Consumer Law

HOW TO DEAL WITH THE COMMON LEGAL ISSUES THAT AFFECT AUTO REPAIR WORKSHOPS – SERIES 1: CONSUMER GUARANTEES

At the recent Australian Auto Aftermarket Expo Industry Legal Principal Lawyer, Emma Dalley, presented a seminar on the five most common enquiries received by members

The five most common enquires Industry Legal receives, excluding employment law, relate to consumer guarantees; warranties; customer supplied parts; unpaid invoices; and uncollected vehicles. These issues can cause considerable disruption, cost time and money, and harm the business’ reputation if not managed effectively. Provided below is a summary of the first legal issue in the series being consumer guarantees. Consumer guarantees and their application

The Australian Consumer Law (ACL) gives consumers automatic guarantees when they acquire goods and services. If these guarantees aren’t met or complied with, consumers have a statutory right to remedies. Consumer guarantees cannot be excluded, restricted or modified by contract. Businesses that supply goods or services to consumers must comply with the consumer guarantees. Manufacturers must also comply with certain consumer guarantees. A person (which includes a business) is considered a consumer if: • they acquire goods or services that cost less than $100,000; • the goods or services cost more than $100,000, but are of a kind ordinarily acquired for domestic, household or personal use or consumption, or • the goods are a commercial road vehicle or trailer used primarily to transport goods on public roads, except where such goods are acquired for the purpose of re-supply or transformation in trade or commerce during production or manufacture. The above monetary threshold recently increased from $40,000 on and from 1 July 2021. Guarantees for goods

• supplier has a right sell the goods • consumer has the right to undisturbed possession of the goods • goods are free from any security, charge or encumbrance • goods will be of acceptable quality* • goods will be reasonably fit for any disclosed purpose • goods supplied by description will correspond with that description* • goods will correspond with the sample or demonstration model in quality state or condition • spare parts and repair facilities for the goods are reasonably available after a reasonable period* • comply with any express warranty* * also apply to manufacturers. Guarantees for services

• services will be provided with due care and skill • services will be fit for any specified purposes • services will be supplied within a reasonable time Remedies

If you supply goods or services that fails to meet one or more of the consumer guarantees, the consumer is entitled to a remedy. Available remedies vary between minor failures and major failures. Generally, if the problem is minor, the supplier can choose to replace, repair or refund the good or for services, provide a refund or a further service to rectify the problem. If a remedy is not provided within a reasonable amount of time, the consumer can get someone else to fix the problem and ask you to pay reasonable costs. A major failure is failure that meets one or more of the following: • the good or service would not have been acquired by a reasonable consumer fully acquainted with the failure (inc. multiple minor failures); • the good is significantly different from the description or sample/demonstration model; • the service is not of such a nature, quality, state or condition, that they might reasonably be expected to achieve a result desired by the consumer that was disclosed and can’t easily be fixed within a reasonable time (inc. any product resulting from the services); • the good or service is substantially unfit for its common purpose and can’t easily be fixed within a reasonable time; • the good or service is unfit for the disclosed purpose and can’t easily be fixed within a reasonable time; • the good is unsafe or service creates an unsafe situation. If the problem is major or cannot be fixed, the consumer can choose to reject goods and choose a replacement or refund; terminate the contract of services and obtain a refund; or seek compensation for reduction in value of the goods/services. A consumer may also seek compensation for any consequential or associated loss or damage resulting from failure to meet the consumer guarantees. The loss or damage must have been reasonably foreseeable and not because of a cause independent of human control after goods or services supplied. In some circumstances, where a supplier provides a remedy to a consumer, they may be able to recover from the manufacture: loss or damage paid to a consumer (if both liable under the ACL); costs incurred in providing a remedy for guarantees as to acceptable quality, fitness for a purpose made known to the manufacturer or description applied by or on behalf of the manufacturer. Avoiding and managing disputes

To prevent a dispute, be clear on the goods/ service being provided before obtaining authority to proceed and adjust expectations if needed; deliver on guarantees, conduct quality checks, implement processes to deliver services with due care and skill; educate your team on their obligations; and keeping records – eg. detailed job cards, notes of issues identified with vehicle and advice to customer (if customer doesn’t take advice, consider terminating service but at least make sure you record your advice and the customer’s instructions in writing). If a dispute is raised or claim made: 1. Assess whether consumer guarantees apply. 2. If yes, assess whether any guarantees have not been met - i.e. inspect vehicle, take photos, keep detailed file notes and review records. 3. If the guarantees have been met – build defence/ reject claim/settle on commercial basis. 4. If a guarantee hasn’t been met – provide suitable remedy. 5. Seek indemnity from the manufacturer (if available). 6. If the dispute is not resolved, the consumer may make an application to a consumer agency (who can investigate breaches) and/or a tribunal/court depending on jurisdiction. 7. Contact your insurer if a claim is made. This document is intended for general information purposes only and should not be regarded as legal advice. Please contact Industry Legal if you require legal advice. Individual liability limited by a scheme approved under professional standards legislation.

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If you require any advice on the matters set out in this document, please contact Industry Legal on 1300 369 703 or aaaa@industrylegalgroup.com.au