continues the current criteria for making bans, standards,

recalls or safety warnings. The second part of this test clarifies that a Minister may take

action where common uses of a good, even if not the normal or intended use for that good,

may pose a safety risk.

The concept of ‘reasonably foreseeable use’ is already part of the product safety laws in

Victoria, NSW and WA, and is a concept used in duty of care cases at common law. In its

2006 Review, the PC recommended that the triggers for taking regulatory actions should

include where the reasonably foreseeable use of a product poses an unacceptable safety risk.

The Australian Consumer Law — A guide to provisions

30

Research undertaken on behalf of the Standing Committee of Officials of Consumer Affairs

The PC

indicates that the vast majority of accidents involving consumer products arise

through misuse of the product by the consumer. In some cases, this misuse of a product

could represent a common use of that product or a use that would readily be foreseen by

the manufacturer or supplier. This can often be the case in respect of children’s products.

2

Product safety regulatory action under the ACL (such as bans, recalls or warning notices)

can be taken where a product may pose a risk of injury even if used in a way that is

different to that product’s intended or normal use. It is not the intention of the ACL to

allow regulatory action to be taken where a consumer has unreasonably used a product,

taking into account the ordinary use that that kind of product is safely put to and the

presence of any warning or other information.

found that the definition of ‘reasonably foreseeable use’ should reflect both the

predictability of the use and the reasonableness of the use. A reasonably foreseeable

misuse is not limited to unintentional errors in use by a consumer.

S afety of s ervices

Chapter 3, Part 3-3 of the ACL applies to services which relate to the supply, installation,

maintenance assembly or delivery of consumer goods (product-related services). Product

safety regulatory action (bans, standards, recalls or warning notices) can be taken in respect

of both consumer goods and product-related services. Previously, product safety action

under the TPA could only be taken for safety of goods and was silent on safety of services.

Services may be unsafe because of the nature of the service itself, or because of the

relationship between the service and a particular good, such as the assembly or installation

of a product, like installing looped blind cords within easy reach of small children and

infants, or the assembly of a bicycle.

In its 2006 Review, the PC found that there are net benefits in extending safety regulation

in certain situations to cover particular kinds of services. The ACL allows product safety

regulatory action to be taken with respect to product-related services where appropriate in

the circumstances. A regulatory impact analysis on a case-by-case basis would be

undertaken before a new standard is made for services.

In the absence of extending regulation to product-related services, governments would not

be able to act to protect the safety of consumers in relation to services.

(TTMRA), amongst other things, are designed to remove barriers to the supply of goods

2 PC 2006 Review, page 142.

Chapter 3: Specific protections

31

between Australia’s States and Territories and between Australia and New Zealand,

respectively.

temporary exemption procedures apply automatically whenever an interim safety ban is

made under the ACL, and in respect of the TTMRA, whenever an interim or permanent

safety ban is made.

certain goods that can be lawfully sold in one jurisdiction to be sold in another jurisdiction

without meeting additional regulatory requirements. Jurisdictions can make temporary

exemptions under these Acts in certain circumstances, including for product safety

purposes.

In certain circumstances, particular goods can be temporarily exempted from the MRA

and/or the TTMRA for a period of up to 12 months. Where a jurisdiction considers that

the characteristics, use or foreseeable use or misuse of particular goods could threaten

public health or safety or the environment, then it may unilaterally invoke a temporary

exemption on that good from the MRA and/or the TTMRA for its jurisdiction.

Temporary exemptions are resolved by the relevant Ministerial Council, either by

revoking the temporary exemption or aligning regulation in all jurisdictions.

Chapter 3, Part 3-3, Division 1 of the ACL specifies the grounds on which safety standards

may be made for consumer goods and product-related services, and the matters they can

deal with.

Grounds for making a

s tandard

S ections 104 & 105

The responsible Commonwealth Minister may make a safety standard in relation to

particular kinds of goods or product-related services. Alternatively, a standard developed

by Standards Australia Limited or another prescribed body may be declared by the

Commonwealth Minister to be a safety standard under the ACL.

Content of a s tandard

S ection 104

Safety standards may relate to the design, construction or testing of products or presence

of warnings on products, and to the skills and qualifications of product-related service

providers or testing of product-related services.

Harmonis ation of exis ting

s tandards

MCCA is engaged in a project to harmonise product safety standards that currently exist in

each jurisdiction. From the commencement of the ACL on 1 January 2011, existing safety

standards will continue in force, subject to the repeal of any standards that are no longer

necessary or are duplicative across jurisdictions

New s tandards under the

ACL

New safety standards made after the commencement of the ACL on 1 January 2011 will

be subject to regulatory impact analysis and the governance requirements of the ACL IGA

on a case-by-case basis.

The Australian Consumer Law — A guide to provisions

32

S afety bans

Chapter 3, Part 3-3, Division 2 of the ACL sets out the procedures for banning the supply of

particular consumer goods or product-related services. Two types of bans can be made –

interim bans and permanent bans.

Chapter 3, Part 3-3, Division 2, Subdivision A of the ACL deals with interim bans, and sets

out the procedures for making an interim ban and the key features of interim bans.

Making an interim ban

S ection 109

The responsible Commonwealth Minister and the responsible State or Territory Minister

may make an interim ban if it appears that:

• particular consumer goods will or may cause injury to any person;

• a reasonably foreseeable use (including a misuse) of particular consumer goods will

or may cause injury to any person; or

• there exists an interim ban for consumer goods or product-related services of that

kind in another jurisdiction.

Application of an interim ban

S ections 110 & 112

Interim bans made must be published on the internet. Interim bans made by the

Commonwealth Minister apply nationally in all jurisdictions, while interim bans made by a

State or Territory Minister apply in that State or Territory only. A State or Territory interim

ban will cease to have effect if there is a Commonwealth interim ban for the same good or

service.

Time limits for interim bans

S ection 111

Interim bans last for 60 days and can be extended by the responsible Minister for 30 days

and a further 30 days by the Commonwealth Minister if necessary.

Chapter 3, Part 3-3, Division 2, Subdivision B of the ACL sets out the procedures for making

permanent bans and the key features of permanent bans. Subdivision B is structured in a

similar way to Subdivision A for interim bans, however, only the Commonwealth Minister

may make permanent bans.

Making a permanent ban

S ection 114

A permanent ban can only be made by the responsible Commonwealth Minister. A

permanent ban can be made where it appears that:

• particular consumer goods will or may cause injury to any person; or

• a reasonably foreseeable use (including a misuse) of particular consumer goods will

or may cause injury to any person; or

• there exists an interim ban for consumer goods or product-related services of that

kind in another jurisdiction.

Application of permanent

bans

S ections 115 & 117

Permanent bans apply nationally in all jurisdictions and remain in force until revoked by

the responsible Commonwealth Minister.

MCCA has engaged in a project to rationalise and harmonise product safety bans in each

jurisdiction. This project is being led by the ACCC. Existing bans continue to be in force from

the commencement of the ACL on 1 January 2011, with the repeal of any bans that are no

longer necessary or are duplicative across jurisdictions.

Chapter 3: Specific protections

33

Product recalls

Chapter 3, Part 3-3, Division 3 of the ACL sets out the procedures for Ministers to order the

mandatory recall of consumer goods. Division 3 also sets out the reporting requirements for

suppliers who undertake voluntary recalls.

Chapter 3, Part 3-3, Division 3, Subdivision A sets out procedures for mandatory recalls.

Ordering a mandatory recall

S ection 122

The responsible Commonwealth Minister or a responsible State or Territory Minister may

order a supplier, or a regulator where the supplier cannot be found, to recall consumer

goods.

Grounds for ordering a

mandatory recall

S ection 122

A mandatory recall can be ordered if it appears:

• particular goods will or may cause injury to any person;

• a reasonably foreseeable use (including a misuse) of particular goods will or may

cause injury;

• a safety standard for those goods has not been complied with; or

• there is an interim or permanent ban in force for those goods; and no supplier has

taken satisfactory action to prevent the goods from causing injury.

Contents of a recall notice

S ection 123

A recall order can require a supplier to do any or all of the following activities:

• recall and remove certain goods from the market;

• inform the public of the dangers associated with certain goods; and/or

• replace, repair or provide a refund for the recalled goods.

R equirements on s uppliers

S ections 124 & 125

A supplier that repairs or replaces a recalled good must ensure that the replacement

good does not contain any defects and complies with the relevant safety standards.

Further, where a recalled good has been supplied to a person overseas, the supplier

must notify that other person about the recall and report this to the Commonwealth

Minister.

Interaction between recalls

S ection 126

A State or Territory recall notice ceases to have effect where a Commonwealth recall is

made for those same goods.

Chapter 3, Part 3-3, Division 3, Subdivision B of the ACL provides that, where a supplier

voluntarily undertakes a recall because of concerns about the safety of its products, the

supplier must notify the responsible Commonwealth Minister with details of the voluntary

recall.

Notification requirements

S ection 128

The supplier must notify the responsible Commonwealth Minister (through the ACCC) of

the details of a voluntary recall, within two days of the recall.

Information to be reported

S ection 128

The supplier must report the following information to the Commonwealth Minister about a

voluntary recall:

• the defect or dangerous characteristic in the recalled goods;

• how a reasonably foreseeable use or misuse of the recalled goods could be

dangerous;

• whether a relevant safety standard has not been complied with; and

• whether a relevant interim or permanent ban exists.

The Australian Consumer Law — A guide to provisions

34

S afety warning notices

Chapter 3, Part 3-3, Division 4 of the ACL allows responsible Commonwealth, State and

Territory Ministers to publish safety warning notices in relation to potentially unsafe goods

and product-related services.

Section 129 sets out the grounds for making, and the contents of, a safety warning notice.

Unlike with safety standards, bans and recalls, safety warning notices do not restrict the

supply of goods or services. Rather, they are designed for situations where investigation is

needed to determine whether a product or service pose an unacceptable risk of injury to any

person, and whether any further regulatory action in the form of a ban, standard or recall is

necessary. They also enable responsible Ministers to warn consumers of the potential

dangers with using certain products.

Mandatory reporting of acc idents

Sections 131 and 132 of the ACL set out the mandatory reporting requirements for consumer

goods and product-related services, respectively. A supplier must notify the Commonwealth

Minister if it becomes aware that a product or service which it has supplied caused, or may

have caused, a death, serious injury or illness. A supplier must also report if they become

aware that another person (such as a consumer) considers that the product either caused or

may have caused the accident. All suppliers in the supply chain involved in supplying the

particular product or service in question must report the prescribed information to the

ACCC.

The mandatory reporting obligation in Division 5 is triggered where a supplier becomes

aware that a good or service it has supplied caused or may have caused a death, serious

injury or illness of another person, or becomes aware that another person considers that

the supplier’s good or service caused or may have caused a death, serious injury or illness.

Suppliers are not required to make themselves aware of anything that they would not

become aware of in the ordinary course of their business.

However, a supplier is not required to report information where it is clear that their

product did not cause the accident or is very unlikely to have been the cause. The supplier

is also not required to report if they or another person have a similar obligation under

another law or under a prescribed industry code.

Information reported under Division 5 is not an admission of liability by suppliers.

Information reported to the Commonwealth Minister is required to be treated confidentially

and cannot be disclosed except in certain specified circumstances. A report provided is not

an admission of liability of a supplier that its product was the cause of an accident.

Chapter 3: Specific protections

35

The ACL provides that specific kinds of goods and services may be exempt from the

mandtoary reporting requirement where a similar reporting requirement already applies

via another law of the Commonwealth or a State or Territory or an industry code of

conduct.

The ACL Regulations specify Commonwealth, State and Territory legislation that has

similar reporting requirements. These relate to four broad categories of goods and

incidents:

The ACL Regulations also provide an exemption for incidents required to be reported

pursuant to a State or Territory coroner’s Act.

Offence provis ions

Criminal offences are contained in Part 4-3 of the ACL for serious contraventions of the

consumer product safety provisions, including supplying goods and product-related

services that do not comply with a relevant product safety standard, interim or permanent

ban or mandatory recall order. These contraventions carry maximum fines of $1.1 million for

a body corporate or $220,000 for a person other than a body corporate.

Part 4-3 of the ACL also provides fines of $16,650 for a body corporate or $3,330 for a person

other than a body corporate for failing to comply with the notification or reporting

requirements of the product safety provisions.

R emedies and penalties

Remedies available for breaching a product safety provision include injunctions, damages,

compensatory orders, non-punitive orders and adverse publicity orders. Civil pecuniary

penalties may also apply with a maximum penalty of up to $1.1 million for a body corporate

and $220,000 for a person other than a body corporate. Disqualification orders, redress for

non-parties and public warning notices are also available.

E nforcement relating to the s afety of cons umer goods and

product-related s ervices

The ACCC has been given stronger powers to undertake market surveillance and

enforcement of the new national product safety law. These powers are based on existing

powers in the States and Territories, but are available to the ACCC for the first time in

connection with the ACL.

The Australian Consumer Law — A guide to provisions

36

Chapter 3, Part 3-4 of the ACL provides the responsible Commonwealth Minister with a

power to prescribe standards about the information required to be provided by suppliers.

Part 3-4 replaces the existing information standards provisions in Part V, Division 1A of the

TPA, but with a number of amendments.

Information s tandards

making power

S ections 134 & 135

Only the responsible Commonwealth Minister has the power to prescribe information

standards in respect of any good or service under the ACL. Alternatively, the Minister may

declare that a standard made by Standards Australia or another prescribed body is an

information standard under the ACL.

Publication of information

s tandards

S ection 134

Information standards must be published on the internet.

Non-compliance with an

information s tandard

S ections 136 & 137

It is a breach of the ACL for a supplier of a particular good or service to sell, offer,

possess or manufacture goods, or to supply or offer services, without complying with the

requirements of an information standard in force for such goods or services.

ACL commences on 1 January 2011. SCOCA is currently considering a process to retain,

revise or repeal existing State and Territory information standards.

From 1 January 2011, a single set of information standards will apply nationally under

the ACL.

The supply of goods or services in breach of a relevant information standard is a criminal

offence under Chapter 4, Part 4-4 of the ACL. Maximum fines of $1.1 million for a body

corporate and $220,000 for a person other than a body corporate can apply.

Remedies available for a breach of an information standard requirement include injunctions,

damages, compensatory orders, non-punitive orders and adverse publicity orders. Civil

pecuniary penalties of up to $1.1 million for bodies corporate and $220,000 for persons other

than bodies corporate can also apply. Disqualification orders, infringement notices, redress

for non-parties and public warning notices are also available.

Chapter 3: Specific protections

37

Chapter 3, Part 3-5 of the ACL sets out the statutory rules for dealing with liability claims for

loss or damage, including economic loss, caused by supplying goods which contain a safety

defect.

Any person, as well as a regulator on behalf of a consenting individual, may commence an

action against a manufacturer to recover compensation where the person has suffered loss or

injury as a result of defective goods being supplied.

Grounds for bringing a

liability ac tion agains t a

manufacturer

S ections 138-141

A liability action can be brought against a manufacturer where:

• loss or damage was suffered as a result of injuries sustained because of defective

goods;

• loss or damage was suffered as a result of another individual sustaining injuries

because of defective goods;

• loss or damage was suffered as a result of another good being destroyed or damaged

because of defective goods; and/or

• loss or damage was suffered as a result of land, a building or a fixture being

destroyed or damaged because of defective goods.

Unidentified manufacturer

S ection 147

For the purposes of bringing a liability action against the manufacturer of a defective

good, a plaintiff can request other suppliers of the good to provide information to help

identify the manufacturer. A failure to provide such information could make the supplier

liable to provide compensation for the loss or damage suffered.

Defences for manufacturers

S ections 142 & 148

The following defences are available to manufacturers:

• the safety defect did not exist at the time the goods were supplied;

• the defect arose only because a mandatory standard was complied with;

• the state of scientific and technical knowledge did not enable the manufacturer to

discover the defect; and/or

• the good was part of another good, and the defect arose only because of the design

or packaging of that other good.

Where a good is defective only because it complied with a Commonwealth mandatory

standard, then the Commonwealth and not the manufacturer will be liable for the loss or

damage suffered.

Differences in drafting and the order of provisions between Part 3-5 of the ACL and Part VA

of the TPA reflect changes to the drafting conventions since Part VA was originally included

in the TPA in 1992. These changes have no effect on the operation of the provisions and do

not interfere with the previous judicial interpretation of these provisions.

There are no offence provisions in the ACL relating to Part 3-5.

Part 3-5 of the ACL provides for a statutory regime for commencing liability actions against

manufacturers to recover compensation. Accordingly, the ACL does not set out the remedies

and penalties available for breaching a provision of Part 3-5 since the provisions provide

guidance to the courts.

39

Chapter 4 of the ACL provides that some contraventions of the ACL may also be criminal

offences. A conviction may only be recorded and a criminal sanction may only be imposed

by a court where the breach has been proved to the criminal standard of proof (beyond

reasonable doubt). Chapter 4 is based on provisions in Part VC of the current TPA as well as

relevant provisions of State and Territory consumer legislation.

The existence of these criminal offences does not displace the ability of a consumer law

enforcement agency to seek lesser penalties, which require the breach to be proved to the

civil standard of proof (on the balance of probabilities). These remedies and penalties are

discussed in Chapter 5 below.

Part 4-6 of the ACL sets out defences that apply to all of the offence provisions. These are:

suspect the advertisements were in breach of the consumer laws; and

information standards for the purposes of resupply, where they were not acquired from

outside Australia and the person could not have known they were non-compliant, or

relied on information from the person they bought them from that there was no such

standard.

Part 4-7 of the ACL sets out a number of procedural matters, including:

breach;

almost the same time, the court must not impose a total aggregate fine of more than the

maximum for one contravention; and

The Australian Consumer Law — A guide to provisions

40

ACL provis ions Maximum fine for bodies corporate Maximum fine for other pers ons

P art 4-1

Unfair practices

$5,000 for section 165 (multiple pricing)

$1.1 million for all other offences

$1,000 for section 165 (multiple pricing)

$220,000 for all offences

P art 4-2, Divis ion 1

Cons umer guarantees

$50,000 for section 169 (display

notices)

$10,000 for section 169 (display

notices)

P art 4-2, Divis ion 2

Uns olicited cons umer agreements

$50,000 for all offences $10,000 for all offences

P art 4-2, Divis ion 3

Lay-by agreements

$30,000 for all offences $6,000 for all offences

P art 4-2, Divis ion 4

Mis cellaneous

$50,000 for all offences $10,000 for all offences

P art 4-3, Divis ion 1

S afety s tandards

$1.1 million for all offences except:

$22,000 for section 196 (requirement to

nominate a safety standard)

$220,000 for all offences except:

$4,400 for section 196 (requirement to

nominate a safety standard)

P art 4-3, Divis ion 2

B ans on cons umer goods and

product related s ervices

$1.1 million for all offences $220,000 for all offences

P art 4-3, Divis ion 3

R ecall of cons umer goods

$1.1 million for compliance with recall

orders

$16,650 for sections 200 (Notification

of persons who supply consumer

goods outside Australia if there is no

compulsory recall) and 201 (Notification

requirements for a voluntary recall of

consumer goods)

$220,000 for compliance with recall

orders

$3,330 for sections 200 (Notification of

persons who supply consumer goods

outside Australia if there is no

compulsory recall) and 201

(Notification requirements for a

voluntary recall of consumer goods)

P art 4-3, Divis ion 4

Consumer goods , or product related

s ervices as s ociated with death or

s erious injury or illnes s

$16,650 $3,330

P art 4-4

Offences relating to information

s tandards

$1.1 million for all offences $220,000 for all offences

P art 4-5

Offences relating to s ubs tantiation

notices

$16,500 for section 205 (compliance

with substantiation notices)

$27,500 for section 206 (false or

misleading information in response to a

substantiation notice)

$3,300 for section 205 (compliance

with substantiation notices)

$5,500 for section 206 (false or

misleading information in response to a

substantiation notice)

41

The ACL introduces:

in administering the ACL. These powers will be supported by national guidance on their

use;

law enforcement agencies in pursuing non-criminal breaches of the law. These penalties

may be imposed by a court when the breach has been proven to the civil standard of

proof (on the balance of probabilities); and

law enforcement agencies and private litigants in enforcing their rights under the ACL.

These powers, penalties and remedies apply to the majority of the consumer protection

provisions in the ACL. Each enforcement provision states to which consumer protection

provisions (whether sections, Divisions or Parts) of the ACL it applies.

Section 18 (misleading and deceptive conduct) is a particular exception because, as is the case

currently, it is not the subject of punitive measures such as criminal sanctions, civil pecuniary

penalties or disqualification orders.

The Australian Consumer Law — A guide to provisions

42

Under section 218 of the ACL, a regulator may accept court-enforceable undertakings in

connection with a matter for which the regulator has a power or function under the ACL.

In practice, if a person becomes aware they may have breached the ACL, they will be able to

offer an undertaking to the regulator to the effect that, for example, they will not engage in

the conduct again and will institute a compliance program. Failure to comply can result in

the undertaking being enforced by the court.

A person can always offer an undertaking to a regulator. However, a regulator is not

obliged to accept undertakings.

For instance, the regulator may believe that the undertaking is not detailed enough, does

not include an admission of a breach where it believes there should be one, or the

regulator may believe the breach is too serious not to take court action.

Part 5-1, Division 2 of the ACL allows a regulator to issue a substantiation notice. When a

regulator becomes aware of a representation that may appear to contravene the ACL, it can

require a person to provide information which could be capable of supporting the claim, or

ask for particular documents that may be relevant to the claim.

This is a preliminary investigative tool to seek information about claims or representations

that may assist a regulator in determining whether to take action for a suspected breach of

consumer protection provisions of the ACL. Substantiation notices do not require the person

to prove that a representation is true or is not misleading.

Section 223 of the ACL allows a regulator to issue a public warning notice, provided certain

conditions are satisfied.

Public warning powers allow regulators to issue a warning notice to the public in respect of a

suspected breach of certain provisions in the ACL.

Chapter 5: Enforcement and remedies

43

Chapters 2, 3 or 4 of the ACL.

the conduct.

The ACL also allows public warning notices where a person refuses or fails to respond to a

substantiation notice and the regulator believes it is in the public interest to issue a notice.

Alleged breaches of certain provisions of the ACL, as applied as a law of the Commonwealth

and enforced by the ACCC and ASIC, can be the subject of an infringement notice.

Provis ions Infringement notice

amounts for lis ted

corporations

Infringement notice

amounts for other bodies

corporate

Infringement notice

amounts for other pers ons

P art 2-2

Uncons cionable conduct

600 penalty units

(currently $66,000)

60 penalty units (currently

$6,600)

12 penalty units (currently

$1,320)

P art 3-1, Divis ions 1 and 2

Unfair practices

(except s ubs ection 32(1),

35(1), 36(1), (2) or (3), s ection

40 or 43)

600 penalty units

(currently $66,000)

60 penalty units (currently

$6,600)

12 penalty units (currently

$1,320)

P art 3-1, Divis ion 3

P yramid s chemes

600 penalty units

(currently $66,000)

60 penalty units (currently

$6,600)

12 penalty units (currently

$1,320)

P art 3-1, Divis ion 4

Pricing

10 penalty units

(currently $1,100) for

section 47(1) (multiple

pricing)

600 penalty units

(currently $66,000) for

section 48 (component

pricing)

10 penalty units (currently

$1,100) for section 47(1)

(multiple pricing)

60 penalty units (currently

$6,600) for section 48

(component pricing)

2 penalty units (currently

$220) for section 47(1)

(multiple pricing)

12 penalty units (currently

$1,320) for section 48

(component pricing)

P art 3-1, Divis ion 5

Other unfair practices

600 penalty units

(currently $66,000)

60 penalty units (currently

$6,600)

12 penalty units (currently

$1,320)

P art 3-2, Divis ion 1

Cons umer guarantees

55 penalty units

(currently $6,050) for

section 66(2) (display

notices)

55 penalty units (currently

$6,050) for section 66(2)

(display notices)

11 penalty units (currently

$1,210) for section 66(2)

(display notices)

P art 3-2, Divis ion 2

Uns olicited cons umer

agreements

(except s ection 85)

60 penalty units

(currently $6,600)

60 penalty units (currently

$6,600)

12 penalty units (currently

$1,320)

P art 3-2, Divis ion 3

Lay-by agreements

(except s ubs ection 96(2))

55 penalty units

(currently $6,050) for

section 66(2) (display

notices)

55 penalty units (currently

$6,050) for section 66(2)

(display notices)

11 penalty units (currently

$1,210) for section 66(2)

(display notices)

The Australian Consumer Law — A guide to provisions

44

Provis ions Infringement notice

amounts for lis ted

corporations

Infringement notice

amounts for other bodies

corporate

Infringement notice

amounts for other pers ons

P art 3-2, Divis ion 4

Mis cellaneous

20 penalty units

(currently $2,200) for

sections 100(1), 100(3),

101(3) or 101(4)

60 penalty units

(currently $6,600) for

sections 102(2) or

103(2)

20 penalty units (currently

$2,200) for sections 100(1),

100(3), 101(3) or 101(4)

60 penalty units (currently

$6,600) for sections 102(2) or

103(2)

4 penalty units (currently

$440) for sections 100(1),

100(3), 101(3) or 101(4)

12 penalty units (currently

$1,320) for sections 102(2) or

103(2)

P art 3-3, Divis ion 1

S afety s tandards

(s ubs ections 106(1), (2), (3)

or (5) or 107(1) or (2))

600 penalty units

(currently $66,000)

60 penalty units (currently

$6,600)

12 penalty units (currently

$1,320)

P art 3-3, Divis ion 2

B ans on cons umer goods

and product related s ervices

(s ubs ections 118(1), (2), (3)

or (5) or 199(1) or (2))

600 penalty units

(currently $66,000)

60 penalty units (currently

$6,600)

12 penalty units (currently

$1,320)

P art 3-3, Divis ion 3

R ecall of cons umer goods

30 penalty units

(currently $3,300) for

sections 125(4), 128(2)

or 128(6)

600 penalty units

(currently $66,000) for

sections 127(1) or (2)

30 penalty units (currently

$3,300) for sections 125(4),

128(2) or 128(6)

60 penalty units (currently

$6,600) for sections 127(1) or

(2)

6 penalty units (currently

$660) for sections 125(4),

128(2) or 128(6)

12 penalty units (currently

$1,320)for sections 127(1) or

(2)

P art 3-3, Divis ion 5

Cons umer goods or

product-related s ervices

as s ociated with death,

s erious injury or illnes s

30 penalty units

(currently $3,300) for

sections 131(1) or

132(1)

30 penalty units (currently

$3,300) for sections 131(1) or

132(1)

6 penalty units (currently

$660) for sections 131(1) or

132(1)

P art 3-4

Information s tandards

600 penalty units

(currently $66,000) for

sections 136(1), (2) or

(3) or 137(1) or (2)

60 penalty units (currently

$6,600) for sections 136(1),

(2) or (3) or 137(1) or (2)

12 penalty units (currently

$1,320) for sections 136(1),

(2) or (3) or 137(1) or (2)

P art 5-1, Divis ion 2

S ubs tantiation notices

30 penalty units

(currently $3,300) for

section 221(1)

50 penalty units

(currently $5,500) for

section 222(1)

30 penalty units (currently

$3,300) for section 221(1)

50 penalty units (currently

$5,500) for section 222(1)

6 penalty units (currently

$660) for section 221(1)

10 penalty units (currently

$1,100) for section 222(1)

A person issued with a notice can pay the stated amount and avoid liability to court action

(which can include penalties) by the Commonwealth, including the ACCC or ASIC, for the

alleged breach of the law. Payment of a notice does not avoid possible action by private

parties, such as affected consumers.

Unlike infringement notices in State and Territory laws such as parking infringements,

failure to pay does not result in enforcement of the notice through the courts. The only

impact of non-payment of a notice is that the Commonwealth retains the right to pursue the

alleged breach of the ACL in court, which may expose the person to civil pecuniary penalties

much higher than the amount of the infringement notice (up to $1.1 million for bodies

corporate and $220,000 for a person other than a body corporate for some provisions of the

ACL).

Chapter 5: Enforcement and remedies

45

The Australian Consumer Law — A guide to provisions

46

A person who breaches specified provisions of the ACL may be liable to pay a civil

pecuniary penalty under section 224 of up to $1.1 million for bodies corporate and $220,000

for persons other than a body corporate. A civil pecuniary penalty may only be imposed by a

court which has found that, at the civil standard of proof, a breach of the ACL has occurred.

Civil pecuniary penalties enable a targeted and proportionate regulatory response, in

addition to increasing the deterrent effect of consumer law provisions.

Provis ions Maximum civil pecuniary penalty for

bodies corporate

Maximum civil pecuniary penalty for

other pers ons

P art 2-2

Uncons cionable conduct

$1.1 million $220,000

P art 3-1, Divis ions 1 and 2

Unfair practices

$1.1 million $220,000

P art 3-1, Divis ion 3

P yramid s chemes

$1.1 million $220,000

P art 3-1, Divis ion 4

Pricing

$5,000 for section 47(1) (multiple

pricing)

$1.1 million for section 48 (component

pricing)

$1,000 for section 47(1) (multiple

pricing)

$220,000 for section 48 (component

pricing)

P art 3-1, Divis ion 5

Other unfair practices

$1.1 million $220,000

P art 3-2, Divis ion 1

Cons umer guarantees

$50,000 for section 66(2) (display

notices)

$10,000 for section 66(2) (display

notices)

P art 3-2, Divis ion 2

Uns olicited cons umer agreements

(except s ection 85)

$50,000 $10,000

P art 3-2, Divis ion 3

Lay-by agreements

(except s ubs ection 96(2))

$30,000 $6,000

P art 3-2, Divis ion 4

Mis cellaneous

$15,000 for sections 100(1), 100(3),

101(3) or 101(4)

$50,000 for sections 102(2) or 103(2)

$3,000 for sections 100(1), 100(3),

101(3) or 101(4)

$10,000 for sections 102(2) or 103(2)

P art 3-3, Divis ion 1

S afety s tandards

(s ubs ections 106(1), (2), (3) or (5) or

107(1) or (2))

$1.1 million $220,000

P art 3-3, Divis ion 2

B ans on cons umer goods and

product related s ervices

(s ubs ections 118(1), (2), (3) or (5) or

199(1) or (2))

$1.1 million $220,000

Chapter 5: Enforcement and remedies

47

Provis ions Maximum civil pecuniary penalty for

bodies corporate

Maximum civil pecuniary penalty for

other pers ons

P art 3-3, Divis ion 3

R ecall of cons umer goods

$16,500 for sections 125(4), 128(2) or

128(6)

$1.1 million for sections 127(1) or (2)

$3,300 for sections 125(4), 128(2) or

128(6)

$220,000 for sections 127(1) or (2)

P art 3-3, Divis ion 5

Cons umer goods or product-related

s ervices as s ociated with death,

s erious injury or illnes s

$16,500 for sections 131(1) or 132(1) $3,300 for sections 131(1) or 132(1)

P art 3-4

Information s tandards

$1.1 million for sections 136(1), (2) or

(3) or 137(1) or (2)

$220,000 for sections 136(1), (2) or (3)

or 137(1) or (2)

P art 5-1, Divis ion 2

S ubs tantiation notices

$16,500 for section 221(1)

$27,500 for section 222(1)

$3,300 for section 221(1)

$5,500 for section 222(1)

Part 5-2, Division 2 of the ACL allows a court to issue injunctions with respect to

contraventions or attempted contraventions of the ACL or conduct which relates to either of

those things.

The injunctive power in the ACL is very broad and may be used to either restrain a person

from doing something or require a person to do a particular thing. Section 232 provides

some guidance as to the types of injunctions that may be made under this broad power.

Section 236 of the ACL provides a right for a person to apply to a court for damages to

compensate them for their loss or damage resulting from a contravention of the ACL.

The right of a person to apply to a court for damages for a breach of the ACL reflects a

similar right which has existed under the TPA since its commencement in 1974.

Part 5-2, Division 4, Subdivision A of the ACL provides a right for a person to apply to a

court for a compensation order, to compensate the person for loss or damage suffered, or

likely to be suffered, as a result of a contravention of the ACL.

The Australian Consumer Law — A guide to provisions

48

The court may make any order it considers appropriate to compensate the person or reduce

their loss or damage. Orders that might be made under this provision are listed in section 43

of the ACL in a non-exhaustive way, and may include orders to vary contracts, refund

money, return property or pay compensation.

These orders can be sought by a person, or by a regulator in representative proceedings.

Section 239 provides a regulator with the power to apply to a court for orders to give redress

to persons not named in the proceedings, where there has been a contravention of the ACL.

A court may make any order it considers appropriate. Redress could include, in this context,

refunds, contract variations and non-financial redress such as apologies. In making an order

for non-party redress the court may not make an award of damages. This is because it is

necessary, in assessing damages, to consider the particular circumstances of the individual to

whom the award of damages is to be made.

Orders that might be made under this provision are listed in section 243 of the ACL in a

non-exhaustive way, and may include orders to vary contracts, refund money, return

property or pay compensation.

Under section 241 of the ACL a person is not obliged to accept redress under a non-party

order, but if the person does so, they will forfeit any other right of action they may have.

Section 246 of the ACL gives a regulator the power to seek a non-punitive order in

connection with a contravention of the ACL. The court may impose a remedy to redress

harm suffered in the community from a contravention, and which will help those in breach

to comply with the ACL in the future.

Non-punitive orders are directed at redressing the harm caused by a contravention of the

ACL rather than punishing the person.

Section 247 of the ACL gives a regulator the power to seek an adverse publicity order in

connection with a contravention of the ACL.

Chapter 5: Enforcement and remedies

49

An adverse publicity order is an order to publish or disclose particular information, is

punitive in nature and is aimed at deterring future contraventions and encouraging

compliance.

Section 248 of the ACL provides that a court may disqualify a person from managing a

corporation in connection with contraventions or offences under the ACL. This penalty can

apply to any person engaged in the management of a corporation — including directors and

officers — which is engaged or involved in contraventions or offences under the ACL.

This penalty can be particularly effective in dealing with individuals who engage in ‘phoenix

company’ activities or ‘fly-by-night’ behaviour.

The Australian Consumer Law — A guide to provisions

50

Part V, Division 1AA of the TPA provides a set of rules that protect certain claims about the

country of origin of goods from legal action alleging that they are false or misleading for the

purposes of section 52 and 53(a) of the TPA.

Part 5-3 of the ACL replaces Part V, Division 1AA of the TPA.

The ACL incorporates the existing country of origin defences in the TPA as well as a new

defence for claims that goods, or components or ingredients of goods, are grown in a

particular country.

Chapter 5: Enforcement and remedies

51

Under the ACL, consumers can seek a refund, replacement or repairs if a supplier fails to

satisfy its obligations in relation to consumer guarantees. Under pre-existing laws,

consumers were required to pursue any failure by suppliers to comply with implied

conditions and warranties as breaches of contract.

The remedy available to consumers will depend on which guarantee has been breached and

the nature of that breach. A consumer will be able to seek damages from a manufacturer if a

manufacturer fails to meet its guarantee obligations.

As is the case under existing laws, suppliers are entitled to be indemnified by manufacturers

in respect of any costs incurred in providing consumers with remedies related to consumer

guarantees.

R ight of action

S ection 259(1)

A consumer has a right to take action if a supplier of goods fails to comply with a guarantee

that applies under Chapter 3, Part 3-2, Division 1, Subdivision A of the ACL.

R ight to require that a

failure to honour a

guarantee be remedied

S ection 259(2)

If a failure to comply with a guarantee is not a major failure and is capable of being

remedied by the supplier, the consumer may require the supplier to remedy the failure

within a reasonable time.

What is a ‘reasonable time’ will vary depending on the nature of the goods and the nature

of the failure.

Cons equences for a

s upplier of failing to remedy

a failure to honour a

guarantee

S ection 259(2)

If a supplier fails to remedy a failure within a reasonable time a consumer may have the

failure remedied elsewhere and recover all reasonable costs incurred from the supplier, or

reject the goods.

The costs that will be recoverable under the section if goods are remedied elsewhere would

likely include any amount paid to the alternative repairer, and any costs of transporting the

goods to and from that repairer, such as postage and handling costs.

R ights of a consumer if a

failure to comply with a

guarantee is major or is not

capable of remedy

S ection 259(3)

If a failure to comply with a guarantee is major or the failure is not capable of being

remedied, the consumer may reject the goods or seek compensation from the supplier for

the reduction in the value of the goods below the price paid or payable for the goods.

Cons umer’s right to recover

damages

S ection 259(4-6)

The consumer may also recover damages for any loss incurred that was reasonably

foreseeable as a result of the failure.

This will include the costs of inspection and transportation in respect of seeking to have the

failure remedied.

The consumer does not have a right to claim damages if the failure occurred because of a

cause independent of human control that occurred after the goods left the control of the

supplier.

Original packaging

S ection 259(7)

The right of consumers to seek remedies from suppliers is not affected by whether or not

the goods are in their original packaging.

When is a failure to honour

a guarantee a ‘major

failure’?

S ection 260

A failure to honour a guarantee is a ‘major failure’ if the goods would not have been

acquired by a reasonable consumer fully acquainted with the extent of the failure, or the

goods depart, in a significant respect, from their description, or from a sample or

demonstration model.

A failure to honour a guarantee is also a major failure if the goods are substantially unfit for

the purpose that goods of the same kind are commonly supplied for and they cannot be

remedied within a reasonable time, or they are unfit for a disclosed purpose and cannot be

remedied within a reasonable time. A major failure also occurs if goods are unsafe.

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52

Ways in which a supplier

may remedy a failure

S ection 261

A supplier may remedy a failure to comply with a guarantee, by:

consumer with a refund.

Whilst there is no restriction placed on a consumer requesting a particular remedy, the

method of remedying a failure will be at the option of the supplier.

When consumers are not

entitled to reject goods

S ection 262

A consumer may reject goods in certain circumstances. That right may be lost in certain

circumstances. These include:

reasonable period given the type of goods, the use to which the consumer is likely to

put them, the length of time it is reasonable for them to be used and the amount of use

to which it is reasonable for them to be put before the failure becomes apparent. What

is reasonable will vary on a case-by-case basis.

circumstances it is impossible for the consumer to reject the goods and return them to

the supplier.

required to accept goods that have been damaged by consumers; accordingly, the right

to reject goods is lost if damage occurs after they are supplied.

damaging them — in these circumstances a consumer will not be able to reject the

goods, but will need to seek another remedy, such as a repair.

If a consumer rejects goods the consumer must return the goods to the supplier.

Exceptions to this rule apply if the goods have already been returned to, or retrieved by, the

supplier.

Any goods returned become the property of the supplier when the consumer tells the

supplier of their intention to reject the goods.

S upplier to pay for cos ts of

returning goods in certain

circums tances

S ection 263(3)

If the goods cannot be returned without significant cost to the consumer, because of the

nature of the failure or due to their size or height, or because the goods are attached to

other property (such as land or a building), then the supplier must collect the goods at their

own expense.

R efund or replacement

goods

S ection 263(4)

If goods are rejected the consumer will have the right to choose between a refund or

replacement and the supplier will have an obligation to comply with the consumer’s request.

R eplaced goods

S ection 264

If goods are replaced, the replacement goods are subject to the guarantees set out in

Chapter 3, Part 3-2, Division 1 of the ACL.

Termination of contracts for

the s upply of s ervices that

are connected with rejected

goods

S ection 265

Certain goods are often supplied in conjunction with associated services. A common

example is mobile telephones and associated network services. When goods are supplied

to a consumer under a contract and that contract also provides for services to be provided

to the consumer, the consumer will often have no use for the associated services if the

goods are rejected and returned to the supplier.

If a consumer rejects the goods and the supplier is required to provide a refund in respect

of a supply of goods, then the consumer may also choose to terminate the contract for the

supply of any services that are connected with the rejected goods. A consumer will not be

required to make any further payments to the supplier of the services after the time that the

contract is taken to have been terminated.

R ights of gift recipients

S ection 266

A person who is provided with goods as a gift from a consumer has the same rights and

remedies as would be available to the consumer under Chapter 5, Part 5-4, Division 1,

Subdivision A of the ACL.

Chapter 5: Enforcement and remedies

53

R ight of action

S ection 267(1)

A consumer has a right to take action if a supplier of services fails to comply with a

guarantee that applies under Chapter 3, Part 3-2, Division 1, Subdivision B of the ACL.

R ight to require that a failure

to honour a guarantee be

remedied

S ection 267(2)

If a failure to comply with a remedy is not a major failure and is capable of being remedied

by the supplier, the consumer may require the supplier to remedy the failure within a

reasonable time. What is a ‘reasonable time’ will vary depending on the nature of the

services and the nature of the failure.

Cons equences for a s upplier

of failing to remedy a failure

to honour a guarantee

S ection 267(3)

If a supplier fails to remedy a failure within a reasonable time, a consumer will be able to

have the failure remedied elsewhere and recover all reasonable costs incurred from the

supplier, or terminate the contract for the supply of the services.

R ights of a consumer if a

failure to comply with a

guarantee is major or is not

capable of remedy

S ection 267(3)

If a failure to comply with a guarantee is major or the failure is not capable of being

remedied, the consumer may terminate the contract for the supply of the services or seek

compensation from the supplier for the reduction in the value of the services below the

price paid or payable for the services.

Cons umer’s right to recover

damages

S ection 267(4)

The consumer may also recover damages for any loss or damage incurred that was

reasonably foreseeable as a result of the failure.

The consumer does not have a right to claim damages from the supplier of services if a

failure occurs because of an act, default or omission, or a representation made by a

person other than the supplier, or an agent or employee of the supplier.

A supplier is also not liable for a failure if it is caused by something that is independent of

human control.

Termination of contracts for

the s upply of s ervices

S ection 269

A termination of a contract for the supply of services takes effect from the time when a

consumer tells a supplier that they are terminating the contract. When a consumer

terminates a contract for the supply of services the supplier must refund any money paid

for the services.

Termination of contracts for

the s upply of goods that are

connected with terminated

s ervices

S ection 270

If a consumer terminates a contract for the supply of services and goods are inextricably

linked to the services, the consumer may also choose to reject the goods at the same time

as terminating the contract for the services. The consumer must return the goods to the

supplier and the supplier must provide the consumer with a refund.

R es pective pos itions of

s uppliers and

manufacturers

S ection 274

Consumers purchase goods directly from suppliers and have only indirect dealings with

manufacturers. Accordingly, the primary source of remedies under the statutory consumer

guarantees would be suppliers. Consumers will be able to seek repairs, refunds or

replacement goods from suppliers. Suppliers will be able to recoup any costs of providing

those remedies from the manufacturers of goods. In certain circumstances, consumers will

not be able to obtain a remedy from the supplier of goods. Examples of such circumstances

include those whereby a supplier has become insolvent, is no longer in business or refuses

to provide a remedy.

R ights of action agains t

manufacturers

S ection 271(1)

To allow for circumstances whereby consumers need to seek a remedy directly from a

manufacturer, a consumer may recover damages from a manufacturer if goods are not of

acceptable quality.

Cons umer’s right to c laim

damages

S ections 271(2), (3) and (5)

A person may also recover damages from a manufacturer if goods do not match a

description that is applied by, or on behalf of, the manufacturer.

The right to recover damages is subject to exceptions if the cause of the failure to comply

with a guarantee is independent of the supplier (that is, it is caused by someone else or by

causes independent of human control).

If a consumer requires a manufacturer to repair or replace goods under an express

warranty, they cannot seek damages from the manufacturer in respect of a failure to honour

a guarantee.

Damages that may be

recovered by action

agains t a manufacturer of

goods

S ection 272(1)

A consumer may recover the price paid for the goods and any loss that is reasonably

foreseeable as a result of the failure. This will include any costs incurred by the consumer to

transport the goods back to the manufacturer and any costs of inspecting the goods to

ascertain whether they are faulty.

The Australian Consumer Law — A guide to provisions

54

Manufacturer’s

requirement to make spare

parts and repairs

reas onably available

S ection 271

One remedy that is available only from a manufacturer relates to the guarantee to make

spare parts and repairs reasonably available. A consumer may seek damages from a

manufacturer in respect of a failure by a manufacturer to make spare parts and repairs

reasonably available.

Original packaging

S ection 271(7)

A consumer may commence an action against a manufacturer for damages irrespective of

whether the goods are in their original packaging.

Time limit for actions

agains t manufacturers

S ection 273

A consumer may commence an action against a manufacturer for a period of three years

after they became aware that a guarantee has not been complied with.

Chapter 5: Enforcement and remedies

55

Part 5-5 sets out a regime which provides joint and several liability for actions against

suppliers and linked credit providers where there has been a:

Joint liability means that a consumer can seek a remedy from either the lender or the

supplier of goods or services in the event of a contractual dispute. Part 5-5 of the ACL

replaces the repealed section 73 of the TPA so that consumers retain the ability to pursue

actions against suppliers and linked credit providers jointly in appropriate circumstances.

To allow such issues to be dealt with expeditiously in a single proceeding, the ACL provides

that, if a consumer is entitled to terminate a linked credit contract under section 135 of the

National Credit Code, he or she is entitled to recover the same amount in the proceedings as

if action were taken under section 135.

57

AP PE NDIX 1: COMPARATIVE TAB LE OF PROVIS IONS

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Meaning of

cons umer

Mis leading

repres entations with

respect to future

matters

When donations are

treated as s upplies

R elated bodies

corporate

Meaning of

manufacturer

Goods affixed to

land or premis es

Meaning of s afety

defect in relation to

goods

As s erting a right to

payment

R eferences to

acquis ition, s upply

and re-s upply

Application of

S chedule in relation

to leas es and

licences of land and

buildings

Los s or damage to

include injury

Continuing c redit

contract

Appendix A: Comparative table of provisions

59

Mis leading or

deceptive conduct

Application of this

P art to information

providers

Unconscionable conduct within the meaning of the unwritten law

Unconscionable conduct

Unconscionable conduct in business transactions

Fals e or mis leading

repres entations

about goods or

s ervices

Fals e or mis leading

repres entations

about s ale etc . of

land

Mis leading conduct

relating to

employment

Offering rebates ,

gifts , prizes etc .

Mis leading conduct

as to the nature etc .

of goods

Mis leading conduct

as to the nature etc .

of s ervices

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Wrongly accepting

payment

Mis leading

repres entations

about certain

bus ines s activities

Application of

provis ions of this

Divis ion to

information

providers

Uns olicited cards

etc .

As s ertion of right to

payment for

uns olicited goods or

s ervices

L iability etc . of

recipient for

uns olic ited goods

L iability of recipient

for uns olicited

s ervices

As s ertion of right to

payment for

unauthoris ed entries

or advertis ements

S ingle price to be

s pecified in certain

circums tances

Appendix A: Comparative table of provisions

61

Haras sment and

coercion

Guarantees as to

title, undis turbed

pos s es s ion and

undis clos ed

s ecurities etc .

Guarantees as to

acceptable quality

and fitnes s for any

dis clos ed purpos e

etc .

Guarantee relating to

the s upply of goods

by des cription

Guarantees relating

to the s upply of

goods by s ample or

demons tration

model

Guarantee as to

repairs and spare

parts

Guarantee as to due

care and s kill and

fitnes s for a

particular purpos e

etc .

Guarantee as to

reas onable time for

s upply

Guarantees not to be

excluded etc. by

contract

Application of this

Divis ion to s upplies

of gas , electricity

and telecomm.

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Convention on

Contracts for the

International S ale of

Goods

Uns olicited

cons umer

agreements

Provis ions relating

to lay-by agreements

S upplier mus t

provide proof of

trans action etc .

Cons umer may

reques t an itemis ed

bill

Pres cribed

requirements for

warranties agains t

defects

R epairers mus t

comply with

pres cribed

requirements

Appendix A: Comparative table of provisions

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S upplying etc .

cons umer goods

covered by a ban

S upplying etc .

product related

s ervices covered by

a ban

Temporary

exemption from

mutual recognition

principles

Compuls ory recall of

cons umer goods

Notification

requirements for a

voluntary recall of

cons umer goods

S afety warning

notices

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S uppliers to report

cons umer goods

as s ociated with the

death or s erious

injury or illnes s of

any pers on

S uppliers to report

product related

s ervices as s ociated

with the death or

s erious injury or

illnes s of any pers on

L iability under a

contract of

ins urance

Making information

s tandards for goods

and s ervices

Declaring

information

s tandards for goods

and s ervices

S upplying etc. goods

or s ervices that do

not comply with

information

s tandards

Appendix A: Comparative table of provisions

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L iability for los s or

damage s uffered by

an injured individual

L iability for los s or

damage s uffered by

a pers on other than

an injured individual

L iability for los s or

damage s uffered by

a pers on if other

goods are des troyed

or damaged

L iability for los s or

damage s uffered by

a pers on if land,

buildings or fixtures

are des troyed or

damaged

Defences to

defective goods

actions

Time for

commencing

defective goods

actions

L iability joint and

s everal

No defective goods

action where

workers ’

compens ation law

etc . applies

Unidentified

manufacturer

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Commonwealth

liability for goods

that are defective

only becaus e of

compliance with

Commonwealth

mandatory s tandard

R epres entative

actions by the

regulator

Offences relating to

unfair practices

Offences relating to

cons umer

guarantees

Offences relating to

uns olicited

cons umer

agreements

Offences relating to

lay-by agreements

and other matters

Offences relating to

s afety s tandards

Offences relating to

bans on consumer

goods and product

related s ervices

Offences relating to

recall of consumer

goods

Offences relating to

cons umer goods , or

product related

s ervices , as s ociated

with death, s erious

injury or illnes s

Appendix A: Comparative table of provisions

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Offences relating to

information

s tandards

Offences relating to

s ubs tantiation

notices

Defences for

criminal

pros ecutions

P ros ecutions to be

commenced within 3

years

Preference mus t be

given to

compens ation for

vic tims

Penalties for

contraventions of

the s ame nature etc.

Penalties for

previous

contraventions of

the s ame nature etc.

Granting of

injunctions etc.

Criminal

proceedings not to

be brought for

contraventions of

Chapter 2 or 3

S ubs tantiation

notices

Public warning

notices

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Compens ation

orders etc. for

injured persons

Orders to redres s

etc . los s or damage

s uffered by

non-party

consumers

Applications for

orders

K inds of orders that

may be made

Power of a court to

make orders

Advers e publicity

orders

Order dis qualifying a

pers on from

managing

corporations

Privilege agains t

expos ure to penalty

or forfeiture —

dis qualification from

managing

corporations

Declarations relating

to cons umer

contracts

Defences for c ivil

pros ecutions

Appendix A: Comparative table of provisions

69

Provis ions relating

to country of origin

repres entations

Ac tion agains t

s uppliers of goods

Ac tion agains t

s uppliers of s ervices

Actions for damages

agains t

manufacturers of

goods

Indemnification of

s uppliers by

manufacturers

Limitation of liability

etc .

L inked c redit

contracts

Non-linked credit

contracts