The Law Handbook 2024

712 Section 7: Consumers, contracts, the internet and copyright consumer may be entitled to a repair, replacement, refund or other compensation. Voluntary warranties do not alter or override the consumer guarantees. The consumer guarantees apply to all purchases and cannot be waived. In contrast, manufacturers’ voluntary warranties are offered voluntarily and usually apply to certain types of products such as electrical goods, cars and furniture. Extended warranties In addition, manufacturers may offer extended warranties to provide additional protection or to lengthen the coverage of their consumer guarantees and their manufacturers warranties. Consumers normally have to pay extra for extended warranties when they make a purchase and, as such, they form part of the contract with the consumer. Note that extended warranties do not alter or override a consumer’s right to claim for breach of a consumer guarantee, so the consumer should consider whether there is any reason to purchase an extended warranty. Compensation for reduction in value An affected person may seek to obtain compensation for the reduction in value of the goods resulting from the manufacturer’s failure to comply with the relevant guarantee (s 272 ACL). The reduction in value is calculated as the difference between the current value of the goods and: • the actual price paid by the consumer; or • the average retail price of the goods at the time of purchase, whichever is the lower value. Consequential loss and damage An affected person may also seek to obtain compensation for any reasonably foreseeable con­ sequential loss or damage they have suffered due to the failure of a manufacturer to comply with a guarantee (s 272 ACL). This includes the cost of inspecting and returning the goods to the manufacturer. Exceptions for manufacturers A manufacturer is not liable to pay damages if the relevant guarantee was not complied with because of: • an act, default, omission or representation made by a person other than the manufacturer, its agent or employee; • something beyond human control that occurred after the goods left the manufacturer’s control; or • the fact that the supplier charged a higher price than recommended or average retail price, creating a higher standard of acceptable quality (due to the higher price) – the manufacturer is only held to the standard expected of goods based on the recommended or average retail price. Finance agreements Liability of suppliers and credit providers The ACL (Part 5-5) has special provisions to protect consumers who have purchased goods using finance provided by a ‘linked credit contract’ or ‘bundled credit contract’. This avoids the situation where a client rejects defective goods and returns them to the supplier but is still liable to a third party finance provider for the cost of the goods. A ‘linked credit contract’ is a finance or credit contract where the supplier of the goods and the credit provider have a contract, arrangement or understanding between them, or where the supplier regularly refers customers to the credit provider (s 2 ACL). The ACL provisions are designed to capture situations where, for example, a car dealer has a finance provider operating at their dealership, or where a supplier recommends or refers a consumer to a particular lender. When any of the ACL guarantees are breached, the supplier and the linked credit provider are each liable for the whole amount of the loss and damage the consumer suffers (s 278 ACL). Generally, the consumer must take any action against the supplier and the linked credit provider jointly (s 279 ACL). If a consumer returns unsatisfactory goods due to a major problem, the consumer can cancel any services that were provided in connection with the rejected goods. The consumer does not have to make further payments to the seller. It is important that the consumer can establish a link between the supplier of goods or services and the credit provider. A linked credit provider is not liable if the consumer contracted with the credit