The Law Handbook 2024

Chapter 7.3: Consumer guarantees 711 • whether the failure to comply with a guarantee is a ‘major failure’. Major failures in services The failure to comply with a consumer guarantee is a major failure if: • the service would not have been acquired by a reasonable consumer fully aware of the nature and extent of the problem; • the service is substantially unfit for its normal purpose and cannot easily be made fit within a reasonable time; • the service (and any product resulting from that service) is unfit for the particular purpose that the consumer made known to the supplier and cannot easily be made fit within a reasonable time; • the service (and any product resulting from that service) does not achieve a desired result that the consumer made known to the supplier; or • the service creates an unsafe situation (s 268 ACL). If there is a major failure with a service, a consumer may choose to: • keep the service contract and recover com­ pensation for the reduction in value of the service below the price paid or the amount payable; or • cancel the service contract and obtain a refund for any parts of the service not used. Minor failures in services If the failure to comply with a consumer guarantee can be remedied within a reasonable time and is not a major failure, the consumer may ask the supplier to fix the problem (s 267(2) ACL). Minor failures to comply with a consumer guarantee can normally be fixed or resolved. In this case, a seller can choose to offer the con- sumer a refund or to resupply the services. This must be provided free of charge and within a reasonable time period, depending on the circumstances. If the supplier refuses to fix the problem, or takes too long to do so, the consumer may: • have the failure remedied by someone else and recover all reasonable costs from the supplier; or • cancel the service contract and obtain a refund (or reduce the amount payable) for the defective service. Consequential loss and damage In addition to the above remedies for major andminor failures, a consumer may also take action against a supplier of services to seek to obtain compensation for any reasonably foreseeable consequential loss or damage they have suffered due to the supplier’s failure to comply with the guarantee (s 267(4) ACL). Remedies under the ASIC Act against suppliers of financial services The standard of due care, skill and fitness for purpose are statutory implied warranties of the contract between the providers of financial services and consumers, so the remedy is in contract. A breach of the statutory implied warranties may involve breaches of the Corporations Act 2001 (Cth) and the ASIC Act. ASIC can take enforcement action against such breaches. Remedies against manufacturers of goods An affected person can bring an action for damages against a manufacturer of goods (s 271 ACL) where there is a failure to comply with the consumer guarantees as to: • acceptable quality (s 54); • matching description (s 56), applicable to any description given by the manufacturer; • express warranties (s 58), applicable to any express warranty given by the manufacturer; or • repairs and spare parts (s 59). An ‘affected person’ includes the consumer and any person who acquires the goods from the consumer (other than for the purposes of re-supply), such as the consumer’s family, friends or associates (s 2 ACL). If a consumer purchased goods directly from a manufacturer, all the guarantees and remedies applying to suppliers apply to the manufacturer. Legal action against a manufacturer must be commenced within three years of the date that the affected person became, or ought to have become, aware of the manufacturer’s failure to comply with the relevant guarantee (s 273 ACL). Manufacturers’ voluntary warranties In addition to the consumer guarantees, manu- facturers may provide a voluntary warranty promising that if defects occur within a given period of time, a