Contracts and consumer protection

26 Aug 2016 - 16:14 | Version 46 |

Based on the contribution of Nick Seddon for the ACT Law Handbook, as amended by CathyHe and JaneBlack and current to 1 May 2016

How does contract and consumer law help you?

People make contracts every day, but may not realise it. For example, buying a new radio, ticking "yes" on a website, selling something on Gumtree are all contracts.

There are rights and responsibilities as a result of getting into a contract. This chapter will help you to better understand these rights and responsibilities. If the Australian Consumer Law (ACL) applies to the contract this gives you rights that cannot be avoided by the business - even if you have agreed to this in a contract.

About the Australian Consumer Law

The Australian Consumer Law (ACL) provides protection to consumers, and rights and responsibilities to businesses. Consumers are people who buy things, for example shopping at the supermarket, or buying something online, or paying a plumber to fix something. For the ACL to apply, the deal or purchase that the consumer was involved in must:
  • be in trade or commerce
  • the goods or services are of a kind ordinarily acquired for personal, domestic or household use or consumption, or acquired for less than $40,000 or
  • the goods consist of vehicles or trailers acquired principally for the transportation of goods on public roads

A good is a thing that someone buys, like a milkshake or a computer. A service can be a contract to do something, like paying a plumber to fix your sink.

The ACL works to protect Australian consumers. So if a business outside Australia sells you something (over the internet for example), they still have to comply with the ACL.

If the ACL does not apply, the law of contract or another law may apply. This chapter will cover a lot of the law of contract and the consumer law. You can make contact with someone from the Help and remedies section of this chapter if you need more information.

What is a contract?

A contract is a legally binding agreement: verbal or written or partly written and partly verbal. It is helpful to think of a contract as a bargain. One person agrees to do certain things in exchange for a promise from another person. For example:
  • a person agrees to pay a shop $30 in exchange for an electric toaster
  • a person wants to insure their car and signs a written insurance contract promising to pay the insurance company the premium and to do certain other things, such as notifying the company if they have an accident. In return, the insurance company promises to pay the costs of repairs, should the car be damaged
  • Michael needs to borrow $1000. The brother of a work colleague lends the money in return for Michael's verbal promise to repay it in two months.

What exactly have the parties to the contract agreed to do? This question often leads to disputes and is one of the reasons that many contracts are written rather than verbal. Nevertheless, the details of a verbal contract can still be proved and the contract enforced.

The full details of the agreement are called the terms of the contract (see Terms of a contract ). The terms may come from:
  • the words the parties have used in making their agreement, either verbal, written or, in limited circumstances, both verbal and written
  • terms implied from the circumstances surrounding the contract or the actions of the parties
  • the rules of law that apply, such as the rule that all consumer goods must be fit for the purpose for which they were sold.

The law of contract

The law of contract regulates the making and enforcing of contracts. For example, the law states:
  • when a contract has been validly formed
  • how to determine the terms of the contract
  • what happens if someone does not keep their side of the bargain, that is, breaches the contract.

The law of contract (contract law) comes from two sources:
  • common law, which is the law made by judges in deciding disputes between people who have entered agreements
  • statute law, which are laws made by State, Territory and Federal parliaments (Acts). Statute laws add to or override the general law of contract. Statute laws in the area of consumer law include the Australian Consumer Law (ACL), which is found in Schedule 2 of the Competition and Consumer Act 2010 (Cth) and the Consumer Affairs and Fair Trading Act 1990 (NT). Both Acts have parts applying to consumer contracts. The National Consumer Credit Code (NCCC), which is found in Schedule 1 of the National Consumer Credit Protection Act 2009 (Cth), applies to all credit contracts (see Buying on credit ).

Contract law is extremely complex. Although the information given here may be helpful in deciding if a right or remedy exists, expert advice may still be needed (see Help and remedies and Legal help ).

Must a contract be in writing?

It is commonly thought that a contract can't be binding unless it is put in writing. While this is true in the special cases listed below, unwritten contracts are generally enforceable. Nonetheless, it is always wise to write down the details of an agreement, especially if large sums of money are involved, the content of the contract is important where there is no reliable witness or other evidence of the contract details.

In the NT the following contracts must be in writing and signed:
  • consumer credit contracts
  • bills of exchange, promissory notes and cheques
  • contracts for the performance of domestic building work worth $12,000 or more
  • contracts for the sale of second-hand motor vehicles by dealers
  • contracts for the sale of land or any interest in or concerning land

In addition, certain contracts of guarantee must be 'evidenced' by some writing. These contracts are enforceable if there is something written, such as a note or memorandum, that contains all of the following:
  • the names or identification of the parties
  • a description of the subject matter
  • the consideration (the price)
  • the signature of the party against whom the contract is to be enforced

The writing can be in several documents provided they can be connected by other documents, such as letters or receipts.

The ACL also requires door-to-door and telemarketing salespersons to provide consumers a written copy of the agreement.

Enforcing a contract

A consumer will often want to know whether they can enforce their rights under a contract, that is, whether they can obtain a remedy against the other party for breaching the contract, or whether another party can enforce a contract against them. This will depend on:

Pre-contract behaviour

Many consumers complain about false impressions created about products or services or the terms under which they will be supplied. False impressions may be created by false statements or misleading conduct and can reach prospective consumers through advertising, packaging, pamphlets or brochures or by statements made by sales staff.

Mere puffs

Advertisements may contain statements that are so extravagant that they could not possibly be interpreted as a representation of fact. Statements in advertisements, such as 'our soap powder washes whiter than white', are not regarded by the law as serious representations of fact, but as mere puffs. An example would be where the advertiser of a particular aftershave states that women will flock to any man who uses the product. Similarly, some latitude is allowed to those selling privately who make statements praising an article to arouse interest in potential buyers. However, there is often a fine line between a statement that is obviously not meant to be taken as fact and a statement that causes uncertainty or amounts to misleading and deceptive conduct (see Misleading or deceptive conduct ).

Statements

Traders often make promises or statements about goods or services on offer prior to a contract being made. In some circumstances, these statements will be viewed as terms of the contract. If those statements are false or the promises not fulfilled, the supplier has breached the contract and the purchaser is entitled to enforce it (see Terms of a contract ).

Many pre-contractual statements or promises made by a trader will not be considered to be terms of the contract, but the consumer may still take action if they are false. All contracts are subject to the law of misrepresentation (see below) and most consumer contracts are subject to the laws about misleading conduct (see Misleading or deceptive conduct ).

Although the common law of misrepresentation provides some limited remedies for misleading conduct, a consumer will generally be better off relying on those available under legislation - Section 18 Australian Consumer Law (see Misleading or deceptive conduct ).

Misrepresentation

A false statement made by a party (or an agent) in the course of negotiating a contract may fall within the legal category of misrepresentation if it is:
  • a statement of fact rather than an opinion - a statement that the maker holds a particular opinion is a statement of fact, so if the opinion is not truly held, a misrepresentation is mad
  • made with the intention of persuading the consumer to act on
  • one of the things that induced the consumer to enter the contract.

Remedies for misrepresentation

If a misrepresentation is established, a consumer may have one or both of the following two options, depending on circumstances:
  • rescind the contract: for example, the consumer would return the goods and have any money paid refunded. There are various restrictions that apply to rescinding a contract under the common law. The consumer will be in a better position if the ACL applies, so they can rely on the laws about misleading conduct. If not, legal advice should be obtained. In both cases, it is important to act quickly. Where the misrepresentation is innocent, that is accidental and not negligent, a consumer will only be entitled to this remedy if the contract has not been carried out
  • sue for damages for any loss caused by the misrepresentation: the consumer will not be entitled to damages if the representation was made innocently, that is, the person who made it believed it to be true, didn't intend to deceive the consumer and took reasonable care to ensure its accuracy.

When will the ACL apply to pre contractual behaviour?

The ACL applies to interactions between a business and a consumer. This means that it can apply to pre contractual behaviour.

For example, when trying to make a sale, the business can't use undue harassment or coercion in an effort to sell a good or service to a person [ACL s50]. A contract of sale can be set aside if it can be proved that it was signed as a result of a 'hard sell'.

If a business has engaged in unconscionable conduct in making a sale, the ACL provides protection for consumers.

An example is the case of Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90. The ACCC alleged that a Lux sales representative called upon five elderly women in their homes under the premise of a free vacuum cleaner maintenance check, and that each of the women was then subjected to unfair and pressuring sales tactics to induce them into purchasing a vacuum cleaner for a price of up to $2280. Lux was found to have engaged in unconscionable conduct in relation to three of these sales.

Other important parts of the ACL that will apply to pre-contractual behaviour in consumer contracts are misleading and deceptive conduct, door to door sales, and the display of prices.

Making a contract

Before an agreement can be called a contract it must have three identifiable features:
  • agreement between the parties to do certain thing
  • intention to enter into the agreement
  • consideration

Agreement

A contract is formed when there is an agreement between the parties to undertake certain obligations. The point at which negotiations have concluded and an agreement is reached is not always easily discerned, but there must have been a clear indication (offer) by one party of a willingness to be bound on certain terms and an unqualified acceptance of that offer communicated to the party making it. The contract is formed at the moment the offer is accepted and any attempt to vary or qualify an offer once it has been accepted will not succeed legally. In most instances, it will be clear that there has been an offer and an acceptance because money has passed between the parties or one party has incurred some expense. However, if negotiations have not progressed very far and the parties fall into disagreement, there may be some dispute about whether the agreement was ever sufficiently definite to create a contract or whether in fact negotiations were still going on and no firm agreement had been reached.

Intention

For there to be a legally enforceable contract the parties must have intended to enter into a legally binding agreement. Intention is seldom stated, but is usually inferred from the circumstances surrounding the agreement.

In normal commercial transactions, such as the buying and selling of goods, the intention is obvious, whereas agreements between friends or members of a family are often not intended to be legally binding unless the contract is one of a commercial type, for example, selling a car to a friend or relative. The law presumes that parties to a domestic agreement, such as a promise to pay pocket money, or a social agreement, such as a promise to take someone to a restaurant, do not intend their agreement to be legally binding.

Consideration

Before there can be a contract, there must be an agreement to exchange. Each party must provide something in return for what the other is providing. The item exchanged is called the consideration. Consideration could be doing an act, promising to do an act, or refraining from doing an act. For example, Alice promises $25 to Betty in exchange for cutting Alice's lawn. If Betty accepts Alice's offer, the two women have a contract. The consideration for Betty's promise to cut Alice's lawn is Alice's promise to pay $25. It does not matter if the consideration given by each side is of unequal value. The law requires only that something is given by each party, so a contract to rent premises in return for $1 per annum would, in general, be enforceable.

Terms of a contract

The terms of the contract are the details of the agreement between the parties. Most contracts contain express terms, which are terms the parties have specifically agreed to either verbally or in writing, and implied terms, which is a term implied, to give business efficacy to a contract or by law.

Not all terms of a contract have the same importance. The remedies available where a term of a contract has been breached will depend on the importance of the term.

The most important terms are called conditions. Conditions are the terms that are fundamental or 'go to the root of the contract'. If a condition is broken, the other party can terminate (cancel) the contract. For example, a person who contracts to buy a Rolls Royce car, but is delivered a Holden, would be entitled to cancel the contract. Even though a car is delivered, a fundamental term of the contract has been breached and the buyer can, therefore, legally terminate the contract and refuse to take delivery.

Less important terms are generally referred to as warranties. If a term of this type is broken, a consumer cannot terminate the contract, but may sue for damages. For example, if the person with the Rolls Royce contracts to have the car fitted with a four speaker stereo, but finds only two speakers when it is delivered, they could not normally cancel the contract and refuse to take delivery of the vehicle, but could seek compensation.

The distinction between conditions and warranties is important because it affects the action an innocent party can take. In all cases, the innocent party can sue for compensation for any loss suffered as a result of a breach (see Remedies available ).

Table 1: The limitations of consumer protection Act

Contract details ACL* CAFTA SOGA
Type of product Goods and services* Goods and services* Goods only
Type of buyer Individuals and businesses Individuals only Individuals and businesses
Type of vendor Any vendor (excluding at traditional auction) Traders only (not individuals or at auction) Any vendor
Type of contract Any (including purchase, lease or hire) Any (including purchase, lease or hire) Purchase only
Limit Under $40,000 (or over if good/services normally acquired for personal, domestic or household use) No limit Over $50
Can the protection be excluded by the contract? No No Yes***
*The ACL only applies to goods or services purchased from 1 January 2011. Goods or services bought before 1 January 2011 are covered by the Trade Practices Act 1974 (Cth)

**Services include everything from architectural services to cleaning, from accounting to banking, and from curtain-making to providing credit.

* Unlike the ACL or CAFTA, the conditions and warranties implied by the Sale of Goods Act 1972 (NT) can be excluded or the liability of the vendor limited by the terms of a contract - Section 57 of the Sale of Goods Act 1972 (NT). However, a vendor will not be helped by an exclusion if they breach a fundamental term of a contract. For example, if the goods supplied are so different to their pre-contract description as to be different goods. In addition, the exclusion will only protect a vendor who acts in the performance of the contract and not, for example, where their actions involve wilful misconduct. In most consumer contracts it will not matter if the SOGA implied terms are excluded, as the ACL will apply.

Express terms of a contract

Where the terms are stated in writing and the parties have signed the document, each is bound by those terms, although there are exceptions to this rule (see Who can make or enforce a contract against whom?). Where one party has not signed the document containing the terms, for example, a parking or aeroplane ticket, they will only be bound by them if it is shown that they knew the terms or that reasonable steps were taken to bring the terms to their attention before purchasing the ticket.

Sometimes a statement made during negotiations leading to a contract will become a term of a contract which is otherwise in writing. Whether or not a statement becomes a term depends on what appears to be the intention of the person making the statement. If the circumstances in which the statement was made were such that an intelligent bystander would think the person making the statement was prepared to give their word that it was true, the statement is a term of the contract. If such a statement turns out to be false, the person who made the statement will be in breach of contract and may be liable to pay damages. The same statement may be a misrepresentation (entitling rescission) or constitute misleading conduct and be a term (see Pre-contract behaviour ).

Failure to keep warranties and undertakings

A manufacturer or importer of goods may cause loss or damage to a consumer by failing to fulfil an express warranty, that is, a written or verbal undertaking or statement about:
  • the quality, performance or characteristics of goods
  • the provision of services that may be required (for example repair facilities, updating facilities and so on)
  • the provision of parts that may be required
  • the future availability of identical goods or goods forming part of a set (for example, the remaining pieces in a dinner set). Such warranties or undertakings are made in many ways, for example, in media advertisements and promotional literature. A consumer has a statutory right to recover compensation for any loss caused as a result of a dishonoured warranty [ACL s271(5)].

Implied terms of a contract

In addition to express terms, a contract may also contain implied terms, unstated terms that the law implies into contracts.

Some implied terms are things that go unsaid during negotiations, such as that the car being sold will have air in its tyres, or those that need to be implied to deal with unforeseen situations. For example, when the buyer of a large object agrees to organise delivery, an implied term would be that the seller will not obstruct the buyer's access to the item. If the parties cannot agree about whether a term is implied, they can take the matter to court where it will be decided on the circumstances surrounding the contract. For most consumers, though, the most important implied terms are those implied by legislation (Acts of Parliament) and the remainder of this section takes these as its focus.

Implied conditions and warranties

Consumer protection legislation provides remedies for consumers where the supply of goods or services is not in accordance with various implied terms.

A number of Acts create implied conditions and warranties which apply to certain contracts and are generally designed to protect the purchaser of goods or services. Many were originally developed as part of common law; they have been restated in Commonwealth and NT law, partly in order to make their operation more certain, partly to extend the protection offered to purchasers - particularly consumer purchasers - and partly to prevent them being excluded by the express terms of the contract.

The major Acts that imply conditions and warranties are the ACL, CAFTA and SOGA. Any particular contract may contain terms implied by two or more Acts, as long as they do not produce any contradiction or confusion. Where inconsistency occurs, the Commonwealth (ACL) Act prevails. The ACL is the main Act that provides protections to consumers in relation to goods and services. See Table 1: The limitations of consumer protection Acts .

When do the implied terms apply?

Not all contracts have conditions and warranties implied by legislation. To determine where these are available, the consumer should check the following points:
  • there must be a verbal or written contract (see What is a contract?)
  • the party wishing to rely on the implied conditions and warranties must usually be party to the contract. For example, a person who receives a gift of goods that are defective cannot rely on the implied terms because they were not party to the contract under which the goods were purchased. However, they may be able to sue for damages by relying on other laws such as the ACL (see Loss & injury caused by defective products )
  • the various pre-conditions of each Act must be met (see Consumer guarantees).

Product safety and information

Under the ACL, Commonwealth, state and territory ministers can regulate consumer goods and product-related services by issuing safety warning notices, banning products on a temporary or permanent basis, imposing mandatory safety standards or issuing a compulsory recall notice to suppliers.

In practice, a consumer who believes goods may not comply with a safety standard should contact the ACCC for advice (see Contact points).

Quotes and estimates

Gathering quotes and estimates for work or repairs needed on domestic appliances, motor vehicles and so forth can be very confusing for consumers. Quite often a consumer believes the cost of a repair job is clear and fixed, but receives a bill for a far greater sum. These discrepancies highlight the important difference between quotes and estimates.

A quote is a fixed price for services, including parts and labour. It should always be in writing, detailing the work to be done, the cost and standard of parts, labour and materials to be used, and the period for which the quote is valid.

Most tradespeople will be happy to give a quote unless they are unsure about the work or parts and time required if the item has to be pulled apart and tested. It is quite legitimate for a fee to be charged for a quote and this is usually deducted from the repair bill.

A quote is legally binding on both parties and, unless special circumstances are written into the quote, the price charged cannot be higher than that stated. Consumers should shop around for several written quotes, consulting friends or family who have had similar work done.

Certain tradespeople, such as mechanics, usually give an estimate if they are unsure of the extent of a problem or the price of parts. An estimate is a reasonable guess of the approximate cost of repairs where the exact extent of the work or cost of materials is not known. An estimate is usually verbal, but can be in writing and often appear to be a detailed quote. Always check the document carefully and, if in doubt, contact the trader to discuss it.

A consumer who decides to proceed on the basis of an estimate should ensure the trader provides them with a fixed quote in writing once the extent of the problem is known and before any work is done. Alternatively, the consumer can set a limit on the amount they are prepared to pay and once this is reached, have the option of agreeing to a fixed price (or quote) or foregoing further work.

When an estimate is used and there is no fixed price agreement between the parties (as with a quote), providing the work is satisfactory and any agreement on a maximum limit is not exceeded, the consumer is obliged to pay the bill even if it is considerably more than the original estimate.

Extra work

A consumer can't be charged for work that was not quoted for and for which they didn't ask, such as where a roof repairer quotes to retile a roof and replaces the guttering without being asked. This highlights the importance of getting detailed quotes in writing.

A bill higher than that quoted should be discussed with the trader immediately. If no agreement can be reached, the consumer can then refuse to pay the excess. It will be up to the trader to try to recoup the difference through a court claim.

It is commonly thought that a repairer can legally refuse to return a consumer's goods until the entire bill is paid. This is an unclear area of the law. In practice, the consumer should pay the part of the bill they agree with and then consider making a claim under the Small Claims Act 2016 (NT) for the return of the goods and compensation (see Help and remedies ).

Further advice is available from NT Consumer Affairs (see Contact points).

Remedies for unsatisfactory repair work are available through implied warranties on workmanship covered in the ACL (see Implied terms of a contract ).

Exclusion clauses

Traders often use exclusion clauses to attempt to avoid liability for defects in goods or for injury caused by goods or services. An exclusion clause may be included in a written contract or contained in a notice or a sign or printed on a ticket.

Where a trader has tried to limit or exclude liability of an implied term, a consumer should seek legal advice as the law on this point is both complex and uncertain. In particular, many exclusion clauses have a much more limited effect than they appear on first reading. See Table 2 for examples.

If an exclusion clause forms part of the contract, the consumer may be unable to recover compensation for the defect or injury. Here the rules about offer and acceptance and deciding the terms of the contract become important (see What is a contract?, this section).

When a signed contract contains an exclusion clause, a consumer is generally bound by it. However, most consumer rights contained in the implied conditions and warranties can't be excluded (see Implied terms of a contract, this section) and any attempt to do so will be void, and will leave the company liable to prosecution.

Where there is no signed document, an exclusion clause can't be enforced unless the trader can show that reasonable steps were taken to draw it to the consumer's attention before the contract was made. For example, when a consumer responds to a parking company's offer to provide parking space at a given rate per hour by parking and taking a ticket from the vending machine, the contract should be complete: the offer has been made by the parking company and accepted by the driver. However, written on the ticket is a clause that excludes the company from liability for damage done to the car while it is parked. This clause may be ineffective because the company has not taken reasonable steps to draw it to the notice of the driver before making the contract. In this case, the clause cannot be said to be a term of the contract. Furthermore, if insufficient care was taken by the parking company and the car is damaged, the company will be liable despite the exclusion clause [Thornton v Shoe Lane Parking Ltd (1970) EWCA Civ 2; [1971] 1 All ER 686].

On the other hand, a court is likely to infer that a driver who parks at the same parking station every day for several months had notice of the exclusion clause, and so it would be included as part of their contract. What constitutes taking reasonable steps to draw a condition to the notice of a consumer varies from case to case.

Courts always give exclusion clauses the narrowest possible reading and, where there is any doubt, will adopt the interpretation most favourable to the consumer. Generally, an exclusion clause will not cover a trader for an action not authorised by the contract. For example, where a car park employee uses a customer's car for private purposes, an exclusion clause would not protect the car park owners should that employee damage the car.

The ACL has made substantial inroads on a trader's right to exclude liability for defects in goods or for damage done to a consumer or their property, whether or not the contract is signed or there is no contract at all. For example, almost all consumer services must be rendered with due care and skill (see Implied warranties, this section) and such obligations on the trader are implied by the Act and cannot be excluded from the contract. For example, if a car is damaged on a parking company's premises due to lack of care or skill on their part, it is irrelevant whether or not reasonable steps were taken to draw attention to an exclusion clause and the consumer can sue for damages.

Table 2: Exclusion clauses

Typical exclusion clauses

Comments

'All other conditions and warranties, statutory or otherwise and whether express of implied, are hereby excluded, and no guarantee, other than that expressly herein contained, applies to the product to which the guarantee relates, or any accessory or part thereof.'

The guarantees created by the ACL [s64] cannot be excluded. Any attempt to do so is made void by the terms of the Act.

'The company accepts no responsibility for loss or damage through any cause whatsoever.'

Under the ACL [s60], contracts for the supply or services to consumers contain a guarantee that the services will be rendered with due care and skill. This guarantee cannot be excluded and the clause is, therefore, void.

'We exchange goods or give credit, but do not refund money.'

When a company supplies goods directly to consumers, those consumers have a non-excludable right under the ACL [s267] to reject the goods and obtain a refund where there has been a major failure.

'Service will not be available under this warranty unless the form below is completed and returned to the registered office of the company within 14 days from the date of the purchase.'

A failure to return the registration card does not extinguish a consumer's statutory rights.

'New products are covered by this warranty for a period of six months.'

Consumer guarantees under the ACL apply for a reasonable time depending on the nature of the goods and services. This means they can continue after the time period for the warranty has expired.

Who can make or enforce a contract against whom?

The effect of signing a contract

A person who signs a contract is generally bound by any terms it contains regardless of whether they have read the document. Despite this rule, in certain circumstances a person may be able to rescind a contract, defend a court action to enforce it or apply to a court to have the contract varied or set aside. These circumstances include:
  • cases of misleading conduct or misrepresentation (see Pre-contract behaviour )
  • where there is a breach of an implied condition (see Terms of a contract )
  • where the contract is unconscionable (see Unconscionable conduct )
  • where the trader or their agent created a false impression of the document or its effect or terms by, for example, telling a consumer that they are signing a receipt for goods when in fact they are signing an agreement to excuse the vendor from liability for injury caused by their use
  • where the person can show that their conduct at signing clearly demonstrated to the other party (or to their agent) that they had no idea of the real nature of the document
  • exceptional cases in which a person can establish a certain defence known as non est factum (which means 'it is not his or her deed'). This defence covers situations in which the document signed was essentially different to that which the person thought they were signing. This defence is not available if the mistake was caused by the claimant's own lack of care, such as failing to read the document, but will stand if they are illiterate or blind. A court will be extremely reluctant to set aside a transaction if it would affect people other than the parties themselves.

Contracts with young people

All parties to a contract must have the legal capacity to enter it and, with certain exceptions, those under 18 years of age (minors) do not meet that requirement. Generally a contract cannot be enforced against a minor, although a minor can enforce a contract against another party.

Contracts for necessaries and beneficial services made by minors are enforceable against them irrespective of whether they are affirmed.

Necessaries are not only those things necessary to maintain life, but also a much wider range of goods and services, such as clothes, books and hair cutting services. The definition of necessary depends on:
  • the minor's station in life, for example, books might be a necessary requirement for a university student; a married minor's requirements would be wider than those of an unmarried minor.
  • whether the goods or services supplied were in fact necessary at the time of the contract; that is, whether the minor actually needed the goods or whether they were already adequately supplied with them (by their parents, for example). The supplier must prove that the thing supplied was necessary.

An ordinary contract of employment will be binding on a minor unless it contains particularly harsh terms. In other words, if a minor takes employment on usual terms, the contract will be binding on them before and after they turn 18 years of age.

A contract under which a minor acquires an interest in something of a permanent or similar nature to which continuing rights and obligations attach, is voidable, that is, the minor is bound unless they avoid (repudiate or reject) the contract before or within a reasonable time after turning 18 years old. If the contract is repudiated, the minor is relieved from any further liability under the contract, but not from obligations already due. Money paid by a minor before repudiation is not recoverable from the other party. In the case of credit contracts, including credit cards, minors may enter contracts, but the financial institution will normally require an adult as guarantor. A guarantor can be forced to comply with the terms even if the minor repudiates the contract (see Buying on credit ).

Contracts and intellectually disabled or mentally ill people

A contract made by an intellectually disabled or mentally ill person is binding unless the person takes action to have it set aside. To have the contract set aside, it must be shown that the person was incapable of understanding the nature of the contract and that the other party knew or ought to have known of the person's intellectual disability or mental illness.

If the contract was made during a period when the person was able to understand it (what is known in law as a lucid interval), it will be binding even though the other party knew of the person's intellectual disability or mental illness.

In any case, an intellectually disabled or mentally ill person is liable to pay a reasonable price for goods sold and delivered if the goods can fairly be regarded as necessaries; that is, goods necessary to the person's condition in life and their actual requirements, at the time of the sale.

If a trader has taken advantage of a person's disability or illness, the person may be able to escape the contract on the basis that it is unjust (see Unconscionable conduct ).

Rights against third parties

It is basic to the law of contract that only a party to a contract can enforce it or be enforced against. This is known as the doctrine of privity of contract; that is, a contract is a private agreement between two parties. However, a person who did not directly participate in dealings leading to a contract may still be regarded as a party if it is clear that the person who negotiated the contract was doing so as an agent on that person's behalf. There are two common situations where these principles are relevant: in the purchase from a retailer of goods that are defective due to some fault of the manufacturer (see below) and in the historical rules regarding incurring of debts by a married woman.

Defective goods

In most consumer transactions the contract is between a consumer and a retail trader. If the goods prove to be defective, the action is taken by the consumer against the trader. The ACL gives consumers rights if the goods they buy are defective. Consumers can use consumer guarantees to exercise their right to a repair, replace or refund for defective goods (see Consumer guarantees).

If a manufacturer of goods supplies a product that has a safety defect, and someone gets injured because of the safety defect, the manufacturer will be liable to pay compensation [s138 ACL] (see Loss & injury caused by defective products).

Unsatisfactory goods and services bought on credit

Sometimes, goods and services are bought on credit or finance arranged by a trader. In these situations, the trader negotiates the sale with the consumer and arranges a separate finance contract between the consumer and a credit provider.

Where a trader arranges finance for a consumer through a credit provider, that provider is known as a linked credit provider. A linked credit provider is a separate company, but is linked to the trader if the trader recommends the credit to the consumer or has the credit provider's documents or contracts available.

A consumer who encounters problems with a transaction may claim compensation from the dealer due to misrepresentation, breach of contract or a breach of an implied condition or warranty (see Misrepresentation , Breach of contract ). Section 279 of the ACL allows the consumer to claim compensation from the linked credit provider as well. This right is subject to a number of defences and will most often be useful where the trader is insolvent.

Breach of contract

What constitutes a breach?

Sometimes a contract expressly states that one party may bring it to an end following a particular kind of breach (or perhaps any breach) by the other party. Where the contract does not have this kind of express provision, the general rule is that if one party makes a serious breach, the other can decide whether or not to end the contract.

Under the law of contract a serious breach is:
  • a breach that results in substantially depriving the innocent party of what was intended to be obtained under the contract
  • a breach of a vital term; that is, a term in relation to which, at the time the contract was signed, the party's words and conduct showed that the party considered that strict compliance with the term was essential.

If the contract is 'kept alive', the innocent party retains their right to claim damages for past breaches. If the innocent party decides to terminate the contract, the other party should be informed as quickly as possible.

Sometimes it is very difficult to ascertain whether a contract has been breached and, if so, whether the breach is sufficiently serious to justify termination. Terminating a contract when not legally entitled to do so is itself a serious breach of contract.

Penalty clauses

Often contracting parties will agree on a sum to be paid if either breaches the contract. If the agreed amount represents a genuine estimate of the likely loss, a court will enforce payment. In such a case, the agreed amount must be paid even if the actual loss is more or less.

Where the agreed amount takes the form of a penalty for a breach, a court will not allow the person suffering the breach to recover more than the actual loss. A penalty is a sum that is not a genuine pre-estimate of damages and usually favours the person who was in the stronger position at the time of making the contract.

Whether a sum is considered a penalty will depend on the intention of the parties, and the courts have laid down the various guidelines, such as:
  • if the sum is extravagant in comparison with the greatest loss that could flow from the breach, it will be regarded as a penalty
  • an agreement to pay a sum of money with a rebate for prompt payment is valid, but a penalty for late payment is not.

Remedies available for breach

A party will be in breach of contract if they don't comply with the terms of the contract, including the conditions and warranties implied by statute. The other party's rights will depend on the nature of the breach and whether any special remedies provided by legislation apply.

The remedies for breach of contract are set out in this section. If implied conditions or warranties have been breached, the consumer has additional remedies (see Terms of a contract ).

To enforce their rights, the consumer can take a self-help approach, enlist the help of a government agency or take a small or ordinary claim to court (see Help and remedies ).

Right to recover damages

The party in breach of the contract can be ordered to compensate the innocent party for any loss suffered to return the innocent party to the position they would have been in had the contract been properly performed.

Sometimes the contracting parties will have agreed on an amount to be paid in the event of a breach, especially where proving the exact amount of damages could be difficult. These provisions are decisive, unless the court considers a provision to be in reality a penalty for breach of contract (see Penalty clauses ). Otherwise, the party seeking damages must establish that loss claimed was in fact suffered and that failure to perform the contract was the real cause of the loss. In making its decision, a court looks at the term breached and actual loss that has resulted. It asks whether the party in breach could have foreseen the sort of loss (if not its extent) that was reasonably likely to result from their action.

The person in breach becomes liable to pay compensation for losses that might not normally occur in cases of this kind if, at the time of contracting, they made it clear that the special loss might occur in this particular case.

The party who sues for damages for breach of contract has a duty to mitigate (to keep to a minimum) any losses resulting from the breach. If they don't, they will have their claim for damages reduced accordingly. For example, if a tenant breaks a one-year lease by vacating after six months, the landlord would be expected to minimise the loss by trying to find a new tenant.

Court order to fulfil the contract

A court can order a contracting party to carry out their side of the contract, although such a directive is fairly rare because an order for damages in favour of the innocent party is usually considered to be adequate justice. However, where one party defaults in a contract for the sale of land, the court is quite likely to order the defaulter to carry out the contract.

Unjust and illegal contracts

Unjust contracts

A person who has entered into a contract they consider unjust may be able to have a court set it aside on the basis that it is unconscionable; that is, it would be 'against conscience' for the other side to enforce it.

Generally, this will only apply where the aggrieved party entered into the contract under some kind of special disability and the other party took unfair advantage of this. A special disability could be any factor preventing a person from looking after their own interests including:
  • insufficient ability to speak English
  • an intellectual disability or mental illness
  • drunkenness
  • the person's will being overborne by threats or coercion by a third party.

In addition to common law rules regarding unjust contracts, the ACL prohibit suppliers from engaging in unconscionable conduct in connection with the supply of goods and services [ACL Part 2-2] (see Unconscionable conduct ).

Illegal contracts

A contract is illegal if it involves a criminal or a civil wrong or an act injurious to the public or against the public good. For example, it is an offence to import drugs. Accordingly, a contract to use a boat to import drugs would be illegal. A contract that encourages a party to break a pre-existing legally binding contract is illegal and classed as a civil wrong.

A contract is also illegal if its subject matter is to be used for an unlawful purpose. For example, if a weapons dealer agreed to sell a firearm to an appropriately licensed person knowing that the buyer intended to commit murder, that contract would be illegal.

A court will not enforce an illegal contract. As a general rule, money paid or property transferred under an illegal contract cannot be recovered. However, there are exceptions to the rule of enforcement. For example, where performance of a contract is made illegal by an Act passed for the protection of a class of persons, a member of that class can recover money paid or property transferred by them under the contract. So a tenant, for example, would be able to recover money paid to a landlord if an Act prohibited that landlord from collecting it.

The subject of illegal contracts is very complex. If there is any doubt about the legality of a contract, legal advice should always be sought.

Ending a contract

Where a party has fulfilled the terms of a contract, they are, by definition, discharged from further obligations. This is called discharge by performance. A contract can also be ended following a breach of one of its terms by one party to the contract, by mutual agreement, or by the frustration of the original intention of the contract.

Example 1: Letter to go with rejected goods

Dear [trader's name]

I am returning the [description of goods] purchased from you on [date] in accordance with section 267 of the Australian Consumer Law.
I hereby rescind the contract entered into to purchase those goods. My grounds for rescission are:

[here set out one or more grounds as appropriate, for example, the goods are not of acceptable quality, do not correspond to the description given in advertising material and so on.]
Please refund to me the amount of $........ being the purchase price paid for these goods.

Yours faithfully,
[name of purchaser]

Discharge following breach

After certain serious breaches of contract, the innocent party has the right to choose whether to discharge (terminate) the contract or keep it in force (see Breach of contract ). If a decision is made to end it, the party in breach must be told either verbally or in writing. The contract comes to an end from that moment and neither party is bound from that date.

However, any obligations that arose before that time, for example, obligations to pay damages for breach of contract, survive and can be enforced (see Breach of contract ).

Discharge by agreement

The parties to a contract can agree at any time that the contract should cease to bind them, although such an agreement is itself a contract which must also be supported by consideration (see Making a contract ). If both parties have, under the contract, obligations that have not yet been carried out, the agreement to bring the contract to an end generates its own consideration, as each party promises not to enforce the remaining obligations of the other.

Where one party has already fully performed their side of the contract, an agreement to discharge the other may not be binding unless the party who has not yet performed gives something of value to buy the promise of release. However, although the party promising release may rescind that promise if nothing of value is received for it, if the party who is yet to perform has relied on the agreement and has changed their situation in some way, such as by selling the goods to another party after the discharge, a court may force the party promising release to keep the agreement.

Discharge by frustration

The doctrine of frustration refers to the doctrine that a contract may be discharged if, after its formation, an event beyond the control of either party renders its performance illegal or impossible. Although it is rare for a court to find that a contract has been frustrated, this may occur if circumstances change after a contract has been made. For example, fire may destroy a houseboat after a contract has been signed to allow a person to dwell in the houseboat for a particular period of time. If the altered circumstances are not the fault of either party, a court may find that the contract has automatically ceased, in which case neither party will be bound by it. The court must be satisfied that there is no provision binding the parties to continue it even if the frustrating event should occur.

Rescinding a contract

A consumer entitled to rescind a contract; that is, cancel the contract, is generally required to return the goods to the supplier with a written notice stating this intention, such as the one shown at Example 1 above.

A consumer who is not satisfied with the trader's response to their complaint or their own attempt to rescind the contract should seek the assistance of a government agency or a lawyer (see Legal help ) or take the matter to court or as a small claim or otherwise (see Through the courts ).

Ending an Unsolicited Consumer Agreement

If a consumer has bought goods or services to the value of more than $100 (or where the total value is not known at the time) and the sale is an unsolicited consumer agreement, the consumer has 10 business days to change their mind and cancel the agreement. An unsolicited consumer agreement is where the salesperson has approached the consumer uninvited at a location that is not the trader's usual place of business. This can be through a door to door sales visit, a telemarketing call, or at a stall in a pedestrian mall. Because the approach from the business is not invited by the consumer the ACL gives the consumer extra protection and gives the consumer the rights to change their mind.

If a consumer wants to cancel the agreement (even if they have already received the goods), they can complete this form and send it to the business.

For more information on unsolicited consumer agreements, see Unsolicited consumer agreements.

The Australian Consumer Law

The Australian Consumer Law (ACL) provides protection to consumers, and rights and responsibilities to businesses. Consumers are people who buy things, shopping at the supermarket, or buying something online, or paying a plumber to fix something. For the law to apply, the deal or purchase that the consumer was involved in must:
  • be in trade or commerce
  • the goods or services are of a kind ordinarily acquired for personal, domestic or household use or consumption, or acquired for less than $40,000 or
  • the goods consist of vehicles or trailers acquired principally for the transportation of goods on public roads.

A good is a thing that someone buys, like a milkshake or a computer. A service can be a contract to do something, like paying a plumber to fix your sink.

If the ACL does not apply, the law of contract or another law may apply. Make contact with someone from the Help and remedies section of this chapter to find out if you are not sure.

Misleading or deceptive conduct

The ACL prohibits a person (a person includes a business) in trade or commerce from engaging in conduct that is misleading or deceptive, or is likely to deceive or mislead a consumer [ACL s 18].

Misleading conduct can come about through advertisements, brochures, verbal or written statements, pictures or diagrams and even arises where there has been a failure to correct a misleading impression known to be held by the consumer.

Examples of actions by suppliers that have been held to be misleading include:
  • a false statement made by a bank officer arranging insurance that an insurance benefit would be available in certain circumstances
  • a statement that a car was in excellent condition when in fact it had a number of defects
  • a false statement by a seller that a computer software package had the capacity to meet the client's specific needs
  • a false statement made by a lessor that their customer could buy the car at the end of the lease period.

Fault or intention to mislead is not required for a person to be guilty of misleading conduct. A seller's statement about goods for sale could be misleading even if they honestly believed it to be true, had no intention of deceiving the consumer and had no reason to be suspicious of the statement at all.

Whether conduct is misleading or deceptive will depend on the factors surrounding the conduct. This means that all relevant circumstances will be taken into consideration, such as the entire advertisement, product label or statements made by a sales representative. Fine print, contradictory statements and images that obscure or alter written statements are all taken into account.

A business that has breached ACL s18 may also breach others sections of the ACL such as s29, some of which is outlined below.

As outlined above in the "Mere Puffs" section, mere puffery is wildly exaggerated, fanciful or vague claims about a good or service that no one could possibly treat seriously or find misleading. These statements are not considered misleading or deceptive under the ACL.

A consumer who has suffered loss or damage as a result of misleading conduct can claim monetary compensation and/or orders that may be made for breaches of Chapter 2 of the ACL, including setting aside the contract and obtaining a refund (see Help and remedies ).

Case study

An internet company offered unlimited download plans for users who signed up to their services. However, the plans were subject to major limitations including speed reductions when a certain amount of data was downloaded. The court found that the use of the term unlimited in relation to plans that were subject to major limitations that were not disclosed was misleading and deceptive. Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20

False or misleading misrepresentations

Businesses are not allowed to make statements that are incorrect or likely to create a false impression. This rule applies to their advertising, their product packaging, and any information provided to you by their staff or online shopping services. It also applies to any statements made by businesses in the media or online, such as testimonials on their websites or social media pages.

A business that makes a false or misleading representation like the ones listed below may also breach section 18 which is discussed above. Where a trader commits any of the following breaches, the consumer can seek various remedies, including compensation, rescission of the contract and injunctions (see Help and remedies ).
  • False or misleading representations: a trader of goods or services commits a criminal offence if they mislead or deceive the consumer about:
    • the standard, quality, composition, style, model or history of goods or services
    • whether goods are new
    • the agreement of a particular person to acquire the goods or services
    • testimonials by any person relating to goods or services
    • the sponsorship, approval, performance characteristics, accessories, uses or benefits of goods or services
    • the price of goods or services
    • the availability of repair facilities or spare parts
    • the origin of goods (as in where they were made such as Made in Australia)
    • the need for goods or services
    • the existence, exclusion or effect of any condition warranty, guarantee, right or remedy
    • a requirement to pay for a contractual right that is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy that a person has under a law [ACL s151].
  • Land: a person involved in the sale of land, commits an offence if they:
    • mislead a consumer about a sponsorship, approval or affiliation the person does not have
    • mislead a consumer about the nature of the interest in the land (such as whether they have a leasehold or freehold interest), price, location, characteristics, use, existence or availability of facilities in relation to that land [ACL s152].
  • Employment: businesses commit an offence if they engage in conduct likely to mislead people seeking employment about the availability, nature, terms or conditions of the employment or any other matter relating to the employment [ACL s153].
  • Nature of goods: a person is not allowed to mislead the public about the nature, manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods [ACL s155].
  • Nature of services: a person is not allowed to mislead the public about the nature, the characteristics, the suitability for their purpose or the quantity of any services [ACL s156].
  • Business activities: where a person advertises business schemes that can be carried on from home, it is an offence to mislead consumers about risks, profitability or any other aspect of that business. Where a person advertises a business scheme and asks people to join or invest in them, it is an offence to mislead consumers about the profitability, risk or any aspect of that business [ACL s159].

Country of origin representations are changing in 2016. If you have a question or concern about a country of origin representation contact the ACCC (see Contact points).

Some examples of business behaviour that might be misleading are:
  • a mobile phone provider signs you up to a contract without telling you that there is no coverage in your region
  • a real estate agent misinforms you about the characteristics of a property by advertising 'beachfront lots' that are not on the beach
  • a jewellery store advertises that a watch 'was' $200 and is 'now' $100 when the store never sold the watch for $200
  • a business predicts the health benefits of a therapeutic device or health product but has no evidence that such benefits can be attained
  • a transport company uses a picture of aeroplanes to give you the impression that it takes freight by air, when it actually sends it by road
  • a company misrepresents the possible profits of a work-at-home scheme, or other business opportunity.

Unconscionable conduct

Unconscionable conduct is actions on the part of a person or business that goes against conscience. It can be conduct that does not meet society's expectations about what is right or reasonable in business. This can be a very broad concept, but is designed to protect consumers from a business that takes advantage of disadvantage.

The following may assist in figuring out whether conduct is unconscionable:
  • the relative bargaining strengths of the customer compared to the business
  • whether the customer was required to comply with conditions not reasonably necessary for the protection of the other party
  • whether the customer understood documents relating to the transaction
  • whether any undue influence or unfair tactics were used against the customer
  • the price and circumstances under which the customer could have supplied or acquired the goods or services to or from a third party
  • whether the supplier or acquirer has a contractual right to vary unilaterally a term or condition of a contract between the supplier or acquirer and the customer [ACL s22].

The factors are only a guide and the list is not exhaustive. Conduct may be considered to be unconscionable where there has been serious misconduct or unfairness

Examples of unconscionable conduct are:
  • high pressure sales techniques
  • harassment or coercion
  • taking advantage of people who for some reason do not understand the documents being used.

A consumer who is the victim of unconscionable conduct may be able to take legal action [ACL ss.20-21]. This could include a claim for an injunction to stop the conduct, a court ruling that a contract is void or should be varied or payment of compensation. In addition, the ACCC or NTCA may assist (see Help and remedies ). Claims under the ACL must be made within six years of the conduct occurring.

Case studies

While in the middle of a prolonged bout of heavy drinking, a farmer agreed to sell his farm at 30% less than its true value. The sale contract was set aside by the court [Blomley v Ryan [1956] HCA 81].

The Amadios, an elderly couple, signed a guarantee with the bank on behalf of their son. They thought that their son's business was prosperous when in fact it was in financial difficulty. The bank enhanced the business's appearance of solvency by selectively honouring cheques that overdrew its account. The bank obtained security for a non-performing loan as a result of the guarantee. The guarantee was set aside as unconscionable because it was manifestly disadvantageous to the Amadios. The bank must have been aware of this and took no steps to ensure that the Amadios were properly advised about the transaction [Commonwealth Bank of Australia v Amadio [1983] HCA 14].

A company was found to have acted unconscionably when it used unfair tactics to obtain payment, such as creating a fake complaints handling body and a fake debt collection agency to manipulate and pressure debtors into paying alleged debts. The court also found the company acted unconscionably by using scare tactics and unfounded claims to deter debtors from non-payment, including that if proceedings were commenced the court would order the debtor to pay a certain amount of compensation to the creditor for failing to pay on time and that any assets belonging to the debtor would be repossessed. ACCC v Excite Mobile Pty Ltd [2013] FCA 350

Consumer guarantees

When you buy goods or services and they break too easily, don't work or don't perform as generally expected, you have rights under the law. The ACL creates a basic set of guarantees for consumers who acquire goods and services from Australian suppliers, importers or manufacturers. These are intended to ensure that you receive the goods or services that you have paid for. When you have a problem and one of the guarantees has not been met, you are entitled to a remedy. These apply on top of and cannot be changed by any express warranties, manufacturer's warranties and extended warranties that may apply.

The type of remedy depends on the circumstances but may include a repair, replacement, refund or having the service performed again.

The consumer guarantees apply every time you buy goods and services.

When you buy goods, the seller guarantees that:
  • goods will be of acceptable quality
  • goods will be fit for a particular purpose
  • goods will match their description
  • goods will match the sample or demonstration model
  • they will honour any express warranties
  • you have title to the goods
  • you have undisturbed possession of the goods
  • there are no undisclosed securities on the goods.

The manufacturer guarantees that:

  • goods will be of acceptable quality
  • goods will match their description
  • they will honour any express warranties
  • they will provide repairs or spare parts for a reasonable time.

When you buy services, the provider guarantees that:
  • they will provide the services with due care and skill
  • the services will be fit for a particular purpose
  • the services will be provided within a reasonable time.

When do consumer guarantees apply?

As a consumer, you automatically receive certain guarantees when you buy, hire or lease goods, or buy services.

You are covered by the law if the goods or services you purchase cost less than $40 000. If the goods or services cost more than $40 000 but are normally used for personal, domestic or household purposes (such as landscape design), the guarantees will still apply. Vehicles and trailers are also covered, irrespective of cost, provided they are used mainly to transport goods.

This means the consumer guarantees can apply to purchases that a business might make, for example an office chair or photocopier. However, regardless of cost, the guarantees do not apply to goods which are to be re-sold or transformed into something that is sold or used up.

If you receive the goods or services as a gift, you have the same rights as the person who purchased them.

The guarantees do not apply to insurance and financial services, as these are covered by other laws. Services for transporting and storing goods for business purposes are also not covered.

Consumer guarantees under the ACL cannot be altered in a negative way by a contract or agreement between a business and a consumer. They apply regardless of any extended warranty or manufacturers warranty that may apply to the good or service.
Acceptable quality

There is a guarantee that goods are of acceptable quality [ACL s54] if they:

  1. are safe, durable and free from defects
  2. are acceptable in appearance and finish
  3. do everything that they are commonly used for.

When deciding whether goods meet this guarantee, you need to consider the nature of the goods, the price, and any information provided directly by the seller or the manufacturer, or on packaging or promotional material.

You should also consider how you have used the product. Goods are not expected to be indestructible, for example, if you damage the goods or use goods in an unreasonable or unintended manner, you may not be able to rely on this guarantee to obtain a remedy.

Second-hand goods are also covered by the guarantee, but age, price and condition must be taken into account.

The guarantee of acceptable quality still applies to imperfect goods or seconds. Where a seller alerts you to any defects before the purchase, you should inspect before you buy to make sure you are still happy to go ahead. Otherwise you may not be entitled to a remedy.

For example, a consumer purchases a new pair of shoes, one of which loses a heel when it is worn for the first time. The consumer can claim that the shoe does not meet the guarantee of acceptable quality.
Fit for purpose

There is a guarantee that goods will be suitable for any particular purpose that you make known to the seller before you buy [ACL s55].

If you explain to the seller that you want the product for a particular purpose, and you buy it based on their claims or expertise, the seller guarantees that it will meet your particular purpose. This guarantee may not apply if it is unreasonable to rely on the seller's skill or judgment, or if you purchase the product despite advice from the seller that it will not meet your particular purpose.

Where the seller is made aware by the consumer of the purpose for which goods are required or the seller represents that the goods are reasonably fit for a particular purpose, then the goods must be reasonably fit for that purpose. This applies whether or not the goods are commonly supplied for that purpose. This guarantee does not apply where the consumer has not relied on the skill and judgment of the person selling the goods or where it would be unreasonable to do so. Nor does it apply if the goods are bought at auction.

Although at first sight these requirements appear rather onerous, the courts have taken a liberal approach which is favourable to consumers. In the case of goods which only have one particular purpose, the first requirement will be satisfied by merely placing an order for the goods. In consumer cases, the latter requirement will be satisfied, for example, by the fact that the consumer went into the supplier's shop. In effect the consumer is said to rely on the seller's skill in selecting the goods.

For example, a consumer purchases paint from a specialty paint shop after explaining to the seller that they are painting their outdoor decking. After a couple of months, the paint begins to peel, as it is unsuitable for outdoor surfaces. The consumer can claim that the paint for the decking is not fit for a particular purpose that was made known to the seller.
Match description

There is a guarantee that any description of a product, whether made verbally or in writing, must be accurate [ACL s56].

Many consumer transactions are by description, that is, the consumer does not actually see the goods being purchased. This may occur in two ways
  • goods are ordered from a distance, for example, online, without ever seeing them, or
  • more commonly, a consumer may, for instance, ask for a tin of fine-ground coffee, or select a tin labelled fine-ground coffee from a supermarket shelf.

Both of these are sales by description. In the latter case it can be argued that the consumer relies on the description on the label (compared with the situation where the tin is opened and the contents examined). If the tin does not contain fine-ground coffee then the consumer may take advantage of the protection offered by the ACL. Note that s56(2) provides that supply of goods is not prevented from being supply by description merely because a consumer selects goods exposed for sale or hire.

If the sale is by reference to a sample as well as by description, then it is not sufficient that the goods correspond to the sample if they do not also correspond with the description [s56(3)].
Match sample or demonstration model

There is a guarantee that if you have chosen goods based on a sample or demonstration model the goods must match in quality, state or condition [ACL s57]

For example, a consumer test drives a new car and agrees to purchase a car the same as the demonstration model. When the new car is delivered it has a smaller engine than the demonstration model. The consumer can claim the car does not match the demonstration model.
Spare parts and repairs

There is a guarantee that when you purchase a product the manufacturer or importer must provide spare parts and repair facilities for a reasonable time after purchase [ACL s58]. This applies even if you did not purchase the goods directly from the manufacturer or importer.

How long is 'reasonable' will depend on the type of product. This guarantee does not apply if you are advised at the time of purchase that repair facilities and spare parts will not be available after a specified time.
Express warranties are honoured

There is a guarantee that, if a seller or manufacturer makes extra promises "either verbally or in writing" about the quality, condition, performance or characteristics of goods, these promises must be met [ACL s59]. Common types include money-back guarantees and lifetime guarantees.

Section 59 provides that any express warranties given by the retailer or the manufacturer must be honoured. This applies to, for example, the 12-month warranty. That must be honoured but it is in addition to the rights provided by the ACL. It is not a substitution for those rights. The same applies to an extended warranty that is purchased by the consumer.

For example a consumer purchases a kitchen knife. The seller promises them that it will stay sharp for 10 years. After five years, the knife is no longer sharp. The consumer can claim that the knife does not meet the express warranty.
Title to goods

There is a guarantee that when you buy goods, the ownership rights are passed to you [ACL s51]. The seller must tell you when there are other rights over the goods.

This guarantee also applies to goods you buy through private transactions but it does not apply to goods that are leased or hired (because you don't expect to own these outright).

For example, a consumer buys a second hand car from a car sales yard. The car is then repossessed because it was stolen. The consumer can claim that the seller did not have clear title to the goods.
Undisturbed possession

There is a guarantee that no one will try to repossess or reclaim a product you buy [ACL s52]. This guarantee also applies to private transactions.

For goods that are hired or leased, the guarantee applies only to the period of the hire or lease. If the goods are purchased under a payment plan and you fail to make the agreed payments, the seller may be able to repossess the goods.
No undisclosed securities on goods

There is a guarantee that the goods will be free of any undisclosed securities or charges, unless you are clearly told otherwise before you purchase [ACL s53].

This guarantee also applies to goods you buy through private transactions, but it does not apply to goods that are leased or hired.

Consumer guarantees - Services

The ACL also provides protections for service agreements. Services include most things normally thought of as services and include contracts for work (but not employment), including professional work, provision of recreational and amusement facilities, a contract between banker and customer and a contract for the lending of money. Insurance contracts are excluded from these protections as are contracts for the transportation or storage of goods for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported or stored [s63].

The ACL provides the following guarantees in relation to services:
  • that the services will be rendered with due skill and care [s60]
  • that the services will be fit for any specified purpose (express or implied) [s61]
  • that the services will be provided within a reasonable time (if no time is set) [s62]

Remedies available

Under the ACL, there are a number of remedies available where a guarantee has not been complied with. This depends on whether not complying with the guarantee is considered a major failure or a minor failure.

For goods that do not meet consumer guarantees and it is considered a major failure, you can ask for a choice of a refund or a replacement. For a major problem with a service, you can choose to receive compensation for the drop in value below the price paid, or a refund.

If you have a minor problem with a product or service, the business can choose to give you a free repair instead of a replacement or refund.
Major failure

A major failure in respect of goods and services [s260 (goods) and s268 (services)] is where:
  • goods or services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure
  • goods depart in one or more significant respects:
    • if they were supplied by description - from that description
    • if they were supplied by reference to a sample or demonstration model - from that sample or demonstration model
  • goods or services are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose
  • goods or services are unfit for a disclosed purpose that was made known to:
    • the supplier of the goods, or
    • a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose
  • the goods or services are not of acceptable quality because they are unsafe.
  • In the case of services,
    • the services, and any product resulting from the services, are not of such a nature, or quality, state or condition, that they might reasonably be expected to achieve a result desired by the consumer that was made known to the supplier, and
    • the services, and any of those products, cannot, easily and within a reasonable time, be remedied to achieve such a result

Goods - Rights to repair, replace, or reject and refund and damages

Where a defect in goods can be remedied and the defect is not a major failure the customer can require the retailer to remedy the defect within a reasonable time [s259(2)] so long as the defect was not due to some independent event that occurred after the goods left the retailer's control. This means that the retailer must choose from one of the following [s261]:
  • repair the goods
  • replace the goods, or
  • refund the price.

If the retailer refuses, or fails to respond within a reasonable time, the consumer may [s259(2)]:
  • have the goods repaired elsewhere and recover the cost from the retailer, or
  • reject the goods (see below).

If the defect cannot be remedied or the defect is a major failure, the customer, or a person to whom the customer has given purchased goods [s266], can either reject the goods (see below) or claim damages measured by the difference between the price paid and the value of the defective goods [s259(3)]. It is also possible for the consumer to take action against the retailer for damages for any consequential losses incurred because of the defective goods (for example, if a defective toaster caused a fire) [s259(4)]. However, because of the definition of 'consumer', business purchases under $40,000 are covered and it is permitted under s64A for a business to limit its liability to the cost of replacement or repair in respect of goods purchased for business and not domestic purposes.

For action against the manufacturer in relation to a defective good see Loss & injury caused by defective products.

The consumer may take action against the retailer whether or not the goods are in their original packaging [s259(7)].

Whenever goods are replaced, the same consumer guarantees apply to the replacement goods [s264].

What to do if there is a major failure

The consumer may reject the goods if they have a major failure, they cannot be repaired or the retailer has not responded by offering repair or replacement.

To do so, the consumer must:
  • return the goods explaining why they are being rejected [s259(3)(a) and s263(2)], or
  • must notify the retailer to come and collect them if the goods are not transportable [s263(2)(b)]. The retailer must then refund the price of the goods or replace them [s 263(4)]. The retailer cannot require the consumer to buy other goods in lieu of a refund [s263(5)

Defective goods cannot be rejected [s262] if:
  • the rejection period (see below) for the goods has ended
  • the goods have been lost, destroyed or disposed of by the consumer
  • the goods were damaged after being delivered to the consumer for reasons not related to their state or condition at the time of supply, or
  • the goods have been attached to, or incorporated in, any real or personal property and they cannot be detached or isolated without damaging them.

The rejection period is the period within which it would be reasonable to discover the defect having regard to:
  • the type of goods; and
  • the use to which a consumer is likely to put them; and
  • the length of time for which it is reasonable for them to be used; and
  • the amount of use to which it is reasonable for them to be put before such a defect becomes apparent.

If goods are rejected and a refund is paid, then any service contract that goes with the goods can be terminated [s265]. The customer should notify the service provider if that party is a separate entity from the retailer. The customer is then entitled to a refund representing the remainder of the unused services.

Services - Remedies

If the defective services can be remedied and the defect does not constitute a major failure, the customer can require the service provider to remedy the failure [s267(2)(a)]. If the service provider fails to respond, or respond within a reasonable time, the customer can have the defective services remedied by another service provider and recover the cost from the original service provider (s267(2)(b(i)) or terminate the service contract [s267(2)(b)(ii)].

If the defective services cannot be remedied or they constituted a major failure, the customer can terminate the services contract or recover damages measured by the difference between the price paid and the value of the defective services [s267(3)]. The customer can also recover damages for any consequential losses, for example, a fire caused by defective installation of roof batts [s267(4)].

To terminate the contract the customer should, so far as possible, notify the service provider. Once terminated, the customer is entitled to a refund of the price for any unused services [s269(3)].

If a services contract is terminated any associated contract for goods can be terminated also. The goods must be returned to the supplier (or, if too difficult to transport, the supplier should be notified to come and collect them) and a refund must be paid by the supplier [s270].

Remedies against a manufacturer

Minimum standards for goods are enforceable against manufacturers. The ACL provides a right of action to a 'person affected' (which means the purchaser or a person who has received the goods as a gift) against a manufacturer who supplies faulty products, that is, goods that are not of acceptable quality, do not conform to a description, do not have spare parts or repair facilities or are in breach of an express manufacturer's warranty [s271]. Under the law of contract the purchaser has no rights directly against a manufacturer because there is no contract with the manufacturer. However, if a manufacturer supplies a defective good and it harms a person, that person can take action against the manufacturer (see Loss & injury caused by defective products).

'Manufacturer' is extensively defined in s7 and includes an importer and a supplier whose brand appears on the goods.

The person affected can seek damages against the manufacturer [ss271-2] or, if the manufacturer has given an express warranty (for example a 12-month warranty), require the manufacturer to replace or repair the goods. If this does not happen, then the person can sue for damages for breach of the express warranty. The damages claimable include the cost of returning the goods to the manufacturer. The right to damages may be sought whether or not the goods are in their original packaging [s271(7)].

When goods have been purchased for business purposes, the manufacturer's liability to pay damages to the business consumer is not limited in the way that the retailer may be able to limit its damages, namely, to the cost of replacement or repair.

A claim for damages must be brought within three years of the date on which the defect became obvious or should have been detected [s273]. Note this is not within three years of purchase.

Any attempt by the manufacturer to exclude these provisions is void [s276].

The right to claim against a manufacturer is usually not very useful because the manufacturer may not be close to hand whereas the retailer will usually be in the locality. So it is usually simpler to complain of faulty goods or services to the company that supplied them.

Unfair practices

A range of unfair practices are prohibited by legislation including:
  • offering gifts and prizes: traders are not allowed to offer gifts, prizes or other free items to attract consumers without intending to provide them or provide them as offered [ACL s32].
  • bait advertising: traders are not allowed to advertise goods or services if there are reasonable grounds for believing that they can't supply them at the price offered within a reasonable time, given the nature of the market and the nature of the advertisement [ACL s35].
  • referral selling: businesses are not allowed to induce consumers to buy goods or services by offering them a rebate, commission or some other benefit in return for supplying the names of potential customers or help with the sale of goods to other consumers, if receipt of the benefit is contingent on an event occurring after the contact is made [ACL s49].
  • failure to supply goods or services paid for: a trader is not to accept payment for any goods or services:
    • they do not intend to supply
    • when they intend to supply goods or services different from those promised
    • when they know they can't supply goods within the time promised or within a reasonable time frame [ACL s36].

Aside from the offence of failing to supply goods or services that have been paid for, the trader is in breach of contract and the consumer could claim damages for any loss, including the purchase price.
  • harassment and coercion: a business must not use physical force, coercion or undue harassment towards a consumer in connection with the supply or payment for goods or services, or the sale, grant or payment for an interest in land [ACL s50].
  • pyramid schemes: it is illegal to participate in or induce another to participate in a pyramid scheme [ACL s44].
  • unsolicited credit and debit cards: it is illegal for businesses to send credit or debit cards to consumers who have not requested them [ACL s39].
  • unordered goods and services: unsolicited goods and services are those sent or supplied to a consumer without their request or authority. A consumer is not liable to pay for these products or for their loss or damage unless it was wilful. A consumer who doesn't wish to purchase the unsolicited items should notify the sender of the date and time they were received and where they can be collected. If the goods are not collected within one month, the goods can be kept free of charge. Alternatively, if the business is not notified, they have three months to collect the goods. Again if this does not occur, the goods can be kept free of charge [ACL s41-42].
  • unauthorised entries or advertisements: a person must not seek payment for placing an entry or advertisement in relation to another person if this was not authorised [ACL s43].

Unsolicited consumer agreements

An unsolicited consumer agreement happens when:

it results from negotiations by phone or at a location other than the seller's place of business, and
a seller, or their sales agent, approaches you uninvited, and
the total value is more than $100 (or cannot be determined when the agreement is made).

For example, when a salesperson calls to your door to sign you up to a new electricity company. Or you get a phone call with someone trying to sell you a new mobile phone plan.

Unsolicited agreements can also occur if:
  • you provide your contact details to a business for one purpose, for example a competition entry, and the seller contacts you for a separate purpose, to sell another product or service to you

  • you return a missed call from a seller or respond to any unsuccessful attempt by them to contact you

What a salesperson has to do

A door-to-door salesperson or telemarketer who makes an unsolicited or uninvited call on a person in their own home must fulfil certain requirements if they make a sale of over $100 [ACL Part 3-2]. They must:
  • disclose their purpose and identity, and inform the customer that they will leave on request [ACL s74]
  • tell the customer about their right to cancel the sale within ten business days (the cooling off period) of the date of the sale. The cooling off period starts from the date of signing for face-to-face sales, and from the day after you receive the written agreement for telephone sales [ACL s76]
  • provide the customer a written copy of the agreement. A face-to-face salesperson must immediately provide a copy of the signed written agreement to the customer. Agreements negotiated by telephone must be provided within 5 business days (or such longer period as has been agreed) [ACL s78]
  • limit their activities to restricted visiting times (unless a prior arrangement has been made with the consumer), namely Monday to Friday between 9am and 6pm (8pm for telemarketers) (public holidays excepted) and Saturday between 9am and 5pm [ACL s73]
  • leave the premises immediately at the consumer's request [ACL s75].

A consumer can cancel or rescind a contract for goods or services:
  • without giving a reason and at any time during the ten-day cooling off period
  • within three months of the contract, if the dealer has failed to comply with the requirement to solicit within permitted hours, to disclose their purpose or identity, or to leave the premises when requested
  • within six months of the contract, if the dealer failed to inform the customer of the cooling off period, failed to fulfil the requirements under sections 78-81 of the ACL relating to unsolicited agreements, or during the ten-day cooling off period, the dealer accepted any money or began supplying services [ACL s82].

If the product proves unsatisfactory during or beyond these periods, the consumer still has other remedies available (see Ending a contract , Breach of contract ).

What must be in the sales agreement?

Any unsolicited sales agreement must:
  • be written in clear and plain language that is easily understood
  • include all terms in full
  • include the total cost to you (including GST if applicable), or how this will be calculated if the total cost is unknown at the time of making the payment
  • include any postal or delivery charges you will have to pay
  • contain the sales agent's name and contact details
  • include the seller's contact details (their physical business address, email and fax number) and Australian Business Number (ABN) or Australian Company Number (ACN)
  • be signed by you and the sales agent
  • be clearly written or printed, although any changes may be hand written and signed
  • contain information about your rights to cancel the agreement including a notice on the front page
  • come with a form of notice that you can use to cancel the agreement

The front page of the sales agreement must include a prominent notice that tells you about your right to cancel the agreement within a specific time period (or to 'cool off').

What you can do if you don't want salespeople at your door

If you don't want salespeople at your door, put up a "Do not knock" sign at your door. You can print a sign off from the ACCC website, or some Fair Trading agencies provide free Do not Knock Stickers.

If a sales person comes to your door and you don't want them there, you can ask them to leave, and they have to leave immediately. They must not return for 30 days.

What you can do if you don't want sales calls

In 2007 the Commonwealth Government set up the Do Not Call Register in response to concerns about increasing levels of unsolicited telemarketing calls and marketing faxes. People can list their Australian fixed line and mobile numbers on the Do Not Call Register, so long as those numbers are used mainly for private or domestic purposes. Telemarketers can check their calling lists against the Do Not Call Register. If a telemarketer calls a number on the Do Not Call Register, they may be in breach of the law and may face penalties. However, it may take up to 30 days before telemarketing agencies recognise new numbers on the register and stop calling them.

Also, registering your telephone number on the Do Not Call Register will not stop all telemarketing calls to your number. There are some exemptions that allow certain public interest organisations, like charities, religious organisations and registered political parties, to continue to make telemarketing calls. Market researchers can also continue to make telemarketing calls.

The Australian Communications and Media Authority (ACMA) manages the register. Details about the register and how to add your telephone number to it can be found on ACMA's website at www.donotcall.gov.au or by phoning 1300 792 958.

What can you do if you change your mind?

If you agree to buy from a door to door sales agent under an unsolicited consumer agreement, you have 10 business days to change your mind. This is called a cooling off period and the sales agent must tell you about it before you sign. If, during this time, you decide the offer is not right for you (for any reason), even though you have signed a contract, you can still cancel the agreement without any penalty.

The cooling off period is 10 business days starting at the beginning of the first business day after the day on which you signed the agreement.

The cooling off period can be extended to three months if the sales agent:
  • approached you outside the permitted hours
  • did not disclose the purpose of their visit or their identity
  • did not leave when you asked.

The cooling off period can be extended to six months if the sales agent:
  • did not tell you about the cooling off period
  • did not give you a copy of the agreement
  • provided services within the cooling off period or provided goods that cost over $500 within the cooling off period.

For example, a sales agent approaches a consumer at their home promoting a new electricity supplier that has rates cheaper than the consumer's existing supplier. The consumer agrees to change energy suppliers. The sales agent visited the consumer during permitted hours and told them the purpose of their visit but did not mention the 10 business days cooling off period. Because the sales person failed to mention the cooling off period, the consumer has the right to cool off and cancel the agreement for an extended period of six months.

How to cancel an unsolicited consumer agreement

You can cancel an agreement verbally or in writing. If you cancel with a written notice, you can do so by emailing, faxing, posting or personally delivering the notice to the seller. Cancellation of the agreement is effective from the date on which you provide the notice. The notice does not have to be in any specific form. To make it easier, a cancellation notice template has been included at the end of this guide.

If you send your cancellation notice by post, it is taken to have been given to the seller at the time you posted it. Keep a record of this date and, if possible, any proof of postage.
Receiving goods or services during the cooling off period

The seller can supply goods to you during the cooling off period if they cost $500 or less. However, they cannot supply you with any goods that cost over $500.

They also cannot supply you with any services during the cooling off period, with the exception of electricity or gas services. During the cooling off period an energy seller can provide electricity or gas to a household not already connected to these services or where there is already a connection but no supply.
No payment during the cooling off period

A seller cannot request or accept payment from you during the cooling off period.

It is unlawful for the seller to request or accept payment from you for 10 business days starting at the beginning of the first business day after the day you signed the agreement. However, this does not apply to the supply of electricity or gas. If you have cancelled the agreement and made any payment, the seller must refund your money. You must return any goods that have not been used.
Returning goods after cooling off

If you cancel the agreement during the cooling off period, within a reasonable time you must do one of the following:
  • return any goods to the seller
  • notify the seller where they may collect the goods. The goods become your property if the seller does not collect them within 30 days of you cancelling the agreement.

Paying compensation

When you cancel an agreement, you will be responsible for paying compensation to the seller for any damage to, or depreciation in the value of the goods. However, you are not responsible for any damage or depreciation due to normal use of the goods or to circumstances beyond your control.

Lay-by agreements

A lay-by agreement lets you buy a product and pay for it in two or more instalments before taking it home. It's important for you to understand what the written agreement covers and how you or the trader can cancel it.

What is a lay-by agreement?

An agreement is considered to be a lay-by if you:
  • pay for the goods in at least two instalments (when the agreement is called a 'lay-by'), or pay for the goods in at least three instalments (when the agreement is not specifically called a 'lay-by'), and
  • do not receive the goods until the full price has been paid.

Any deposit you pay is an instalment.

The lay-by agreement must be in writing. You must get a copy of your written lay-by agreement that states all terms and conditions, including any termination fees that may apply. [ACL s96]

Cancellation of lay-by agreements

You can cancel the lay-by agreement at any time before you receive the goods.

If you cancel the lay-by, the business must refund your deposit and all other amounts you've paid except for the termination fee [ACL s99].

Where your payments don't cover the termination fee, you will have to pay the fee.

Businesses can only cancel lay-by agreements if:
  • you've broken the agreement, for example, you failed to pay instalments
  • they are no longer trading
  • the product is no longer available and this is outside of their control.

Pricing displays and receipts

Knowing how much something is going to cost, and how much you paid for it is important so that you can exercise your consumer rights.

Pricing displays

An important part of making a decision about what to buy is knowing the correct price. There are specific laws in place about how businesses have to show how much something costs.

When prices are advertised or promoted, products and services must clearly display a single price which is the minimum total cost that is able to be calculated. This should include:
  • the price of all aspects of the final product and service
  • all taxes, duties and extra fees.

It does not need to include:
  • delivery charges - although the minimum delivery charge should be included separately in the advertisement
  • optional charges or extras.

The single price must be at least as prominent as any other price displayed. This means you should be able to identify the total price in the advertisement just as easily as the prices for all the other aspects. For example, the price of a holiday advertised should be inclusive of all costs, including any airport taxes and charges.

Restaurants, cafes and bistros that charge a surcharge on certain days do not need to provide you a separate menu or price list or have a separate price column with the surcharge included. However, the menu must include the words "a surcharge of [percentage] applies on [the specified day or days]" and these words must be displayed at least as prominently as the most prominent price on the menu.

Multiple pricing

Where different multiple prices appear for one product or service, businesses must withdraw those products and services and fix the display or advertisement. There are exceptions when the advertisement states that prices vary in different regions, where a price is entirely hidden by another price, a unit price is shown, or a price is displayed in an overseas currency.

If you choose an item or service that has multiple different prices displayed or advertised and the business can't withdraw the product or service from sale and fix the error, you are entitled to buy it for the lowest price.

What are misleading prices?

Misleading prices may include:
  • a 'before', 'was' or 'strike through' price that is not the price those items were sold for in a reasonable period immediately before the sale period started
  • a 'before', 'was' or 'strike through' price where only a limited proportion of sales were at the higher price in a reasonable period immediately before the sale period started
  • a comparison between cost/wholesale and sale prices if the cost/wholesale price is greater than what the business paid for the products
  • a price comparison with a competitor price for identical goods, but the stated price is taken from a different market or geographical location
  • savings or discount statements when compared to the recommended retail price (RRP), but the goods have never been sold at the RRP or the RRP does not reflect a current market price.

Businesses may also mislead consumers about prices if they:
  • promote a sale or special price which is not in fact a temporary sale price, thus creating an unwarranted sense of urgency to make an immediate purchase
  • represent that an advertised price is the total price that you will have to pay when it is not.

Receipts and proof of purchases

You only need a proof of purchase to take something back to the shop, a receipt or tax invoice is an example of proof of purchase.

A business must provide proof of transaction if the thing that you bought cost over $75. A proof of transaction includes a receipt. You can ask for a receipt if it cost less than $75.

Proof of purchase can include:
  • a tax invoice
  • a cash register receipt
  • a credit card or debit card statement
  • a handwritten receipt
  • a lay-by agreement
  • a confirmation or receipt number provided for a telephone or internet transaction.

Pawnbrokers and second-hand dealers

A pawnbroker is a person who lends money on the security of pawned goods which they hold until the money for the goods is repaid. In the NT pawnbrokers are regulated by Part 14 of CAFTA.

A pawnbroker must have a licence to operate. Licences are issued by the NT Department of Business (see Contact points). A pawnbroker must have displayed on their premises a visible sign that states the licensee's name and the words 'licensed pawnbroker'.

A pawnbroker is not allowed to enter into a contract with a person unless they have ascertained the person's full name and current residential address and verified the person's identity. Acceptable forms of identification are a drivers licence, passport or other identification issued by a government entity, such as a medicare card.

A pawnbroker must keep records of each contract made including:
  • the number of the contract
  • the full name and current residential address of the person pawning the goods
  • the date and time the contract was made
  • a description of the goods pawned
  • the amount lent
  • the interest rate
  • the redemption period if it is longer than one month

This record, known as a pawn ticket, is signed by the borrower who retains a copy. To get a replacement for a lost pawn ticket the borrower must sign a written statement setting out an accurate description of the pawned goods and the circumstances of the loss or theft of the pawn ticket. The pawnbroker will also request verification of the borrower's identification and need to be satisfied that the person's claim is lawful.

Pawned goods can be redeemed by the pawn ticket holder by the end of one month or longer if both parties agree. A pawnbroker must keep pawned goods on premises until the redemption period expires. It is an offence for the pawnbroker to sell the goods before the expiry date. If they do so a court order can be obtained to recover the cost of the goods. If the goods are not redeemed in time, the pawnbroker is required to sell the goods as soon as practicable so as to receive the best market price. The sale price is then taken off the loan. If the goods are sold for more than the amount loaned, the excess is given to the customer.

A person who believes that an article stolen from them is held by a pawnbroker can apply to the Local Court to have it order the pawnbroker to return it or pay an amount of money. They should report the matter of the stolen item to the police.

A second-hand dealer is a person who buys, sells or exchanges second-hand goods. Second-hand dealers are also regulated by CAFTA. A second-hand dealer must be licensed and display a sign with the name of the premises and the words 'second-hand dealer'. They must keep records and provide a receipt bearing the original signature of the seller. If a person finds their stolen property at a second-hand dealership they should contact the police. The police will take steps to establish the fact that the goods are stolen. Once the fact is established steps can be taken to recover the goods or obtain compensation. If a person purchases goods from a second-hand dealer, and those goods turn out to be stolen, they may be repossessed.

Weights and measures

The National Measurement Institute (NMI) is Australia's peak measurement organisation, responsible for maintaining the primary standards of measurement, including trade measurement.

The National Measurement Act 1960 (Cth) and its regulations control the system of weight and measures used in trade in the NT. This Act aims to prevent the use of non-approved and unjust measuring instruments, provides the requirements for sales by measurement and also requires certain markings on pre-packaged items. It also provides for a licensing system for businesses that verify trade measuring instruments, deals with the powers of inspectors, and details general offences and the penalties that can result.

The NMI is responsible for enforcing the National Measurement Act 1960 (Cth) (see Contact points). If a person suspects that a trader is using dodgy scales they should contact the NMI, who will investigate the complaint to determine if any further action is required.

Food labelling

There are laws in place across Australia requiring food and beverage labels to contain certain information for consumers. The Australia New Zealand Food Standards Code sets out these requirements. In most cases the following information needs to be provided:
  • name of product
  • lot identification number
  • name and address of supplier
  • statement of country of origin
  • ingredient list
  • allergen details
  • nutritional information panel
  • date marking
  • storage instructions
  • directions for use
  • marking of weight

There are some exemptions to these labelling requirements, depending upon the size of the product and packaging. However, such information may still need to be disclosed near or in connection with the product or provided to the consumer on request. Food Standards Australia New Zealand (FSANZ) is the statutory agency that administers the Food Standards Code. More information, including a copy of the Food Standards Code, is located at FSANZ's website: www.foodstandards.gov.au

If you have any queries or concerns about food and beverage labelling, you should contact FSANZ or NTCA for more information (see Contact points).

Help and remedies

Remedies available

A consumer's legal remedies could include:
  • compensation for loss or injury
  • replacement of an unsatisfactory item
  • a refund of the purchase price
  • corrective work such as repairs
  • getting out of a contract altogether
  • compelling the supplier to perform their obligations

Who can help?

A consumer can find help to remedy their complaint through four avenues:
  • self help (that is, do-it-yourself action)
  • with the assistance of government departments
  • by going to mediation at a community justice centre
  • by taking court action.

The course of action adopted will depend on the outcome sought by the consumer, the value of the item in dispute or amount of compensation claimed (if any), the position of the consumer and the remedies available under the law. These options are discussed in this section and in several other sections in this chapter and also in the chapter on insurance.

Self help

As a first step, a consumer should usually take their complaint to the trader concerned. The trader will often concede the complaint and offer to remedy it in some way, for example, by replacing defective goods, agreeing to perform repairs, or making a refund. The complaint should be made to someone in a position of authority and preferably to someone other than the person involved in the original transaction - an employee who has made a mistake may defend their actions to avoid coming to the notice of their employer. Where there is a reasonable basis for complaint, most reputable traders will immediately give a refund, exchange the goods or repair a defect.

A self help approach requires the consumer to act promptly, by quickly informing the trader of the complaint and not using the goods.

If the trader doesn't respond to the complaint, NTCA may be able to assist with negotiations (see Government assistance below).

It is always easier to obtain satisfaction from a trader who has not been paid, so a consumer can simply refuse to perform their side of the contract by withholding payment until a defect is remedied. For example, where a consumer believes that goods delivered are inferior or don't correspond to the goods ordered, they can refuse to accept delivery or accept delivery but refuse to pay for them until the defect is remedied. The consumer should tell the trader of their intention and the reasons for it as quickly as possible.

It is usually easier for the trader to remedy a justified complaint than to take the consumer to court to recover payment. Nonetheless, withholding payment can be risky and a consumer should always obtain legal advice before refusing to carry out the terms of any contract (see Legal aid, chapter 2).

If a consumer decides to breach their contract by withholding payment, it is quite possible the trader will take court action, particularly if the sum of money involved is large. If the consumer knows the trader is about to start court proceedings, it may be better to make the first move by lodging a small claim in the Local Court. This will prevent anyone else taking action in any other court. NTCA will advise a consumer who wishes to adopt this course (see Contact points).

Government assistance

Northern Territory Consumer Affairs

The agency principally responsible for regulating the activities of traders in the NT is the Northern Territory Consumer Affairs (NTCA) (see Contact points). Its role includes:
  • providing a free inquiry service to consumers and traders
  • investigating complaints from consumers and businesses
  • undertaking surveillance of dangerous and hazardous products
  • inspecting and verifying all weighing and measuring instruments used for trade purposes
  • reviewing consumer protection legislation and proposing changes where necessary
  • investigating and, where necessary, prosecuting individuals or corporations for breaches of consumer legislation
  • encouraging the development of codes of conduct aimed at stimulating competition, fair trading and self-regulation
  • providing consumer affairs information, advice and community education to business and individuals, including a special program for remote and isolated communities.

Complaints to NTCA can be made in person or in writing. In normal circumstances no action can be taken on complaints received by telephone, except where a consumer is disadvantaged by remoteness or some other factor. In any case, NTCA prefers to receive written instructions to ensure that action is taken in good faith. NTCA will give advice over the telephone regarding consumer rights under legislation it administers and provide referral information.

NTCA receives over 6500 inquiries and 550 formal complaints from consumers each year.

NTCA will only investigate a complaint after a consumer has approached the retailer, credit provider or, where appropriate, manufacturer without receiving satisfaction. All documents relevant to the transaction are given to the interviewing officer.

NTCA resolves complaints by a process of conciliation (see Alternative dispute resolution, chapter 1). A trader is advised of a consumer's complaint and has three alternatives:
  • to offer redress to the consumer by, for example, refunding money or replacing unsatisfactory goods
  • to clarify the situation where a breakdown in communication has occurred
  • to refuse redress on the grounds that the complaint is not justified

NTCA tries to negotiate settlements of unresolved complaints, but can't order a trader to take a particular course of action. About 60% of complaints achieve full or partial satisfaction or are clarified by the trader. Of the balance, some are taken to court by the consumer, usually as a small claim, while others are unable to be conciliated due to the trader's unwillingness to provide redress or because the complaint has little or no merit.
Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (ACCC) is a Commonwealth agency responsible for enforcing the ACL. Its focus is on systemic breaches of consumer rights, including matters that affect a large number of consumers.

The ACCC is the only national agency dealing generally with competition matters.

In taking actions to encourage and enforce compliance with provisions of the Competition and Consumer Act 2010 (which the ACL is a part of). The ACCC's main goals are to:
  • maintain and promote competition and remedy market failure, and
  • protect the interests and safety of consumers and support fair trading in markets.

The ACCC takes action to:
  • stop unlawful conduct
  • deter future offending conduct
  • where possible, obtain remedies that will undo the harm caused by the contravening conduct (for example, by corrective advertising or securing redress for consumers and businesses adversely affected)
  • encourage the effective use of compliance systems
  • where warranted, take action in the courts to obtain orders which punish the wrongdoer by the imposition of penalties or fines and deter others from breaching the Act

The ACCC cannot pursue all the complaints it receives or issues that come to its attention about the conduct of traders or businesses and the ACCC rarely becomes involved in resolving individual consumer or small business disputes. While all complaints are carefully considered, the ACCC's role is to focus on those circumstances that will, or have the potential to, harm the competitive process or result in widespread consumer detriment.

There are a number of ways you can contact the ACCC to get information about consumer rights or lodge a complaint. The ACCC does not give legal advice, this should be sought from a solicitor.
  • ACCC Information line (open 8:30am-5:30pm eastern standard time) 1300 302 502
  • ACCC Indigenous Infoline 1300 303 143
  • Small Business Helpline 1300 302 021
  • The Northern Territory ACCC office is located at Level 8, 9-11 Cavenagh St, Darwin
  • The ACCC website is www.accc.gov.au.
  • The ACCC also runs Scamwatch www.scamwatch.gov.au On this website consumers can check out new scams, and find out information about how to avoid being scammed

You can also contact the ACCC through social media

Australian Securities and Investments Commission

The Australian Securities and Investments Commission (ASIC) is responsible for promoting the confident and informed participation of consumers and investors in the financial system. ASIC has a consumer protection role with regard to financial products and services in Australia.

ASIC's aim is to foster a financially literate community, where Australian consumers can make informed decisions about financial products and services, understand their rights and responsibilities, and identify and avoid scams and swindles. ASIC does this through a strategic program of education, information, compliance and enforcement, designed to promote integrity in the marketplace.

ASIC deals with complaints about misconduct or illegal activity involving:
  • information or advice given to consumers about financial services (including investments, superannuation, insurance, payment systems such as electronic funds transfer and deposits)
  • misleading or deceptive conduct in advertising or selling a financial product or services
  • misleading or deceptive conduct to do with borrowing money
  • financial scams

ASIC's consumer website FIDO at www.fido.gov.au offers free and impartial tips and safety checks about financial products and services.

For help or information contact ASIC's Infoline on 1300 300 630 or ASIC's NT office on 8943 0900.

National Measurement Institute

The National Measurement Institute (NMI) is the peak Australian measurement body responsible for biological, chemical, legal, physical and trade measurement. NMI is responsible for maintaining units and standards of measurement in trade and ensuring an effective compliance framework.

Trade measurement enquiries and complaints can be made to NMI online at www.measurement.gov.au, or 1300 686 664, or at infotm@measurement.gov.au.

Northern Territory Government Department of Business

The NT Department of Business is responsible for matters relating to the licensing of pawnbrokers and second-hand dealers.

Enquiries about licensing may be directed to Licensing NT within the Department of Business by telephone on (08) 8999 1800 or by email at glsadministration.dob@nt.gov.au

Their website is www.dob.nt.gov.au.

Mediation through community justice centres

Community justice centres (CJCs) offer mediation services to help people resolve disputes without needing to go to court. Mediation is free, confidential, voluntary, timely and easy to access. You don't need a lawyer to use mediation. In fact lawyers are usually not permitted to attend mediations.

CJCs offer mediation for a wide range of legal disputes, including:
  • consumer complaints
  • small claims disputes.

CJC services are available to any person involved in a dispute. Sometimes chamber magistrates at court will refer people and cases to a CJC instead of issuing a court attendance notice. Other government agencies, like the police, NTCA and Territory Housing, can also refer people to a CJC for mediation. Attendance and participation in mediation is entirely voluntary - a person may withdraw at any time, even during the mediation session.

Mediations involve the parties at dispute agreeing to come to the CJC venue or some other agreed neutral venue. Two mediators work together to help the parties in dispute to reach their own agreement and resolve the dispute. The parties and mediators meet at the start in one room. Each party gives their account of what has happened, without interruption. The mediators then summarise what has been said and try to extract the main issues. During the mediation, the parties usually go into separate rooms and the mediators will have separate private and confidential meetings with each of them. This helps work out what the most important issues are and to explore ways to come to an agreement.

Hopefully by the end of the allocated time for the mediation, the parties will have reached an agreement they can both live with. Each party will not get everything they want from the outset. There will need to be some compromise by each party. If the parties reach agreement, the mediators will put the agreement in writing and ask the parties to each sign and date it. The agreement is not enforceable in any court or tribunal, but it is described as a 'good faith agreement'.

If you are going to mediation at a CJC, here are some things to remember:
  • despite what has happened and any frustration you might have, go into the mediation in a calm, polite and open-minded way
  • if you need adjustments for your disability or other special needs, let the CJC staff know well in advance and they can make appropriate arrangements
  • if you are nervous about mediation, ask the CJC staff if you can bring along a support person with you
  • take all relevant documents with you, like receipts, contracts, quotes, emails, advertisements and letters

Through the courts

Where any consumer rights have been infringed (including where a trader has breached the contract or any of its implied conditions or warranties) the consumer can seek a remedy in the courts (see Implied terms of a contract, this section).

At the time of writing claims under $10,000 may be taken as a 'small claim'. Claims up to $100,000 may be taken in the Local Court. Claims for greater amounts must be taken in the Supreme Court.

Court action can be expensive and in many cases it is advisable to have a solicitor. The NT Legal Aid Commission, Aboriginal legal aid services or a community legal centre can provide free or low cost representation in some cases (see Legal aid, chapter 2) and other types of support are available.

Small claims

The Small Claims Division of the Local Court can hear 'small claims', that is, claims involving less than $10,000 [Small Claims Act (SCA) s5]. The advantages to making a small claim are that legal costs will not generally be awarded against the losing party [SCA s29] and the court's informal procedures [SCA s12] make it easier for an unrepresented consumer to handle their own case.

A claim must be made within three years of the date on which its cause arose, the same time limit for claims made in ordinary NT courts.

Local Court staff can provide information about small claims and assist a person who wishes to commence a claim. A form available from the Local Court office must be completed with a filing fee. The filing fee for claims of $5000 to $10,000 is $176; for claims between $10,000 and $20,000 the fee is $280; for claims of $20,000 or more the fee is $350. For claims for unspecified damages, the fee is $350. Apart from the informality at court, the procedure for small claims is similar to that of the Local Court in other civil matters. These procedures are discussed in detail in Debts, chapter 9. Once a claim is filed, the claimant serves a copy on the other party, by either doing it themselves or sending it by certified mail, or arranging to have the police or a private bailiff serve the documents. Police charge a fee to serve notice on a person who lives at an Aboriginal community. The fee to service notice is currently $113.

Where a defendant doesn't file a defence to the claim, a claimant can apply to the court for default judgment to be entered in their favour. A defendant can file the defence at any time up until judgment is entered (see Debts, chapter 9). A judgment can be enforced as if it was a judgment of the Local Court [SCA s22].

If a claim is defended, the matter will be heard before a magistrate. Each party can be represented by a lawyer, employee or an unpaid agent, though legal representation is not usually necessary.

Where expert evidence is required, a magistrate can appoint an investigator, who may be paid by the NT Government to inquire into the circumstances of the claim. An investigator might, for example, enquire about a technical question on which the court needs advice. An investigator's written report is made available to all parties, but the investigator can't be compelled to attend court for cross-examination.

If one party is absent from the hearing, the court may still make an order on the evidence available. Where there was good reason for their non-attendance, the court can order a rehearing at the absent party's request.

Orders the courts can make

The courts can, at the request of a consumer, NTCA or the ACCC, grant a variety of orders, including a direction that [SCA s30A]:
  • requires a party to pay a specified sum of money
  • requires a party to perform work to rectify a defect in goods or services
  • requires a party to return goods to a specified person
  • requires a party to replace goods
  • is any combination of two or more of the above

A court can also:
  • declare a part or the whole of a contract void
  • vary a contract
  • refuse to enforce a contract
  • order that goods be repaired

Other action that can be taken

A consumer may also have the following options available to them:
  • Compensation: a consumer is entitled to claim compensation for breaches of most consumer protection laws under the ACL as well as for breaches of contract.
  • Criminal prosecution: both the ACCC and NTCA (see Government assistance, this section) can prosecute a person who breaks consumer protection laws. However, not all breaches of the law are criminal and a criminal prosecution will not, of itself, provide a remedy to the consumer; it will simply punish the offender. A criminal conviction may, however, help a consumer running a civil compensation case [CAFTA Pt 6]. The advisable course of action in some circumstances would be to encourage the ACCC or NTCA to prosecute a breach and then, armed with the findings, proceed with an action for compensation.
  • Injunctions: an injunction is a court order requiring the party to whom it is addressed either to do something or to refrain from doing something. An injunction can be either interlocutory (interim) or final (perpetual). A consumer can apply for an injunction in the Supreme or Federal Court to prevent the infringement of certain rights. For example, misleading or deceptive advertising could be restrained [ACL s232].
  • Corrective advertising: the ACCC can apply for an order compelling an advertiser to disclose certain information, usually to remedy the deceptive impression created by questionable advertisements.

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