Statutory protection and implications

Consumer rights

In any transaction, consumers have the right to goods of merchantable quality, which includes products that are safe, designed for their intended use and contain clear instructions for correct usage. Consumers can also expect a business to disclose all relevant information, including a product's place of manufacture and, for food products, its ingredients.

When purchasing a product (or service), consumers should be able to access the terms of sale, including the full price paid and a description of the product or service purchased. A simple example of this is a receipt. In the case of a product or service not being of merchantable quality, including the time extended by warranties, the consumer can expect a refund, repair or exchange unless he or she had understood and previously agreed to accept a faulty product for an agreed price. The law allows retailers to sell faulty goods if the product is safe and all the faults are disclosed to the consumer.

Implications

With regard to consumer rights, in any contract there are assumptions that the consumer can make about the product or service, including that it is of merchantable quality (unless the business has disclosed all faults and the consumer has accepted these). Even if the contract does not expressly state that the product is of merchantable quality, the consumer can assume that this is the case.

If you went to a 'seconds' factory and bought a cheap, dented washing machine but later found that the machine didn't work, you have the right to a refund, repair or exchange. Although the vendor revealed that the machine had a fault and you paid less because of that fault, the implication was that the machine would do what it was designed to do despite the fault.

Buyer beware

The Latin term caveat emptor translates to 'let the buyer beware' and indicates that although consumers have a number of rights, the responsibility of the purchase still falls on the consumer to educate themselves about the product before making an offer. If the vendor has disclosed all relevant information and the product is of merchantable quality, then the vendor is not obligated to rectify a consumer's poor choice.

If you went into a store and bought a pair of jeans off the shelf, but later found that you had bought the wrong size and you didn't like the colour, the store gave you an opportunity to try on the jeans so they are, therefore, not obligated to rectify your poor choice.

Statutory protection

A statute is a written law pertaining to a State, Territory or nation. Consumers are protected by statutes such as the Trade Practices Act 1974 (Cth) ('the Act'), which is a federal law designed to ensure that vendors comply with the minimum standards required for their business, making certain practices, such as selling unsafe products or misrepresentation, illegal. The Act also covers situations of market manipulation to guarantee that consumers have access to a free market of choice and healthy competition.

The Act generally applies to companies which operate or trade in more than one State or Territory. In addition to the Act, each State and Territory has its own laws under the department or office of fair trading, consumer affairs or business affairs. State law applies to individuals and businesses not covered by the federal Act and protects consumers in much the same manner.