Guidance on the consumer guarantee as to acceptable quality and ‘durability’ This guide was developed by: • Access Canberra, Australian Capital Territory • Australian Competition and Consumer Commission • Australian Securities and Investments Commission • Consumer Affairs • Consumer and Business Services South • Consumer, Building and Occupational Services, • Fair Trading • Consumer Affairs • Office of Fair Trading • Department of Commerce,

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Guidance on the consumer guarantee as to acceptable quality and ‘durability’ 1 Factors affecting how long a good can reasonably be expected to last after purchase 2

(a) Nature of the good 2

(b) Price of the good 6

(c) Statements made about the good 7

(d) Any other relevant circumstances relating to the supply of the goods 9

iii Guidance on the consumer guarantee as to acceptable quality and ‘durability’

The Australian Consumer Law (ACL) This document is intended to act as a creates a basic set of guarantees (or guide and individual circumstances differ. rights) for consumers who acquire goods. The examples are intended as a guide One of these guarantees is that the only. It is ultimately the role of the court goods will be of “acceptable quality”. This or tribunal to determine whether or not a guarantee includes that goods will be good is reasonably durable. If a consumer durable as a reasonable consumer would has concerns that a good is not durable, regard as acceptable. A good purchased these should initially be raised with the is expected to be durable enough to retailer or manufacturer. perform its intended function(s) for a How long a reasonable consumer would reasonable amount of time. expect a particular good to last depends Consumer guarantees under the on a number of factors including: ACL apply for a reasonable time and • The nature of the good, which can in addition to any warranties that include:1 manufacturers and/or suppliers provide –– The materials used or composition for a good. This means consumer of the components guarantees may continue to apply during the period of those warranties and after –– Whether the good is a new good or those warranties expire. a factory second. • The price of the good2 Retailers sometimes offer to sell an extended warranty or care package • Statements made about the good, either on the packaging or by the to extend the length of time of the 3 manufacturer’s warranty. Whether or supplier or manufacturer and not a consumer purchases an extended • Any other relevant circumstances.4 warranty, they still have the protection It is important to remember that the of the ACL consumer guarantees. If a concept of reasonable durability refers supplier is offering an extended warranty to how long the good can be expected it is best practice to provide consumers to last in normal circumstances. This with a list of what rights the extended means using the good in the way it was warranty provides above any automatic intended or the purpose it was designed consumer guarantee rights under the for, having regard to any representations ACL. This will lower the likelihood of a made at the time of purchase. If consumer being misled about the value abnormal use by the consumer causes a of the extended warranty. good to be damaged, and therefore less durable, then the good will not fail to be of acceptable quality if the reason for its failure is that abnormal use.5

1 ACL reference: section 54(3)(a). 2 ACL reference: section 54(3)(b). 3 ACL reference: section 54(3)(c) and (d). 4 ACL reference: section 54(3)(e). 5 ACL reference section 54(6).

1 Factors affecting how long a good can reasonably be expected to last after purchase

(a) Nature of the good Some goods have parts with a limited lifespan that cannot be repaired or The nature of the good is relevant to how 6 replaced, and the good as a whole long a good can be expected to last. The becomes unusable once the limited nature of the good includes: lifespan parts fail. It can be expected that • the materials used or composition of the limited lifespan parts, and therefore the components (if any) the good as a whole, will last for a • the type of good and its use and reasonable time after purchase. • whether the good is a new good or a On the other hand, some components factory second. in goods, such as vacuum cleaner filters, must be regularly replaced for the The materials used or composition of good as a whole to continue to work. the components The requirement to regularly replace How long a good can be expected to components of this kind does not stop last will depend upon the quality of the the good from being reasonably durable. materials used in the good’s manufacture. The type of good and its use A good made of high quality materials can generally be expected to last longer The type of good and how the good than an equivalent good made of lower is used can also impact upon a quality materials. good’s durability. For example goods that are more portable or contain complex components would generally Example be reasonably expected to last for a Samira and John are in the market shorter time period than goods that are for a set of shelves. John buys a set stationary and relatively simple. This is of shelves made out of chipboard because a reasonable consumer would while Samira opts for shelves made be likely to expect portable goods to be of solid oak. After five years John’s subject to more wear and tear through shelves have dents and chips in them whereas Samira’s shelves do not. normal use of the good. John’s shelves would probably not fail to meet the consumer guarantee of acceptable quality because they were not durable, even though they did not last as long as Samira’s.

6 ACL reference section 54(3)(a).

2 Example Example Billy and Maya each visit an Jason buys a new mobile phone electronics retailer on the same which is not advertised as being day. Billy buys a new refrigerator water resistant or water proof. while Maya purchases a new mobile Within two weeks he uses his mobile phone, each for the same price. After phone while having a bath and 3 years both products develop faults accidentally drops the phone into and stop working. the bath water. The mobile phone no Billy’s fridge is unlikely to be longer works. reasonably durable because a Jason’s use of the mobile phone reasonable consumer would expect in the bath is likely to constitute a refrigerator to last longer than 3 abnormal use because such use years. On the other hand, Maya’s goes beyond the expected use of phone may be reasonably durable the phone and a reasonable person because a reasonable consumer would not expect a phone that is not may not expect a mobile phone to sold as water resistant or water proof last longer than 3 years given the to continue to function normally portability of a mobile phone means after being submerged in water. it is likely to be subject to greater wear than a refrigerator. Example However, if a good is used in an Isla bought a mid-range laptop from abnormal manner then a reasonable an electronics store. She used her consumer would expect that it would be laptop to complete her university durable for a shorter period of time than work, which she would sometimes if it had not been used in an abnormal do outside in fine weather or by way. Abnormal use can include using resting her laptop on her lap. After a good for a different purpose than one year her laptop breaks down reasonably expected or significantly and no longer works. over-using a good in a way that would Isla’s use of the laptop outside or on reduce the good’s lifespan. However, her lap is unlikely to be abnormal not every use of a good that deviates use. This is because she was still from a manufacturer’s intention is using the laptop for its expected necessarily ‘abnormal’. What amounts to purpose and a reasonable consumer abnormal use is ultimately a question for would expect a laptop would be a court or tribunal considering all of the durable enough to be used outside circumstances of the goods’ purchase in suitable weather or used by placing on their lap. and use and what a reasonable consumer would expect.

3 Whether the good is a new good, A business should inform consumers refurbished good, or a factory second about the fault responsible for the A factory second is a good that, due reduced price on a good so the consumer to a fault or imperfection, is sold at a will know how that fault may affect the reduced price. Often the fault is minor, reasonable durability of the good. such as a cosmetic imperfection. A refurbished good that develops a A refurbished good is one that fault can still fail to meet the consumer contains some second-hand parts, but guarantee of acceptable quality even has had some parts replaced, and is though it contains second hand parts. in good working order at the time of The fact that some parts of the good purchase. For example, a refurbished are second-hand affects, but does not laptop could be a second hand laptop determine, its reasonable durability (see that has had the hard drive and battery Service statements and second hand replaced with new parts. goods below). A new good can generally be expected to Where a refurbished good has multiple be more durable than a factory second or components, a reasonable consumer refurbished good. would expect that the second hand components may not last as long as the If a factory second good develops same component of an identical good another fault unrelated to the original that is not second hand. fault or imperfection responsible for its reduced price, the good may still fail A business should be clear about what to meet the consumer guarantee of components in a refurbished good have acceptable quality. been replaced and what components are second-hand so a consumer can Where a factory second good has make an assessment about how long the multiple components, it can be expected refurbished goods’ components are likely that the component with a minor fault or to last. imperfection will not last as long as the same component of an identical good that does not have the minor fault or imperfection.

4 Example Example Julie buys a mid-range fridge at a Julie buys a dress at a factory factory seconds sale. The fridge’s seconds sale. The dress is marked white coating has bubbles under down because it has a broken zipper. the surface that are clearly visible at Julie has a tailor replace the zipper, the time of purchase and noted by however, when she washes the dress the supplier as the reason for the (in accordance with the instruction fridge being sold at a lower price. on the care label) the stitching comes After a year or so, these bubbles apart at the seams and the fabric start to break apart and expose the frays, making the dress unwearable. surface underneath. The fridge’s The dress is unlikely to be of functionality is not affected. acceptable quality because Julie Despite this fault, the fridge is likely was not aware of any fault with the to meet the consumer guarantee stitching or fabric and a reasonable of acceptable quality because it still consumer would expect the stitching functions as a fridge and the original and fabric of a dress to last more imperfection in the paint was drawn than one wash. to Julie’s attention. A reasonable consumer would expect that the imperfection in the coating would cause the coating to be less durable.

It is also possible to sell goods with major faults as factory seconds or at outlet sales. This is acceptable so long as the fault is drawn to the consumer’s attention. The other components of the good should be reasonably durable, and last as long as the same components of identical goods not sold as factory seconds.

5 (b) Price of the good A good will generally be more expensive if it is scarce or highly valued. For The price of a good can generally, be example, a gold bracelet may cost a lot linked to the quality of the materials and because gold is a relatively scarce and the manufacturing techniques used to desirable material, but because gold is a produce the good, and therefore, the soft metal it may not be as durable as a durability of the good. This means that cheaper steel bracelet. often goods purchased at a high price can be expected to last longer than Some goods, such as smartphones or goods purchased at a lower price. tablets, are more expensive because they use the latest technology. Despite Example being more expensive, these goods may or may not be more durable than Lara buys a high-end washing a cheaper version of the same good. A machine for $1250. Jessica buys consumer may be paying a premium for a washing machine with similar the technology and not for higher quality features for $400. The primary reasons for the price difference materials or manufacturing processes. between the two machines are Therefore, a higher priced good cannot the materials and manufacturing always be expected to be more durable processes. Both Lara and Jessica use than a cheaper good only because of the their washing machine around two price paid for it. times per week with similar load sizes and both have maintained the Similarly, a cheaper good will not machines as required. necessarily always be expected to last less After five years, both washing time than higher-priced but otherwise machines break down when their equivalent goods. motors fail. As Lara’s washing machine is a top-of-the-range good, Example a reasonable consumer is likely to expect it would last for more than Tom buys a watch endorsed by a five years and that therefore, Lara grand slam winner for $350. Simon could claim her washing machine buys a similar watch for $150. did not meet the acceptable quality Simon’s watch was made in the consumer guarantee. However, as same factory and out of the same Jessica’s washing machine is a lower materials as Tom’s, but does not have quality, budget version, a reasonable a celebrity endorsement. consumer would likely expect it to Both Tom and Simon wear their last for a lesser time period and watch every day, including during Jessica may not be able to claim exercise. After five years, both her washing machine was not of watches are worn out and no longer acceptable quality. accurately keep time. Even though Tom’s watch was more expensive, However, a higher price is not the only it is likely that both watches were criteria for determining the reasonable reasonably durable and met the durability of a good. Many other factors consumer guarantee of acceptable affect the price of a good. quality.

6 (c) Statements made about the Example good Sam purchases a top-of-the-range There are often statements about the blender that says ‘high quality durability of a good on its packaging or German engineered design and label, in advertising material or made parts’ on the box. In addition, the orally by sales staff. These statements, salesperson says ‘they are built to known as ‘express warranties’, affect last, my family had ours for years’. how long a reasonable consumer would These statements would set an expect a good to last. expectation of longer durability in the mind of a reasonable consumer. For example, if the label states that the This means Sam could reasonably good will last a certain amount of time, expect the blender to last longer then a reasonable consumer would than other lower-range models. expect the good to last at least the amount of time stated. Some businesses will also provide a warranty against defects, called a Example manufacturer’s warranty. Warranties Alison buys a fitness watch. The against defects are usually time limited. packaging states the watch will The length of the manufacturer’s last up to five years and can be warranty may be of some relevance worn during lap swimming. Alison to how long a reasonable consumer regularly wears the watch when would expect a good to last, as they are swimming at her local pool. After statements made by the manufacturer in two years the watch stops due to relation to the good’s durability. water entering the watch. Alison would be able to claim the watch However, any warranty, whether was not of acceptable quality express or manufacturer, will only under the ACL because it was ever complement the consumer not reasonably durable given the guarantees under the ACL and cannot statements made on its packaging. modify or remove them. This means a reasonable consumer can expect a good to last longer than the supplier or manufacturer’s warranty period, depending on the circumstances.

7 Example Retailers sometimes offer to sell consumers an extended warranty or Li Wei buys a basic laptop care package to extend the length of which comes with a one year time of the manufacturer’s warranty. manufacturers’ warranty. The If consumers choose not to purchase laptop’s central processing unit an extended warranty, they still have and battery stop working one year and six months after purchase. It is the protection of the ACL consumer likely Li Wei could claim the laptop guarantees. Before buying an extended is not of acceptable quality under warranty, consumers should always ask the ACL because it is not reasonably the retailer to explain what it gives them durable. This is because a reasonable over and above their automatic consumer consumer would expect a laptop to guarantee rights. last for longer than one and a half years, despite the manufacturer’s warranty having expired.

8 (d) Any other relevant Example circumstances relating to the Michael buys a second-hand car supply of the goods and receives a service statement at Service statements and second hand the time of purchase. The service statement says the car is likely to goods need its brake pads replaced in eight Sometimes a consumer will receive a to ten weeks after purchase and that service statement when they a purchase the throttle body is in good working a good second-hand. A service statement order. sets out what condition the good is in Seven weeks later, the brake pads at the time of purchase, what kinds of need replacing. It is unlikely that repairs might need to be carried out Michael can claim the car is not of on the good in the future, and when acceptable quality because the brake those repairs are likely to be needed. A pads must be replaced. A reasonable service statement may help the consumer consumer would not have expected determine how long they can expect a the brake pads to last longer than good to last. eight to ten weeks, given the information in the service statement. However, if the throttle body failed and needed replacing seven weeks after purchase, Michael could claim the car is not of acceptable quality as, based on the service statement he was provided, he would reasonably expect the throttle body to remain functional for an extended period.

9 When purchasing second hand goods Example more generally, the age and condition of the goods should be carefully considered Hamish and Connor purchase before purchasing, as this will affect the identical clothes dryers at the same reasonable durability. Some purchases of mid-range price for their homes. second hand goods are not in trade or Hamish lives with his partner and commerce, and this means that the ACL two children in a flat with no consumer guarantees do not apply. For washing line and uses the dryer example, a person who is selling their car six times a week. In addition to because they have bought a new one, his family’s washing, Hamish also but doesn’t run a business selling cars, is launders table cloths and napkins for not engaged in trade and commerce. several local restaurants. This means he uses his clothes dryer at least History of use of the good three times per day, five days per week. As a general principle, the more heavily Connor lives alone in a house with a and frequently a consumer uses a good, washing line and uses his dryer once the less time a reasonable consumer every two weeks. expects a good to last. Conversely, the less a consumer uses a good, the longer After three years, both Connor and a reasonable consumer expects the good Hamish’s dryers break down. to last. Given that Connor rarely used his dryer, he would reasonably expect it to last longer than three years. Therefore, it is likely that Connor could claim that his dryer was not of acceptable quality under the ACL because it was not durable. However, given how frequently Hamish used his dryer it is likely that the dryer was of acceptable quality under the ACL even though both dryers lasted the same three years.

10 Sometimes this principle will not apply. The length of a bundled goods/services Some goods may deteriorate over time contract regardless of level of usage, for example If a good is leased or sold as part of a if they have rubber seals that are exposed bundled goods and services contract, to the air. Other products, such as certain then a reasonable consumer can expect types of batteries and motors, may the good will last for at least the length deteriorate faster when not used at all. of the service contract. A reasonable consumer expects a second-hand good to have been used Example before even though there may not be Kim signs up to a 24-month post- a good understanding of its history of paid mobile phone service contract usage. This previous use means that a which includes leasing a smart reasonable consumer would expect a phone. Fourteen months into second-hand good to last less time than the contract, the phone becomes the same good purchased new. unresponsive. It is likely that Kim’s phone is not of Example acceptable quality because it is not reasonably durable. This is because a Tino purchases a second-hand reasonable consumer would expect cordless drill from a pawn shop. the mobile phone to last at least 24 After a year of moderate use, Tino months given the length of the post- notices that the drill battery quickly paid service contract. loses its charge. Given that Tino purchased his drill second-hand and does not know how old it is or how often its previous owner used it, it may be reasonable for the battery to require replacement after 12 months. In these circumstances, Tino’s drill may still be sufficiently durable despite its poorer battery life.

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