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BUSN7052 Chap.11 Australian Consumer Law: Guarantees and Misleading Conduct

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Chapter 11 of 13 · BUSN7052

Australian Consumer Law: Guarantees and Misleading Conduct

The Australian Consumer Law, Schedule 2 to the Competition and Consumer Act 2010 (Cth), applies in the ACT through the ACT's own Fair Trading (Australian Consumer Law) Act 1992. This chapter explains who is a consumer under s 3, the guarantees for goods and services in ss 51 to 64, and the remedies for major and minor failures.

It then covers misleading or deceptive conduct under s 18, the specific false representations in s 29, bait advertising, product liability and safety reporting, unfair contract terms and the enforcement tools available to the ACCC.

In this chapter

What this chapter covers

  • 01

    Consumer test in s 3 and the resupply exclusion

  • 02

    Guarantees for goods in ss 51 to 59

  • 03

    Services guarantees and the s 63 exclusions

  • 04

    Major and minor failure remedies

  • 05

    Misleading conduct under s 18 and s 29

  • 06

    Product safety, unfair terms and ACCC remedies

Worked example · free

A phone sold as water resistant that fails in a shower

Q [6 marks]. A retailer's display says a phone is “water resistant for everyday life”. A buyer's phone fails after steam from a shower. The retailer says its refund policy covers change of mind only. Advise the buyer. The marks shown help you pace revision and are not a University allocation.
Sale of Goods Act terms beside ACL guaranteesEach implied term of the Sale of Goods Act on the left has a matching consumer guarantee in the Australian Consumer Law on the right, linked by dashed rungs.SGA: every buyerACL: consumers onlys 17 titless 51 to 53s 18 descriptions 56s 19 quality, fitnessss 54 and 55s 20 samples 57Guarantees: non-excludable
Each Sale of Goods Act term on the left lines up with the matching consumer guarantee on the right, which is why many answers apply both Acts in parallel once the buyer is shown to be a consumer.
  • +1Consumer status: a phone is ordinarily acquired for personal use and costs well under the $40,000 threshold stated in the course slides, so the buyer is a consumer under s 3.
  • +2Guarantees: a phone marketed as water resistant for everyday life that fails from shower steam is arguably not of acceptable quality (s 54) and does not match its description (s 56).
  • +2Misleading conduct: the display may lead ordinary buyers into error about water resistance, a possible breach of s 18 and s 29(1)(g); compare the ACCC's Samsung case on water resistance claims.
  • +1Policy: the refund policy cannot limit the guarantees (s 64), and telling consumers otherwise risks s 29(1)(m).
The buyer has guarantee claims the policy cannot exclude, and the retailer faces possible s 18 and s 29 exposure.
Sia tip — Run guarantees and misleading conduct as two separate issues; a consumer claim does not need s 18, and s 18 does not need a consumer.
Glossary

Key terms

Acceptable quality
The s 54 consumer guarantee about the quality of goods, the ACL counterpart of merchantable quality.
Major failure
A failure to comply with a guarantee serious enough to let the consumer reject the goods.
Bait advertising
Advertising goods at a price when the trader knows it cannot supply reasonable quantities.
Unfair contract term
A standard form term that causes significant imbalance, is not reasonably necessary and would cause detriment.
Mere puffery
Exaggerated sales talk that no reasonable person would treat as a factual claim.
FAQ

Australian Consumer Law: Guarantees and Misleading Conduct FAQ

Is a business that buys stock to resell a consumer?

No. Section 3 excludes goods acquired for resupply, whatever their price, and goods acquired to use up or transform in trade or commerce. A past answer guide applied this to a café buying coffee beans: even below the price threshold, beans bought for the business fell outside the guarantees.

Who chooses between a refund and a replacement?

For a major failure, the consumer may reject the goods, and s 263 then requires the supplier to refund or replace at the consumer's choice. For a failure that is not major, the supplier may remedy it within a reasonable time by repair, replacement, refund or curing title under s 261.

What makes conduct misleading under s 18?

Conduct in trade or commerce is misleading if it leads, or is likely to lead, members of the relevant section of the public into error. Identify who the audience is, then ask whether an ordinary member would be misled. Context decides, as Taco Bell showed, and obvious exaggeration is permitted as puffery.

Does product safety law protect pets?

The 2025 marking guide said the product safety rules relate to harm to humans, not animals, so they were not relevant to a pet's death. Suppliers must report deaths, serious injuries or illness associated with consumer goods within two days under ss 131 and 132.

Study strategy

Exam move

Start every consumer law answer with the gateway: is the buyer a consumer under s 3, and if not, does the Sale of Goods Act still apply? Practise the gateway on borderline buyers such as a café, a farmer buying a ute or a builder buying insulation, using Bunnings v Laminex for the meaning of ordinarily.

Next, match the defect to the guarantee section and, where a sale of goods is involved, to the parallel SGA term, so you can run both Acts side by side as recent marking guides expected. For remedies, draw the major and minor failure paths and practise deciding which applies from the facts, because the remedy, not the breach, usually carries the final marks.

Treat misleading conduct as a separate issue with its own test: audience, likely error, then s 29 if a specific representation fits. Keep a short list of cases with their one-line facts, such as Taco Bell, Proctor and Gamble, Valve and Thermomix, so you can cite them by short name.

Finally, remember the services guarantees: one guide predicted many students would miss the customer's claim for services, and a quick check of s 60 and s 61 avoids that.

Working through Australian Consumer Law: Guarantees and Misleading Conduct in BUSN7052? Sia is AskSia’s AI Law tutor — ask any BUSN7052 Australian Consumer Law: Guarantees and Misleading Conduct question and get a clear, step-by-step explanation grounded in how BUSN7052 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.

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