This year new Australian consumer protection and fair trading laws came into effect. In the first of a series of articles on the changes, legal expert Krystil Carter advises fashion brands about guarantees.
Whilst the idea of new consumer laws may seem daunting, those in the fashion world can breathe a sigh of relief. The new consumer guarantees don’t create any radically new and different rights for consumers, taking many of the same principles that existed previously.
In fact, the new laws have reduced business compliance burdens by establishing a nationally agreed set of consumer protections called the Australian Consumer Law (ACL). Now there’s a consistency in consumer protection laws across all Australian states, so there’s no need to keep abreast of different laws for interstate operations.
What you need to know
In this article, I will discuss the ACL as it relates to ‘consumer guarantees’. The guarantees provide consumers with a comprehensive set of rights for the goods a consumer acquires and the rights are automatic – so it’s important to know the guarantees back-to-front so you understand your legal obligations to your customer.
It’s important at the outset to know that statements that attempt to limit consumers’ rights are unlawful. This means you cannot restrict or exclude consumer guarantees; for example, you cannot enter into a contract to sell a garment and try to ‘contract out’ of your obligations.
Similarly, signs that blatantly state ‘no refunds’ are unlawful (and have always been unlawful) because such signs give the consumer the impression that the consumer cannot get a refund under any circumstance – even if your product breaches the ACL.
However, signs that state ‘no refunds will be given if you have simply changed your mind’ have always been acceptable, and will continue to be, as whether a retailer offers a return for change of mind purchases is ultimately up to the business owner.
Do the consumer guarantees cover all goods sold?
It’s safe to assume that most goods a designer or fashion retailer sells will be covered by the new laws. For those selling antique second-hand goods or offering costumes for hire, be aware that the ACL also applies to second-hand and hired goods. However, the new laws don’t apply to some goods, including:
• goods bought from one-off sales by private sellers, such as garage sales and fêtes
• goods bought before 1 January 2011
The nine consumer guarantees
There are nine guarantees:
1 Your goods must be of an acceptable quality when sold
2 Your goods must be reasonably fit for any purpose the consumer or supplier specified
3 Your goods must meet the description you’ve advertised
4 Your goods must match any sample or description provided by you
5 Your goods must satisfy any extra promises made about them by you
6 You guarantee you have the right to sell the goods
7 You guarantee that no one will try to take back the goods or prevent the consumer using the goods
8 You guarantee your goods are free of any hidden securities or charges
9 You guarantee you will take reasonable steps to provide spare parts and repair facilities for a reasonable time after purchase.
A discussion of a few of the essential guarantees is set out below.
Your guarantee of acceptable quality
In order to ensure your goods comply with the guarantee of acceptable quality, ask yourself: would a reasonable consumer, fully aware of the goods’ condition (including any defects), find the goods fit for all the purposes for which goods of that kind are commonly supplied? Would it be free from defects as well as being safe and durable?
Whether goods will be of acceptable quality will vary based on certain factors, including:
• the price paid for the goods – for example, an inexpensive watch is not expected to last as long as a $3000 watch
• any statements about the goods on any packaging or label – for example, the box for the watch indicates it’s water resistant
• any representation made about the goods by you to the consumer.
There are also circumstances when the guarantee of acceptable quality does not apply, such as when you alert the consumer to any hidden defects in the goods prior to sale.
For example, a consumer finds shoes labeled ‘seconds’. A tag attached to the shoes advises there is a problem with the stitching. If the consumer buys the shoes, the consumer cannot claim the shoes were of unacceptable quality when the stitching splits.
However, the consumer may be entitled to a remedy if another defect develops, such as the sole cracking.
Lastly, although defective goods can be sold, it’s important the consumer is alerted to the specific defect before sale, such as by displaying written notice on the goods. Simply describing the goods as ‘seconds’ or ‘sold as is’ is not sufficient.
Your guarantee of matching the sample
When a consumer buys goods based on a sample, you guarantee the goods will match the sample and any description provided. For example, if a sample of fabric is provided to a consumer on the basis that a few garments will be made with the sample provided, but the fabric in the garments are different from the sample, the consumer has a right to a remedy.
The consumer is legally entitled to a reasonable time to compare the goods to the sample. For example, if a consumer pays for the finished garments at the shop, takes the garments home and compares them with the sample provided which is different to the finished garments, you can’t allege that the consumer has no right to a remedy, simply on the basis that the consumer has paid for the goods and taken them from your place of business.
Your guarantee for repairs and spare parts
When a consumer buys goods, manufacturers or importers guarantee they will take reasonable steps to provide spare parts and repair facilities, for a reasonable time after purchase.
For example, if a consumer purchases a watch for $3000 and it stops working within 6 months and the consumer contacts the supplier and asks where it can get repaired, but is advised they no longer have parts for that model of watch, the supplier will likely be in breach of the ACL as a reasonable consumer would expect a 6-month-old watch to be repairable.
There is no set time frame as to what is ‘reasonable’ – this will depend on the type of goods. For instance, it would be reasonable to expect that parts for a $3000 watch will be available for quite some time after purchase but it may not be reasonable to expect the same time frame for an inexpensive pair of sunglasses.
What happens if your goods do not meet a consumer guarantee?
If your goods fail to meet a guarantee, a consumer will have rights against either the supplier or, in some cases, the manufacturer – it depends on which guarantee is breached. In such circumstances, either the supplier or the manufacturer will have to provide a remedy to the consumer to attempt put things right.
When the problem is minor, the remedy may be more simple, such as providing a repair or offering a replacement or refund. When the problem is major, the consumer may be entitled to reject the goods entirely (and choose a refund or a replacement) or ask for compensation for any drop in value of the goods.
Therefore, if you’re faced with an issue about whether your product breaches a guarantee, seek expert legal advice as to firstly, whether you’re obliged to provide a remedy and secondly, what remedy you’re obliged to provide.