Australian Consumer Law and Consumer Guarantees - Case Study Example

The Australian Consumer Law Name Institution Date Introduction The Australian Consumer Law is a national law that covers consumer protection as well as fait trading1. It forms Schedule 2 of the Competition and Consumer Act 2010. The ACL applies the same in every State and Territory of Australia. Through the ACL, consumers today are protected of their expectations in business conduct within Australia. This essay aims at applying the Australian Consumer Law in answering a selected question case study. The case study under analysis is the one for Albert who bought a car while relying on the information provided by the seller and later after using the car, he found that it was not fit for the purpose he had asked for from the seller. From the case study, Albert was not knowledgeable about cars. He went to a car dealer who tells him that the car he is looking at was in perfect condition, was the best bargain in town and it was the same model of car that had won a famous race oversees. Based on the seller’s description of the condition of the car, and the fact that the model won a race convinced Albert to buy the car. However, it turned out later that the car was un-road worthy and another model had won the race. This essay aims at establishing whether the Australian Consumer Law provides Albert with any assistance in recovering his money. The Australian Consumer Law aims at protecting the consumer in transactions that are related to trade or commerce2. As per the law, the consumer has a right to safety, honesty, fair agreement, knowledge and choice. In the case of Albert, as a consumer the seller of the car had a responsibility to provide honest information to him. The seller had the responsibility of allowing Albert enters to a fair agreement and gives him the knowledge he required about the car he wanted for the particular purpose and also make a choice of the car most suitable to him for the drive. However, the seller was dishonest, he allowed Albert to enter into an unfair agreement that would make him incur losses after the car broke down without serving the purpose he intended to use it for. The seller did not give Albert the information of the car he intended to buy. Instead, the seller just say Albert looking at a car and started describing that it is the car Albert was looking for and is suitable for the purpose he intended for. The seller failed to give Albert the right to choose the best car he wanted. Therefore, the seller breached the rights of the consumer as per the Australian Consumer Law. Section 3 of the ACL defines a consumer as that person who makes a purchase of goods that do not exceed the amount of $ 40,000 in total price3. If the price of the goods exceeds this amount, then they should be acquired for domestic, personal, consumption or household use or they consist of a commercial road vehicle. Under the ACL sec 3, Albert is a consumer since he bought good (car) that was worthy less than $40,000 considering the current price of the car. The car also fitted in the class of good that are defined in the ACL including existing goods, future goods, specific goods, unascertained goods and ascertained goods. The car was an existing good that was in possession of the seller during the time of the contract. In the case of Healy v Howlett& Son [1917] 1 KB 337, the court held that a consumer has the capacity of rejecting the good if it does not fit in the specific class that was requested4. In the case of Albert, the car was an ascertained good and the seller provided one that could not serve the specific purpose that Albert wanted. Therefore, Albert can reject the car since it did not fit the class he had identified to the seller. Additionally, Albert has a right of rejecting the car sold to him by the seller under ACL since it was not satisfactory to the purpose he intended to use. The rule that applies in the case of Albert is Caveat Emptor. This is a doctrine that applies to the sale of goods to a consumer. The doctrine states that the consumer should be aware of the quality of the goods that they are purchasing by themselves5. However, there is an exemption to the doctrine where a buyer relied on special knowledge from the seller. For example, when buying a car from a professional seller, the buyer is exempted from the doctrine since the seller was a professional and would be required by the law to give the buyer the correct knowledge of the car one is looking for. This is a similar example to that of Albert whereby the seller of the car was a professional and Albert relied upon special knowledge of the seller to purchase the car that was not satisfactory contradicting the description of the seller. In consumer law, under the sale of goods, there are various guarantees that are provided. They are implied guarantees under the sale of goods law. The consumer guarantees require that goods should conform to the description, and acceptable quality. They should fit for the disclosed purpose and must comply with the sample of the model demonstration6. Additionally, there are express warranties for the manufacture/supplier who must reasonably make available and on time facilities for repair as well as supply of spare parts. Failure of the manufacture to comply with the consumer guarantees provided in the ACL, the consumer has a right of raising a cause of action against the seller under the law. In the case of Albert, the seller did not comply with the consumer guarantees as stipulated in ACL. Therefore, Albert has a right of raising an action against the seller to recover his money as allowed by the ACL. The car that was sold to Albert was not meeting the guarantee of acceptable quality. Section 54 of the ACL states that goods must be of acceptable quality at the time of acquisition, and they should be fit for the specific purposes for which they were supplied. They should be safe and durable, acceptable in appearance as well as in finish, and free from defects7. Any statement that is made by the manufacture about the acceptable quality of the good is enough to consider the good as of the acceptable quality described by the seller. In the case of David Jones Ltd v Willis (1934) 52 CLR 110, the court held that goods that are sold by description over the counter have a guarantee to acceptable quality8. It the responsibility of the business to train its employees on the merchandize purchasing so as to avoid problems that may arise from the implied guarantees that apply to quality. However, in the case of Wren v Holt [1903] 610 KB, the court stated that when the description of goods is limited to the extent of being used for only one purpose, then the goods will be unacceptable if they can’t serve the specific purpose that was described9. Manufactures must ensure that goods are of best fit for the intended purpose. In the case between Drummond v Van Ingen (1887) 12 APP Case 284, the court held that goods that are sold to consumers should correspond to the sample in quality10. However, when the differences are minor, then the quality of the goods will be considered the same. The condition will not have been breached in such circumstances. The goods will be considered to be free from defect that cannot be identified apparently when a reasonable examination is done on the sample. In the case of Albert, the description provided by the seller was enough to consider the car of acceptable quality. When Albert used the car, there was a major difference with the sample car that was described by seller. It was proved not to be of acceptable quality. The car had defects from a reasonable examination of the sample. Under section 51 of the ACL, referring to consumer guarantees, the consumer must purchase the goods for a seller who has a guarantee to the title to those goods11. When a buyer purchases the goods from a seller who does not have a guarantee of title to the goods at the time of sale, then the buyer cannot claim for any remedy in case of failure of the goods. It will be a total failure of consideration for the buyer. In the case of Rowland v Divall [1923]2 KB 500, the court held that consumers must buy their goods from someone who has a title to the sell, otherwise the buyer cannot claim anything and should return the goods back to the real owner12. Conclusion (Remedies) The seller of the car in the case of Albert was in breach of consumer guarantees. The seller also used unfair terms to enter into contract with Albert. The ACL provides various remedies to the buyer for a breach of consumer guarantees and unfair terms of the seller. Under unfair terms of the supplier, the ACL requires the seller to remedy the buyer through an injunction, compensation and provision of redress. Section 261 of the ACL states that a supplier should remedy the buyer when there is a failure to comply with the consumer guarantee13. The supplier can do so by curing the defect, repairing the good, replacing the good or providing the consumer with a refund. Therefore, the ACL does provide Albert with assistance in recovering his money. He can be compensated or refunded the money by the seller. References Bozzi, C, 2015, Consumer Guarantees. Australian Commercial Law, p.403. Corones, S, 2013, The Australian Consumer Law, Thomson Reuters, Lawbook Co. Grace, J, 2011, The Australian Consumer Law, [Book Review], p.32. Green, S, 2014, Contesting Disclaimer-of-Reliance Clauses of Efficiency, Free Will, and Conscience: Staving off Caveat Emptor. Tex. A&M L. Rev., Vol.2, Iss.1, p.13. Paterson, J, 2011, The New Consumer Guarantee Law And The Reasons For Replacing The Regime Of Statutory Implied Terms In Consumer Transactions, Critique and Comment, p.253. Pentony, B., Graw, S., Parker, D., & Whitford, K, 2013, Understanding business law. LexisNexis Butterworths. p.290. Acts Competition and Consumer Act 2010 Cases David Jones Ltd v Willis (1934) 52 CLR 110 Drummond v Van Ingen (1887) 12 APP Case 284 Healy v Howlett& Son [1917] 1 KB 337 Rowland v Divall [1923]2 KB 500 Wren v Holt [1903] 610 KB Read More