Motor vehicle sales and repairs
An industry guide to the Australian Consumer Law
This guide was developed by:
• Access Canberra, Australian Capital Territory
• Australian Competition and Consumer Commission
• Australian Securities and Investments Commission
• Consumer Affairs Victoria
• Consumer, Building and Occupational Services Tasmania
• New South Wales Fair Trading
• Northern Territory Consumer Affairs
• Queensland Ofce of Fair Trading
• South Australia Consumer and Business Services
• Western Australia Department of Mines, Industry Regulation and Safety,
(Consumer Protection)
Copyright Commonwealth of Australia 2018
ISBN 978-0-642-74919-2
This publication is available for your use under a Creative Commons By Attribution 4.0 Australia
licence, with the exception of the Australian Consumer Law logo, photographs, images, signatures
and where otherwise stated. The full licence terms are available from the Attribution 4.0 Unreported
licence page on the Creative Commons website.
Use of Commonwealth material under a Creative Commons By Attribution 4.0 Australia licence
requires you to attribute the work (but not in any way that suggests that the Commonwealth endorses
you or your use of the work).
Material used ‘as supplied’
Provided you have not modied or transformed the material in any way, then the Commonwealth
prefers the following attribution:
• Source: Commonwealth of Australia
Derivative material
If you have modied or transformed the material, or derived new material in any way, then the
Commonwealth prefers the following attribution:
• Based on the Commonwealth of Australia material
Inquiries regarding this licence and any other use of this document are welcome at:
Manager
Communications
The Treasury
Langton Crescent
Parkes ACT 2600
Email: medialiaison@treasury.gov.au
4
In particular, it provides guidance on
the legal rights and obligations created
by consumer guarantees provided by
the ACL. Remedies are available when
there is a:
• major failure to comply with a
consumer guarantee
• minor failure to comply with a
consumer guarantee that cannot be
xed within a reasonable time, or
• minor failure to comply with a
consumer guarantee that can be xed
(whether or not it is capable of being
xed within a reasonable time).
What is not in this guide
This guide gives general information
and examples—not legal advice or a
denitive list of situations where the ACL
applies. You should not rely on this guide
for complete information on all your
obligations under the ACL.
In addition, this guide does not cover
your obligations under state and territory
vehicle trader licensing laws; e.g. the
Motor Dealers and Repairers Act 2013
(NSW).
The Australian Consumer Law (ACL)
is Australia’s national consumer law,
replacing previous consumer protection
laws in the Commonwealth, states
and territories. The ACL applies at the
Commonwealth level and in each state
and territory.
This guide provides information
on the ACL for the motor vehicle
(vehicle) sales and repair industries—
including motorcycles.
It covers issues about which industry
bodies have requested more detailed
guidance and which consumers have
frequently reported to national, state and
territory consumer protection agencies.
This information will be relevant to:
• authorised vehicle dealers (including
of vehicles and motorcycles)
• mechanics and vehicle servicers and
repairers
• vehicle manufacturers, distributors
and importers.
The guide’s main focus is on consumer
issues related to defects and failures
(both one-off and repeated) in new and
used vehicles.
INTRODUCTION
A guide to Australian consumer law —Motor vehicle sales and repairs 5
Other ACL guides and
information
This guide supplements the ACL guides
for business and legal practitioners,
available from the Australian Consumer
Law website:
• Consumer guarantees
• Sales practices
• Avoiding unfair business practices
• A guide to unfair contract terms law
• Compliance and enforcement: how
regulators enforce the Australian
Consumer Law
• Product safety.
For more information, visit:
Australian Consumer Law website
Australian Competition and Consumer
Commission (ACCC) website.
State and territory consumer
protection agencies
Australian Capital Territory: Access
Canberra website
New South Wales: Fair Trading website
Northern Territory: Consumer Affairs
website
Queensland: Ofce of Fair Trading
website
South Australia: Consumer and Business
Services website
Tasmania: Consumer, Building and
Occupational Services website
Victoria: Consumer Affairs Victoria
website
Western Australia: Department of Mines,
Industry Regulation and Safety (Consumer
Protection) website
Terminology
For the purposes of this guide:
A manufacturer is a business that
makes or puts products together or has
its name on the products. It includes
the importer, if the maker does not have
an ofce in Australia, and/or any agent
(including a distributor) which holds itself
out to the public as the manufacturer or
ofcial importer of the vehicles. Examples
of manufacturers include Ford, Holden,
Hyundai, etc.
A dealer is any business that supplies
vehicles to consumers, including:
• new vehicle dealers that are
authorised by manufacturers,
usually via a franchise agreement
(often referred to as a dealer
agreement), to be the primary seller
of the manufacturer’s vehicles and
replacement parts produced by, or for,
an original equipment manufacturer,
and also a provider of authorised
repair and servicing for new and used
vehicles, within a dened geographic
area
• used vehicle dealers that supply
used vehicles to consumers, and also
repair and service new and used
vehicles, generally with no ofcial
endorsement by or afliation with
the manufacturer.
An independent repairer is a
business that repairs and services
vehicles, but is not ofcially endorsed
by or afliated with the manufacturer
or dealer. Examples of independent
repairers include smaller owner-operator
workshops and larger conglomerates
(e.g. Kmart Tyre & Auto Service, Midas
Australia, Ultra Tune, etc.).
6
Trade or commerce means in the
course of a manufacturer’s or dealer’s
or independent repairer’s business or
professional activity, including a not-for-
prot business or activity.
A consumer is a person who buys any of
the following:
• any type of products or services
costing up to $40 000 (or any other
amount set by the ACL in future)
• a vehicle or trailer used mainly to
transport goods on public roads.
The cost of the vehicle or trailer is
irrelevant
• products or services costing more
than $40 000, which are of a kind
ordinarily acquired for personal,
domestic or household purposes
(such as the family car).
A person is not a consumer if they buy
products to:
• on-sell or resupply
• use, as part of a business, to:
– manufacture or produce something
else (for example, buying rubber to
make tyres)
– repair or otherwise use on other
goods or xtures.
Major failure and minor failure refer
to failures to comply with consumer
guarantees. The ACL does not use the
term ‘minor’; it only makes reference to
a failure that is ‘major’ and ‘not major’.
However, throughout this guide the
term ‘minor failure’ is used for simplicity
and will apply to circumstances where a
failure will not be major.
A representation is a statement
or claim.
A guide to Australian consumer law —Motor vehicle sales and repairs 7
CONSUMER GUARANTEES ON
VEHICLES
Under the ACL, there are numerous consumer guarantees that apply to new and
used vehicles sold to a consumer. Table 1 outlines the automatic, statutory consumer
guarantees relating to the supply of vehicles.
Table 1: The consumer guarantees relating to the supply of vehicles
A supplier guarantees:* A manufacturer guarantees:
• goods will be of acceptable quality**
• goods will be t for any purpose
disclosed before sale
• goods will match their description
• goods will match the sample or
demonstration model
• they will honour any express
warranties
• consumers have title to the goods
• consumers have undisturbed
possession of the goods
• there are no undisclosed securities on
the goods
• goods will be of acceptable quality**
• goods will match their description
• they will honour any express
warranties
• they will make available repair
facilities or spare parts for a
reasonable time
* For the purpose of the ACL, the term ‘supplier’ refers to dealers. The term ‘supplier’ would also refer to a
manufacturer if it sells or otherwise supplies vehicles directly to consumers, including via online platforms; this
would be in addition to their inherent classication under the ACL as ‘manufacturers’.
** Goods are of acceptable quality if they are safe, durable and free from defects, are acceptable in appearance
and nish and do everything that they are commonly used for (see page 11).
8
Linked credit providers
Sometimes vehicle sellers have ‘linked
credit providers’—for example, a nance
company to which they regularly refer
people under an agreement with
that company. These credit providers
can be liable under the ACL for the
loss or damage someone suffers
when that seller fails to meet certain
consumer guarantees.
Other exclusions
Other types of vehicles not covered by
consumer guarantees include those:
• bought before 1 January 2011. These
are covered by statutory implied
conditions and warranties under the
Trade Practices Act 1974 and state and
territory legislation in force before 1
January 2011
• bought to on-sell or resupply. These
sales are covered by the implied
tness for purpose warranties under
state and territory sale of goods
legislation, unless excluded by
the contract.
Vehicles bought from private
sellers
Vehicles bought from one-off sales
by private sellers are only covered by
the guarantees as to title, undisturbed
possession and undisclosed securities.
However, the implied warranties
under state and territory sale of goods
legislation also apply to private sales,
unless excluded by the contract.
Vehicles bought at auction
Vehicles bought by way of ‘sale by
auction’ are only covered by the
guarantees as to title, undisturbed
possession and undisclosed securities.
A ‘sale by auction’ is an auction that is
conducted by an agent (or auctioneer),
whether the agent acts in person or by
electronic means. Not all auctions are
‘sales by auction’, for example, auctions
conducted by eBay are not considered as
‘sales by auctions’, because eBay does not
act as the agent (or auctioneer) for the
person supplying the goods.
However, the implied warranties
under state and territory sale of goods
legislation apply to auction sale contracts,
unless excluded by the contract.
Leased or hired vehicles
Leased or hired vehicles are covered
by the consumer guarantees, with the
exceptions of the guarantees as to title
and undisclosed securities. The guarantee
for undisturbed possession applies only
for the term of the lease or hire.
For more information on rental vehicles,
see the Australian Consumer Law industry
guide: rental cars, available from the
Australian Consumer Law website.
A guide to Australian consumer law —Motor vehicle sales and repairs 9
Interaction between warranties
and consumer guarantees
A warranty does not change your
responsibilities under the ACL. Consumer
guarantees cannot be replaced, limited
or removed by any agreement, contract
or warranty. Consumer guarantees apply
for an unspecied but reasonable period,
to be determined by a range of factors,
including the nature and cost of the
goods. The consumer guarantees apply
in the same way regardless of whether
a vehicle is covered by a manufacturer’s
warranty, an express warranty or an
extended warranty, and consumer
guarantees may continue to provide
protections after warranties have expired
(warranties are discussed further at
page 20).
When explaining customers’ rights under
warranty, you should be careful not to
represent that customers have no other
legal right to address a defect. To ensure
you do not risk breaching the ACL when
dealing with your customers, you should
ensure that consideration of customers’
consumer guarantee rights and your
obligations as either a manufacturer
or dealer are embedded in all systems,
policies and procedures that make up
your complaints handling system. An
updated complaints handling system will,
as a matter of best practice, help ensure
that a consumer’s statutory rights under
the ACL are given due consideration at
the outset of responding to a claim.
Figure 1: Remedies from consumer guarantees and warranties
Consumer guarantees
Consumer has
consumer guarantee
rights (which may be
more extensive than
warranty rights)
e.g. if a major failure
occurs outside of
warranty period.
Warranty
Consumer has
warranty rights
(which may be
more extensive
than consumer
guarantee rights).
No right available (
e.g because the problem was casued by consumer misuse).
Consumer has
rights under
consumer
guarantees
and warranty.
10
Example 1:
A vehicle that was just over three years
old suffered from a manufacturing
defect that resulted in excessive jerking
and shuddering when accelerating to
such an extent that the vehicle was not
drivable. The vehicle was substantially
unt for its normal purpose because
despite many attempts at a repair, the
dealer could not permanently x the
issue (see also discussion about ‘major
failure’, at page 12). The vehicle has
failed to meet the consumer guarantee
of acceptable quality. As the vehicle
is not drivable, the failure would
constitute a major failure to comply
with a consumer guarantee.
The dealer cannot avoid providing a
remedy merely because the problem
occurred one month after the expiry of
the manufacturer’s three year warranty
period applicable for that vehicle
(or 1000 kms after the 100 000 km
warranty distance, as the case may
be). If the defect is a manufacturing
defect, then the consumer may
reject the vehicle and ask whoever
supplied the vehicle (e.g. the dealer)
to provide the consumer’s choice of a
repair, replacement or refund under
the consumer guarantee provisions,
regardless of whether the warranty
has expired.
There are several factors that make it
reasonable for a consumer to reject a
vehicle in response to a major failure
(and seek a refund/replacement), more
than three years after purchase. These
factors include that the consumer’s use
of the vehicle was consistent with a
reasonable consumer’s likely use, and
that it would be reasonable for the
vehicle to be used for longer than three
years before the manufacturing defect
becomes apparent (see discussion about
the ‘rejection period’, at page 15).
Example 2:
A manufacturing defect prevented a
two-year-old vehicle from shifting into
reverse gear. The vehicle has failed
to meet the consumer guarantee of
acceptable quality. The dealer spent
two months unsuccessfully attempting
to repair the vehicle, and the consumer
then requested a replacement or refund
under the consumer guarantees. Given
the vehicle failed to meet a consumer
guarantee and could not be repaired
within a reasonable time (see discussion
about ‘major failure’, at page 12), the
failure is a major failure to comply with
a consumer guarantee. The consumer
may reject the vehicle and ask whoever
supplied the vehicle (e.g. the dealer) to
provide a replacement or refund under
the consumer guarantee provisions.
This applies regardless of whether
the vehicle may have been able to
be repeatedly repaired under the
manufacturer’s warranty. The consumer
may, however, wish to keep the vehicle
and have it repaired, in which case
the dealer is entitled to repair the
vehicle rather than replace it or provide
a refund.
A guide to Australian consumer law —Motor vehicle sales and repairs 11
– a high-performance vehicle may
require more maintenance to keep
up its performance level
• the price of the vehicle, for example,
a consumer may reasonably expect a
top-of-the-range model in a particular
vehicle class to be more durable than
a cheaper competing model in the
same class
• representations made about
the vehicle; for example, in any
advertising, on the manufacturer’s
or dealer’s website or in the
vehicle manual
• anything the dealer told the consumer
about the vehicle before purchase
• any other relevant facts, such as the
way the consumer has driven or used
the vehicle.
The guarantee of acceptable quality does
not apply if:
• the dealer alerts the consumer to
the defect in the vehicle before the
consumer agrees to the purchase
• the consumer examines the vehicle
before buying and the examination
should have revealed it was not of
acceptable quality. The examination
does not require the consumer to
nd hidden defects or ones that
are difcult to detect; for example,
engine, brake or gearbox faults, which
may not be easily detected
• the consumer causes the vehicle to
become of unacceptable quality or
does not take reasonable steps to
prevent the vehicle from becoming
of unacceptable quality, for example,
the consumer puts petrol in a
diesel vehicle
As a matter of best practice, and also
to minimise the risk of contravening the
provisions of the ACL, which prohibit
misrepresentations and misleading
or deceptive conduct (e.g. where the
consumer has requested a remedy
under the consumer guarantees), you
should also:
• when providing a remedy, make it
clear to the consumer when you
are providing remedies under the
consumer guarantee provisions—
rather than simply describing such
remedies as ‘goodwill’
• when not providing a remedy,
consider providing consumers with
written reasons for refusing to
provide a remedy under the consumer
guarantee provisions.
Acceptable quality
The test for acceptable quality is whether
a reasonable consumer, fully acquainted
with a vehicle’s condition (including any
defects) would nd it:
• t for all the purposes for
which vehicles of that kind are
commonly supplied
• acceptable in appearance and nish
• free from defects
• safe
• durable.
This test takes into account:
• the nature of the vehicle, for example:
– a new vehicle would be expected to
last longer than a used vehicle
– a dedicated four-wheel-drive vehicle
may have a higher standard for off-
road use than a ‘soft off-roader’
12
• the vehicle is substantially unt for its
normal purpose and cannot easily be
made t within a reasonable time. For
example, the engine of a vehicle with
a stated towing capacity of 3500 kgs
and normally used for towing, has a
design aw that cannot be easily xed
which causes it to overheat when it
tows a load of more than 2500 kgs
• the vehicle is substantially unt for
a purpose that the consumer told
the dealer about, and cannot easily
be made t within a reasonable
time. For example, a vehicle does
not have enough towing capacity
to tow a consumer’s boat, despite
the consumer telling the dealer
the specications required to tow
the boat
• the vehicle is unsafe. What is ‘unsafe’
will depend on the circumstances of
each case. For example, a vehicle has
faulty brakes that cause the vehicle to
require a signicantly greater braking
distance than would be safe for
normal use.
When there is a major failure to comply
with a consumer guarantee, the
consumer can choose to:
• reject the vehicle and choose a repair,
refund or an identical replacement
(or one of similar type and value if
reasonably available) from whoever
supplied the vehicle (e.g. the
dealer), or
• the consumer uses the vehicle in an
abnormal way. ‘Abnormal’ use has
not been dened under the ACL.
However, certain uses for vehicles will
be inherently abnormal, for example,
a small hatchback is not designed
for towing a horse oat. Information
provided in the manufacturer’s
handbook and any other operating
instructions may also be relevant.
Major vs minor failures
When a vehicle fails to meet a consumer
guarantee, your rights and your
obligations to the vehicle owner depend
on whether the failure is major or minor
and whether you sold or otherwise
supplied the vehicle to the consumer
(e.g. see reference to ‘supplier’ in table 1
and table 2).
Major failures
A major failure to comply with
the consumer guarantees includes
the following:
• a reasonable consumer would not
have bought the vehicle if they had
known about the full extent of the
problem. For example, no reasonable
consumer would buy a new vehicle
with so many recurring faults that
the vehicle has spent more time off
the road than on it because several
qualied repairers have been unable
to solve the problem
• the vehicle is signicantly different
from the description, sample or
demonstration model shown to the
consumer. For example, a consumer
orders a vehicle with a diesel engine
after test-driving the demonstration
model, but the vehicle delivered has a
petrol engine
A guide to Australian consumer law —Motor vehicle sales and repairs 13
Example 1:
Within the rst 60 days after purchase,
a manufacturing defect caused a vehicle
to become immobile and not drivable,
and the dealer was unable to repair
the vehicle within a reasonable number
of days. The vehicle is unlikely to meet
the consumer guarantee of acceptable
quality, and a reasonable consumer is
unlikely to have bought a vehicle if they
had known the vehicle would develop
such serious defects shortly after
purchase. Therefore, the failure is likely
to be a major failure of the vehicle to
comply with the consumer guarantee of
acceptable quality.
Example 2:
Shortly after purchase, a manufacturing
defect caused a vehicle to develop
excessive noisiness. During each
attempted repair, the vehicle was
not able to be used by the consumer
for extended periods (e.g. because
the vehicle was not in the owner’s
possession), for a combined period
of ve weeks. The vehicle is unlikely
to meet the consumer guarantee of
acceptable quality, and moreover, a
reasonable consumer is unlikely to
have bought a new vehicle if they had
known the full extent of the vehicle’s
problems. Therefore, the failure is likely
to be a major failure of the vehicle to
comply with the consumer guarantee of
acceptable quality.
• keep the vehicle and ask for
compensation, from the dealer or the
manufacturer, for any drop in its value
caused by the failure of the vehicle to
comply with a consumer guarantee,
and compensation for any reasonably
foreseeable loss suffered due to the
failure of the vehicle to meet the
consumer guarantees.
Additional guidance on criteria for
determining a major failure
While examination of a vehicle will
likely be required to identify the nature
of a fault, the ACL does not require
an involved process of diagnosis to
determine if a vehicle’s failure is ‘major’.
You should approach consumer claims for
remedies from the perspective of whether
a reasonable consumer would have
bought the vehicle if they had known of
the full nature and extent of the failure at
the time of purchase. In particular:
• if a manufacturing defect causes a
vehicle to become immobile and not
drivable, and this defect cannot be
easily repaired with the result that the
vehicle is not able to be used within
a reasonable time, this is likely to
constitute a major failure to comply
with the consumer guarantee of
acceptable quality
• where a vehicle experiences multiple
minor failures which necessitate
multiple or repeated repairs with the
result that the vehicle cannot be used
by the owner for unreasonable periods
of time (e.g. because the vehicle is
not in the owner’s possession), this is
likely to constitute a major failure to
comply with the consumer guarantee
of acceptable quality.
14
A minor failure does not initially allow
the consumer to reject the vehicle
and demand a refund, replacement
or compensation for the difference in
value—even if the vehicle is immobile
and not drivable for a short period of
time (e.g. several days).
Example:
A consumer buys a new vehicle, and
it soon develops a slight rattling noise
that does not interfere with its normal
operation. The consumer returns the
vehicle to the dealer, who inspects
it, determines the cause of the noise
and offers to repair it in two days.
The consumer refuses this offer and
demands a refund, claiming a major
failure to comply with the guarantee of
acceptable quality. However, in these
circumstances, the fault would most
likely be considered a minor failure,
if capable of being xed within a
reasonable time. The dealer would not
have to offer a refund in this case.
When the failure to comply with a
consumer guarantee is minor, you are
not held to repairing it. You can choose
between providing a repair or offering
the consumer a refund or an identical
replacement (or one of similar value if
reasonably available).
If you have identied a minor failure,
but have not been able to x it within
a reasonable time, the consumer can
choose to get the job done elsewhere
and charge you the reasonable costs
of this repair or can treat the failure
as major. This applies even if the delay
is due to unavailability of parts. See
‘Inability to repair within a reasonable
time’ on page 16.
Example 3:
A vehicle is approximately three years
old. During the three years, a few
relatively minor issues have occurred.
Firstly, after about one year, a piece of
interior trim came loose and the dealer
was able to repair it. After about two
years the satellite navigation system
developed a glitch, which the dealer
was easily able to x with a software
update. At three years of age, the boot
latch broke, which the dealer was able
to quickly and easily replace. Each
issue was able to be easily repaired,
and the vehicle was able to be used
normally. Therefore, even though each
individual failure is likely to be a minor
failure of the vehicle to comply with
the consumer guarantee of acceptable
quality, these failures, which occurred
over a three-year timeframe and do not
reect a recurrent or systemic issue, do
not constitute a major failure.
Minor failures
Minor failures to comply with the
consumer guarantees of acceptable
quality or tness for purpose include
those where a vehicle has a fault that
signicantly affects its operation, but can
be xed within a reasonable time. For
example:
• a vehicle where the windscreen wipers
stop working
• a vehicle fault that can be rectied
with a software update
• a vehicle with a small fault in its
transmission, which the manufacturer
can quickly resolve by, for example,
replacing the entire transmission
rather than repairing only the
faulty component.
A guide to Australian consumer law —Motor vehicle sales and repairs 15
Abnormal use
Vehicles are not expected to be
indestructible; a consumer’s use of a
vehicle can affect its durability.
The guarantee of acceptable quality will
not apply if the consumer:
• uses a vehicle abnormally
• causes the quality of a vehicle to
become unacceptable
• fails to take reasonable steps to avoid
the quality becoming unacceptable.
The law does not dene ‘abnormal use’.
However, examples of abnormal use
would include:
• a soft-top vehicle is left out in the
rain with its roof open, resulting in
damage to the interior
• a two-wheel drive vehicle being
consistently driven in lower traction
over rough surfaces that are better
suited for four-wheel-drive vehicles.
There is a difference between damage
caused by abnormal use, and gradual
deterioration (also called ‘wear and
tear’) caused by a consumer’s normal
use of a vehicle. Wear and tear involves
the eventual wearing out of parts to the
point where they no longer work, as well
as such things as scufng, scratching or
discolouration that would predictably
occur over time when the vehicle is used
normally. Normal wear and tear is not a
minor or major failure.
If a consumer uses a vehicle normally,
and its condition deteriorates faster or
to a greater extent than would usually
be expected, then the vehicle may
have failed to meet the guarantee of
acceptable quality and the consumer may
be entitled to a remedy.
Major failure—when consumers are
not entitled to reject goods
A consumer cannot reject a vehicle if the:
• rejection period has passed
• consumer has lost, destroyed or
disposed of the vehicle
• vehicle was damaged after being
delivered to the consumer
• vehicle, part or component has been
attached to, or incorporated in,
some other property and cannot be
detached without damaging it
• consumer has caused the problem
through their own action or
inaction—see ‘Abnormal use’.
The ‘rejection period’ is the period
commencing from the time a consumer
bought a vehicle, during which it would
be reasonable to expect a problem
to appear.
The length of a vehicle’s ‘rejection period’
is yet to be the subject of signicant
judicial consideration, however, there
is nothing in the ACL to suggest that
its application is related to the concept
of warranties. It is therefore entirely
possible that the warranty period can
end before the rejection period ends. It
is also possible that a latent defect does
not become ‘apparent’ until it has been
identied and diagnosed. In determining
whether the rejection period has passed,
it is relevant to consider the:
• type of vehicle
• way in which the consumer is likely to
use it
• length of time, and amount of use,
that would reasonably be expected
to elapse before the problem
becomes apparent.
16
acquainted with the combined length
of those repair attempts would not
have acquired the vehicle. If you initially
consider the fault can be repaired within
a reasonable time, the consumer must
give you a chance to do so.
Example 1:
A two year old vehicle suffered from a
manufacturing defect that caused the
engine (and vehicle) to seize. The dealer
initially assessed the repair as taking
a day or two but despite the dealer’s
best attempts, the vehicle was unable
to be repaired within ve weeks. This
indicates that the fault was not one that
could be xed within a reasonable time,
there was a major failure to comply
with the consumer guarantees, and
the consumer was entitled to reject the
vehicle under the consumer guarantees.
Example 2:
An 18-month-old vehicle had an
intermittent electrical fault that caused
a warning light to activate from time
to time. The consumer accepted that
the fault was minor and asked the
dealer to repair it, but the warning
light did not activate while the vehicle
was in for repair, so it was not possible
to identify the cause of the problem.
The consumer returned the vehicle for
a second and third attempted repair,
and the dealer was eventually able
to identify and repair the fault. The
consumer was not entitled to reject the
vehicle, as the time taken to remedy the
fault was reasonable when the nature
of the fault was taken into account.
Example:
A consumer buys a new vehicle,
and takes due care to maintain the
condition of the vehicle’s exterior. One
year after purchase the dealer conducts
a routine service and determines the
vehicle needs to be repainted to prevent
the onset of rust. The dealer cannot
refuse to repaint the vehicle by claiming
the consumer’s use of the vehicle
was abnormal.
Inability to repair within a reasonable
time
A reasonable repair time, for the purpose
of determining whether a fault is major,
is assessed taking into account the nature
of the problem and the difculty in
identifying it. Otherwise, the assessment
is on the basis of all things being
normal or equal; for example, that parts
are available.
A failure that is initially assessed as
minor but which is not xed within a
reasonable time, for example, because
parts subsequently become unavailable,
or because of any other reason beyond
your control) gives the consumer the right
to reject the vehicle. If multiple repair
attempts are required to remedy a single
minor failure, which is indicative of a
systemic problem, you should consider
the combined length of all the repair
attempts (and not the individual length of
each repair in isolation), when deciding if
the repair time is ‘reasonable’.
Similarly, if multiple repair attempts
are required to remedy different types
of minor failure, this may ultimately
constitute a major failure of the
guarantee of acceptable quality, for
example if a reasonable consumer fully
A guide to Australian consumer law —Motor vehicle sales and repairs 17
Change of mind
You do not have to give a refund
when a consumer simply changes their
mind about a vehicle; for example,
they no longer like it, or they found it
cheaper elsewhere.
However, you can choose to have a
policy to offer a refund, replacement or
credit note when a consumer changes
their mind over and above your statutory
obligations. If so, you must abide by
this policy.
State or territory laws may have a
mandatory cooling-off period for vehicles
purchased from licensed dealers.
Dealer’s right to seek
reimbursement from a
manufacturer
Where a consumer asks a dealer to deal
with a problem where a vehicle:
• is not of acceptable quality, or
• does not match a description provided
by or on behalf of the manufacturer,
or
• is not t for a purpose made known
to the manufacturer either directly or
through you as the dealer
and in dealing with that problem in
accordance with the dealer’s legal
obligations the dealer incurs costs,
the manufacturer must reimburse the
dealer for the costs that the dealer
properly incurs.
The dealer has three years to ask the
manufacturer for reimbursement, from
the date that:
• the dealer xed any legitimate
problems with the consumer’s
vehicle, or
• the consumer took legal action
against the dealer.
The amount can include any
compensation paid to the consumer for
reasonably foreseeable consequential
losses. For more information on
consequential loss, refer to Consumer
guarantees: a guide for business and
legal practitioners, available from the
Australian Consumer Law website.
Manufacturers cannot contract out of
this obligation to reimburse dealers.
However, dealers and manufacturers can
make an agreement about what they will
each cover, as this does not affect the
consumer’s rights.
Additional guidance about dealer’s
right to seek reimbursement from
the manufacturer
You have the statutory right to recover
from manufacturers the costs of remedies
incurred in meeting the buyer’s rights
under relevant consumer guarantees
(namely the consumer guarantees as to
acceptable quality, description provided
or being t for disclosed purpose), where
the manufacturer was responsible for
the failure. Your right to be indemnied
by the manufacturer is not conditional
on getting prior approval from the
manufacturer for the remedy.
18
If you are obliged by your contracts with
manufacturers to obtain pre-approval for
repairs under warranty (e.g. if the cost of
the repair is above a specied threshold),
the manufacturer’s approval should not
be delayed unreasonably, as consumers
also have a statutory right for services
to be provided within a reasonable
time. If you take too long to x the
problem (e.g. because you are waiting
for the manufacturer’s pre-approval) the
consumer can get someone else to x the
problem and ask you to pay reasonable
costs, and if the delay amounts to a
‘major’ failure, the consumer can demand
that you refund or replace the vehicle.
Note also that the dealer’s ‘cost incurred’
in replacing the defective vehicle can
be reduced by the amount the dealer
obtains when re-selling the defective
vehicle (assuming the defective vehicle
can be repaired and made compliant with
the guarantee of acceptable quality—
most importantly with regards to safety).
In such circumstances, the ‘cost incurred’
can be properly calculated when the
dealer repairs and re-sells the defective
vehicle—so the cost incurred will be the
cost of the refund or replacement vehicle
and any costs associated with repairing
the defective vehicle, less the amount
the dealer obtains on the re-sale of the
repaired defective vehicle.
Example 1:
During a repair under warranty, a dealer
replaced a vehicle’s engine control
unit in accordance with manufacturer
guidance about a defect in that vehicle
model, which was in breach of the
consumer guarantee of acceptable
quality. The dealer’s agreement with the
manufacturer contractually obliged the
dealer to obtain pre-approval for any
repairs under warranty above a certain
monetary threshold, which would in
this case include replacing the engine
control unit. However, the manufacturer
unreasonably delayed its pre-approval
for the repair, so the dealer decided
to repair the vehicle and replace the
engine control unit under the consumer
guarantee provisions. The manufacturer
was legally obliged to indemnify the
dealer for providing a remedy under
the ACL.
A guide to Australian consumer law —Motor vehicle sales and repairs 19
Example 2:
Shortly after the expiration of a vehicle’s
three-year/100 000 km warranty
period, an electrical fault, which was
a manufacturing defect, caused a re
in the engine bay, and then the vehicle
burst into ames. This constituted
a major failure to comply with the
consumer guarantee of acceptable
quality under the ACL. Although the
dealer was obliged, under its contract
with the manufacturer, to obtain the
manufacturer’s pre-approval before
providing a remedy (because the
warranty period had expired), the dealer
granted the consumer’s request for a
replacement, due to a breach of the
consumer guarantee as to acceptable
quality. The dealer had a statutory right
to be reimbursed by the manufacturer
for the reasonable cost of replacing the
defective vehicle.
Product recalls
You may need to recall a vehicle if it is
unsafe, non-compliant with a mandatory
standard or subject to a ban. Recalls
are usually initiated by a business but
a responsible Commonwealth, state or
territory minister can also order a recall.
The purpose of a recall is to prevent
injury by removing the hazard and offer
affected consumers a remedy in the form
of a repair, replacement or refund.
A product that is safe now may pose an
injury risk in the future. A supplier should
recall goods as soon as any present or
future injury risk is identied.
A product may be recalled for a
variety of reasons, and product safety
recalls operate independently from
the consumer guarantees provided
under the ACL. Separate to any remedy
offered under a recall, consumers have
rights under the consumer guarantees.
Under the ACL, businesses that supply
goods must guarantee that they are of
acceptable quality, including that they
are safe, regardless of any warranties that
come with those goods.
A recall remedy may be consistent with
the consumer guarantees obligations,
though a recalled good is not
automatically deemed to be unsafe under
the consumer guarantees.
In the instance of a major failure,
a consumer can assert their rights
and ask the supplier for a refund or
replacement. If an agreement cannot
be reached between the consumer and
the supplier, the consumer can make
an application for consideration by an
administrative tribunal.
Suppliers are able to contact the
National Exchange of Vehicle and
Driver Information System (NEVDIS)
when they submit a vehicle recall
notication. NEVDIS records vehicle
identication number (VIN) data and
can provide the last known address of a
registered vehicle.
The Department of Infrastructure,
Regional Development and Cities is
responsible for monitoring vehicle recalls.
You must notify the Department if you
know that a vehicle, part, accessory or
service may have a safety-related defect.
For more information, refer to:
• the Department of Infrastructure,
Regional Development and Cities
website, for information on vehicle
standards and safety
20
• Consumer product safety: a guide
for businesses and legal practitioners,
available from the Australian
Consumer Law website
• the Consumer Product Safety Australia
website, where you can register to
receive automatic alerts whenever a
new recall is listed.
Warranties
Warranties against defects or
‘manufacturer’s warranty’
You, or the vehicle manufacturer,
may provide a warranty that promises
consumers that:
• products (such as vehicles) or services
will be free from defects for a certain
period of time
• defects will entitle the consumer
to repair, replacement, refund or
other compensation.
This is called a ‘warranty against defects’,
also commonly called a ‘manufacturer’s
warranty’.
Example:
A consumer buys a vehicle that comes
with a manufacturer’s warranty. The
warranty says the manufacturer will
repair the vehicle at no cost if it has a
mechanical failure within three years of
the purchase date.
A warranty against defects document
must meet a number of requirements,
including that it:
• contains the mandatory text:
‘Our goods come with guarantees
that cannot be excluded under
the ACL. You are entitled to a
replacement or refund for a major
failure and compensation for any
other reasonably foreseeable loss
or damage. You are also entitled to
have the goods repaired or replaced
if the goods fail to be of acceptable
quality and the failure does not
amount to a major failure.’
• is expressed in a transparent way—
in plain language, legible and
presented clearly
• prominently states the warrantor’s
name, business address, phone
number and email address (if any)
• sets out relevant claim periods
or procedures.
Warranties against defects may set out
requirements that consumers must
comply with. For example, a warranty
against defects on a vehicle may require
the consumer to ensure any servicing is
carried out:
• by qualied staff
• according to the manufacturer’s
specication
• using appropriate quality parts
where required.
If you wish to seek to restrict a
consumer’s freedom to choose, for
example, who they use as a repairer,
you should get legal advice on the
prohibitions on ‘exclusive dealing’ found
in the Competition and Consumer Act
2010. Exclusive dealing broadly involves a
trader imposing restrictions on a person’s
freedom to choose with whom, in what
or where they deal. For more information,
see ‘Exclusive dealing notications’ on the
Australian Competition and Consumer
Commission (ACCC) website.
A guide to Australian consumer law —Motor vehicle sales and repairs 21
Warranty start date
You need to be clear about the date that
your warranty commences, particularly in
circumstances where a sale is recorded,
or a vehicle is registered or otherwise
in use before it has been purchased
by a consumer. This can be the case
in instances such as the use of and
subsequent sale of demonstrator vehicles
and can cause a vehicle’s warranty
to commence before the vehicle is
purchased by a consumer. If the vehicle’s
warranty starts before the consumer buys
the vehicle, you should disclose this to the
consumer at the time of purchase.
Express warranties
An express warranty is different
from a warranty against defects or
‘manufacturer’s warranty’. As one of
the consumer guarantees, vehicles must
satisfy any extra promises—‘express
warranties’—you or a manufacturer has
made about them.
An express warranty focuses on a
promise or promises, for example, about
what the vehicle will look like, will do (or
is capable of doing) and for how long.
Sometimes a warranty against defects
may contain an express warranty.
Example:
When a consumer buys a utility vehicle,
the written warranty (the warranty
against defects) states that the tray
can hold up to 1000 kgs, or if not, the
tray will be replaced. This is an express
warranty about what the vehicle can
do. If the tray breaks after a load
weighing 500 kgs is placed on it, the
consumer can insist that the express
warranty contained in the warranty
against defects be honoured (i.e. a
replacement tray). If not, they will be
entitled to a remedy.
Extended warranties
An extended warranty offered at
the point of sale or at the end of a
manufacturer’s warranty extends
the coverage provided in the original
manufacturer’s warranty, usually at an
additional cost.
The consumer guarantees provide rights
to consumers that exist despite anything
the dealer or manufacturer may say or
do. Extended warranties are optional.
They are in addition to, and do not
replace, the consumer guarantees.
If you are selling extended warranties,
you need to ensure that you are offering
something of value to the consumer—
something that does not simply mirror
consumers’ rights under the law as this
may be misleading.
22
Warranties and consumer guarantees
A warranty does not change your
responsibilities under the ACL. The
consumer guarantees apply in the same
way regardless of whether a vehicle is
covered by a manufacturer’s warranty,
an express warranty or an extended
warranty, or whether those warranties
have expired.
Used vehicles
Statutory warranties on used vehicles
State and territory motor car trader
licensing laws require you to provide
a statutory warranty on used vehicles
that meet particular criteria. These
warranties are in addition to the
consumer guarantees.
For example, see s. 54 of Victoria’s Motor
Car Traders Act 1986, which provides
that, subject to certain provisions, when
a person buys a secondhand vehicle from
a dealer that was manufactured not more
than 10 years before the date it was
sold and has been driven for less than
160 000 kms, that person has a particular
statutory warranty that defects will be
repaired or otherwise made good.
After a statutory warranty has expired,
the consumer may still have rights to
a remedy under the ACL if there is a
problem with the vehicle. However, the
level of protection will depend on things
such as the vehicle’s age and condition.
For more information on statutory
warranties that apply to your business,
check with your state or territory
consumer protection agency or
licensing authority.
You must not:
• pressure consumers to buy an
extended warranty
• tell a consumer that an extended
warranty provides them with
additional protections when such a
warranty does not provide them with
any benets above and beyond their
consumer guarantees rights.
When selling extended warranties, you
should explain to the consumer what an
extended warranty would provide, over
and above the consumer’s rights under
the consumer guarantees.
Extended warranties may set out
requirements that consumers must
comply with. For example, an extended
warranty on a vehicle may require the
consumer to ensure any servicing is
carried out:
• by qualied staff
• according to the manufacturer’s
specication
• using appropriate quality parts
where required.
If you wish to seek to restrict a
consumer’s freedom to choose, for
example, who they use as a repairer,
you should get legal advice on the
prohibitions on ‘exclusive dealing’ found
in the Competition and Consumer Act
2010. Exclusive dealing broadly involves a
trader imposing restrictions on a person’s
freedom to choose with whom, in what
or where they deal. For more information,
see ‘Exclusive dealing notications’ on the
ACCC website.
A guide to Australian consumer law —Motor vehicle sales and repairs 23
Used vehicles not covered by statutory
warranties
Even if a used vehicle sold by a licensed
trader is not covered by a statutory
warranty, it will still be covered by the
consumer guarantees.
Example:
A consumer buys a used four-wheel-
drive vehicle which is not covered by
a statutory warranty in the state or
territory where the dealer is licensed
as it has travelled too many kilometres.
However, it is a top-of-the-range
vehicle and is only three years old, so
when the engine seizes three months
after purchase due to a manufacturing
defect, rendering the vehicle immobile
and not drivable, this is likely to be
a failure to meet the guarantee of
acceptable quality under the ACL
and the dealer should provide an
appropriate remedy.
Remedies available for a failure to
meet the consumer guarantees
relating to vehicles
Under the ACL, there are numerous
remedies available when the consumer
guarantees that apply to new and used
vehicles sold to a consumer haven’t been
met. Table 2 outlines the automatic,
statutory consumer guarantees relating to
the supply of vehicles.
24
Table 2: Outline of remedies for consumer guarantees relating to vehicles
Type of failure The remedy that is available
Major failures
These cannot be xed or are too difcult
to x within a reasonable time. A failure
is major if:
• a reasonable consumer who was fully
aware of the nature and extent of the
failure would not have bought the
vehicle, part or service, or
• the failure prevents the consumer
from using the vehicle, part or service
for the purpose that vehicles, parts
or services of that kind are commonly
supplied for (or for a purpose they
disclosed to the supplier before
purchasing), and it cannot be xed
within a reasonable time, or
• the vehicle, part or service is unsafe
or creates an unsafe situation.
The consumer chooses between
a repair, replacement or refund, or
compensation for the drop in value of
the vehicle or part from the supplier.*
• The consumer may also recover
damages from the supplier for any
loss or damage they suffer.
Minor failures
These can normally be xed or resolved
in a reasonable amount of time.
The supplier* chooses between a repair,
replacement or refund.
• Repairs must be done within a
reasonable time and without charge.
– If not, the consumer can request
a free replacement or refund, or
repair elsewhere and recover the
costs from the supplier.
The consumer may also recover damages
from the supplier for any loss or damage
they suffer.
In some cases the consumer can approach the manufacturer directly to recover
damages for both major and minor failures. If a manufacturer fails to meet a
relevant consumer guarantee (including the guarantee of acceptable quality—
as indicated in table 1), the consumer is entitled to recover damages from the
manufacturer, and in some circumstances, additional damages for reasonably
foreseeable consequential loss.
* For the purpose of the ACL, the term ‘supplier’ refers to dealers. The term ‘supplier’ would also refer to a
manufacturer if it sells or otherwise supplies vehicles directly to consumers, including via online platforms; this
would be in addition to their inherent classication under the ACL as ‘manufacturers’.
A guide to Australian consumer law —Motor vehicle sales and repairs 25
CONSUMER GUARANTEES ON
SERVICES
Under the ACL, you must meet
the consumer guarantees of
providing services:
• with due care and skill
You guarantee to use an acceptable
level of skill or technical knowledge
when providing the services, and take
all reasonable steps to avoid loss or
damage
• which are t for any specied
purpose
You guarantee that services will
be reasonably t for any purpose
specied by the consumer; and any
products resulting from the services
are also t for that purpose. You
also guarantee that services, and any
resulting products, are of a standard
expected to achieve any desired
results that the consumer told you
about
• within a reasonable time (when
no time is set)
You guarantee to supply the service
within a reasonable time. What is
‘reasonable’ will depend on the nature
of the services.
The consumer guarantees apply to
services sold in trade or commerce, that:
• were purchased on or after 1 January
2011
• cost up to $40 000 (or any other
amount set by the ACL in future),
regardless of purpose or use, for
example, servicing a business vehicle
• cost more than $40 000, and are
normally acquired for personal,
domestic or household purposes,
for example, restoration of a
classic vehicle.
Services not covered by consumer
guarantees include:
• services bought before 1 January
2011. These are covered by statutory
implied conditions and warranties
under the Trade Practices Act 1974
and state and territory legislation in
force before 1 January 2011
• services costing more than $40 000,
which are for commercial use,
for example, repairs to a heavy
commercial vehicle
• transportation or storage of products
for the consumer’s business, trade,
profession or occupation.
Major vs minor failures
When a service fails to meet a consumer
guarantee, your obligations depend on
whether the failure is major or minor.
A major failure with services is when:
• a reasonable consumer would not
have acquired the services if they were
fully acquainted with the nature and
extent of the problem. For example,
a reasonable consumer would not
have their vehicle serviced if they had
known a major engine fault would not
be identied
• the services are substantially unt
for their normal purpose and cannot
easily be made t, within a reasonable
time. For example, a consumer asks
a panel repairer to x hail damage
to their vehicle, but the work is of
such poor quality that all the vehicle’s
panels would have to be removed and
replaced
26
• the consumer told the dealer or
independent repairer they wanted the
service for a specic purpose but the
services, and any resulting product, do
not achieve that purpose and cannot
easily or within a reasonable time be
made to achieve it. For example, a
consumer species they want a tray to
be tted to their ute that would carry
1000 kgs. On using this tray with less
than 1000 kgs, the tray failed to hold
the load, because the tray tted was
not suitable for the specied purpose
• the consumer told the dealer or
independent repairer they wanted a
specic result but the services, and
any resulting product, were not of a
standard that would reasonably be
expected to achieve that result. For
example, a consumer asks a repairer
to perform a power upgrade to
reduce their vehicle’s acceleration
time by a specied amount; but the
repairer uses parts that would not be
expected to achieve this result
• the supply of the services has created
an unsafe situation. For example, a
mechanic incorrectly installs a part,
causing a brake failure.
When there is a major failure, the
consumer can:
• cancel the services and get a refund
for any unconsumed services, or
• get compensation for the difference
in value between the service delivered
and what they paid for.
The consumer gets to choose, not the
dealer or independent repairer.
When the problem is minor, the
consumer cannot cancel the service and
demand a refund immediately. They
must give you an opportunity to x the
problem:
• free of charge, and
• within a reasonable time.
If you refuse or take too long to x the
problem, the consumer can get someone
else to x the problem and ask you to pay
reasonable costs, or cancel the service
and get a refund, as above.
Repair notices
If you use refurbished parts to x
defective products (rather than new
parts), or replace defective products with
a refurbished version, you must always
give the consumer a ‘repair notice’ before
accepting products for repair.
This notice must include the following
specic wording required by the ACL:
• ‘Goods presented for repair may be
replaced by refurbished goods of the
same type rather than being repaired.
Refurbished parts may be used to
repair the goods’.
A guide to Australian consumer law —Motor vehicle sales and repairs 27
You must provide this repair notice
whether or not you know, before
inspecting the products, that you will use
refurbished parts or supply refurbished
products instead of repairing the
products.
You can include a repair notice in another
document (for example, terms and
conditions for the repair) as long as:
• the document states the repair notice
is given under the ACL, and clearly
distinguishes it from other information
• the repair notice is easy to see (for
example, not hidden in ne print)
• you provide the document before
accepting the products for repair.
For more information on repair
notices, visit the Australian Consumer
Law website.
For more information on consumer
guarantees applying to services, refer
to Consumer guarantees: a guide
for business and legal practitioners,
available from the Australian Consumer
Law website.
28
COMMON ISSUES
Choice of repairer under the
consumer guarantees
Consumers are sometimes confused
about the differences between the
consumer guarantees, warranties against
defects and extended warranties. This
is especially the case if dealers and
manufacturers make broad statements
that consumers will ‘void their warranties’
or similar if they go to an independent
repairer (for example, a repairer who is
not afliated with the manufacturer or
part of the manufacturer’s network).
Any suggestion by manufacturers or
dealers that vehicles need to be serviced
at a licensed dealer to maintain the
owner’s consumer guarantee rights is
not correct. Note, if an independent
repairer causes a defect, then that
defect is unlikely to be covered by
the manufacturer’s warranty, and the
consumer will need to seek a remedy
from the independent repairer.
For more information, see ‘Warranties
against defects’ on page 20, ‘Extended
warranties’ on page 21 and ‘Consumer
guarantees on services’, on page 25 of
this guide.
Logbook and service manual
claims
Consumer guarantee rights cannot be
excluded by contract. The consumer
guarantees apply regardless of any other
warranty offered by a manufacturer and
there is no requirement under the ACL
for a vehicle to be serviced by a dealer
for the consumer guarantees to apply.
Accordingly, an independent repairer can
service a vehicle without affecting the
consumer guarantees.
You should also be careful to avoid
misleading statements that consumers
are required to service their vehicles at
a dealer or they will void their rights.
A false impression that this is the case
may be created by information contained
in materials supplied by manufacturers,
such as in logbooks and service manuals,
and in some cases, verbal representations
made by dealers. Logbook and
service manual claims that may be
misleading include:
1. Explicit statements that dealers must
carry out services and repairs.
2. References to dealers (instead of
repairers generally) in the context of
information about servicing or repairs.
Note also, if the manufacturer’s
warranty requires a vehicle to be
serviced by a dealer, this may constitute
anti-competitive conduct under
the Competition and Consumer Act
2010. Separately, if an independent
repairer causes a defect, the consumer
must seek a remedy against the
independent repairer.
Non-disclosure agreements
Consumers are legally entitled to rely
on consumer guarantees irrespective
of whether they sign condentiality
agreements. If you insist consumers
sign a condentiality agreement before
providing a remedy you may be at
risk under the ACL provisions that
prohibit misrepresentations.
A guide to Australian consumer law —Motor vehicle sales and repairs 29
Component pricing
You must not promote or state a price
that is only part of the cost, unless
also prominently advertising the single
(total) price.
The single price must include any charge
payable, along with the amount of any
tax, duty, fee, levy or other additional
charge (for example, GST, import tax,
dealer fees or stamp duty).
The single price must be displayed at least
as prominently as any component price.
A prominent single price is one that:
• stands out so that it is easily seen by a
consumer
• is clear, eye-catching and
very noticeable.
What is ‘prominent’ may vary on a case-
by-case basis and you should consider
factors such as the size, placement,
colour and font of the price, as well as
the background of the advertisement. For
example, if a single price is smaller or in
a font colour that is harder to read than
any component price, then this is likely to
mean that it is not as prominent.
This applies equally to all forms
of advertising that include price
representations, regardless of whether
the advertisements are placed by a dealer,
manufacturer or cooperatively.
Components you do not need to include
in a single price are:
• optional extras: additional charges
that a consumer may choose to
pay. However, if an optional extra
is depicted in the advertisement,
you must include the price for that
optional extra
• sending charges: while mandatory
charges for sending products need to
be specied in the advertisement, they
do not have to be included in the total
price. You could, however, choose to
do so. It is important to note that in
the regulators’ view, ‘dealer delivery’
as currently imposed within the
vehicle industry would be considered
as a component of the single price
• any components which are not
quantiable at the time the
representation is made
• amounts your business pays to a third
party that are not passed on to the
consumer
• amounts a consumer is required to
pay directly to a relevant authority
(such as in used vehicle sales).
Determining whether a
component is quantiable
An amount is quantiable if, at the time
you are making the representation,
you are able to readily convert it into a
dollar amount.
If a total price is comprised of a number
of components, you must quantify and
add up each component to the extent to
which you are able.
Where a total price involves:
• a combination of quantiable and
non-quantiable components, or
• a component amount that
uctuates or varies (e.g. changes in
foreign currency)
you must calculate the total price using
those components that are quantiable
at the time.
30
You also need to clearly advise consumers
of the basis on which the amounts were
calculated and that they may change
as not all components were able to be
included in the single price. This will
allow you to provide consumers with the
minimum total cost they need to pay to
obtain the vehicle.
Vehicles with pre-existing
damage
You have specic obligations when selling
new vehicles with pre-existing damage,
for example, hail damage that occurred
while a vehicle was displayed outdoors.
If you are selling a damaged new vehicle
at a discounted price and you have
informed a consumer of the reason
for the discounted price, they cannot
then claim that the identied damage
is a failure to comply with a consumer
guarantee. However, if you do not
disclose the damage at the point of
sale, there is a risk that the vehicle may
later be found to be of unacceptable
quality, especially if the damage is not
evident or cannot be discovered through
a reasonable examination of the vehicle
before purchase.
If you are selling a secondhand or
damaged vehicle that is still within an
original warranty period, you should
provide the consumer with information
about the status of the manufacturer’s
warranty, so they can be aware of any
limits to the warranty before buying.
Consumers seeking refunds for
minor problems
If a failure to comply with a consumer
guarantee is not major and can be xed
within a reasonable time, the consumer
cannot reject the vehicle and demand a
refund.
You can choose to:
• provide a refund
• replace the vehicle
• cure any defect in legal title of the
vehicle (if the failure relates to title), or
• repair the vehicle in a reasonable time.
Example:
A new vehicle had a problem with
a small part in its front-end. The
consumer believed this was a major
failure to comply with the consumer
guarantee of acceptable quality, and
requested a refund.
However, when the dealer assessed the
problem, they found it was a minor
problem and could be repaired within
a reasonable time simply by replacing
the part.
In this case, the consumer was not
entitled to demand a refund, as the
problem could be xed quickly.
However, if the dealer had been unable
to x the problem within a reasonable
time, then the consumer would have
been entitled to the same remedies as if
it were a major failure.
For more information about major and
minor failures, see page 12.
A guide to Australian consumer law —Motor vehicle sales and repairs 31
If you and a consumer disagree about
the seriousness or cause of a problem,
the consumer might choose to obtain
an independent mechanical inspection
and written report from an independent
mechanic or an automobile association
(e.g. the NRMA, RACV, RACQ, etc.).
The consumer will have to pay for
this report, but can claim its cost as a
consequential loss if the report conrms
the fault’s existence. However, the
consumer cannot make such a claim if
the report nds there was only a minor
failure to comply with a consumer
guarantee. See ‘Consequential loss’ on
page 33.
If you disagree with an independent
mechanical inspection report, and believe
there has not been a failure to comply
with a consumer guarantee or that the
failure is not a major one, the consumer
can lodge an application with a tribunal
or court for a determination under
the ACL.
Availability of spare parts
Manufacturers or importers guarantee
they will take reasonable steps to provide
spare parts and repair facilities (a place
that can x the consumer’s vehicle), for a
reasonable time after purchase.
How much time is ‘reasonable’?
This will depend on the type of vehicle.
However, for a new vehicle, it would be
reasonable to expect that spare parts
will be available for many years after
its purchase.
Example:
A consumer has an accident while
driving his motor scooter, which he
bought new a year ago for $2000. He
contacts the importer and asks where
he can get it repaired. The importer
advises they no longer supply parts for
that model of scooter. A reasonable
consumer would expect a one-year-old
scooter to be repairable. The importer
has not taken reasonable steps to
provide spare parts or facilities, so the
importer must provide a remedy.
When the guarantee on repairs and
spare parts does not apply
A manufacturer or importer does not
have to meet the guarantee on repairs
and spare parts if they advised the
consumer in writing, at the time of
purchase, that repair facilities and spare
parts would not be available after a
specied time.
Unauthorised repairs
If you supply products or services (such
as repairs) to someone who has not
agreed to buy or receive them, they
may be considered ‘unsolicited supplies’.
It is unlawful to request payment for
unsolicited products or services. You must
refund any payments that you may have
accepted for such products or services.
32
Example:
A consumer booked a vehicle service,
which the mechanic advised him would
cost between $350 and $450.
When the consumer returned to
collect his vehicle, he was stunned
after being charged $4500 for a
reconditioned transmission.
The dealer or independent repairer
did not advise the consumer about
the need for this work and the
associated costs before the repairs were
carried out.
As the extra work was unsolicited, the
consumer does not have to pay for
any work other than what he initially
agreed to. This would not be the case if
the mechanic had asked his permission
before replacing the transmission, and
he had agreed.
If there is a dispute over unauthorised
repairs, the onus will be on you (as the
business demanding payment) to prove
you have a legitimate right to payment.
For more information on unsolicited
supplies, refer to Sales practices: a guide
for businesses and legal practitioners,
available from the Australian Consumer
Law website.
Consumers getting vehicles
repaired by another business
Disputes often arise when a consumer
has a vehicle repaired by someone other
than the original dealer, then makes a
claim on that dealer for the repair costs.
If you sell a vehicle and a fault develops,
the consumer must give you a reasonable
opportunity to meet any obligations
under the consumer guarantees or
a statutory warranty, before asking
someone else to repair the fault.
However, if you refuse or fail to repair
the vehicle within a reasonable time,
the consumer can have the repairs done
elsewhere and seek to recover ‘reasonable
costs’ from you. The consumer does
not have to get your agreement or
provide quotes.
‘Reasonable costs’ for a repair would
be within the normal range charged
by repairers of that type of vehicle,
and include:
• the cost of the repair
• any other associated costs incurred
by having the vehicle xed elsewhere,
such as transport costs.
Example:
A consumer buys a used European
vehicle from a licensed dealer who sells
used vehicles of all makes. The vehicle
soon develops a problem that entitles
the consumer to have it repaired under
the consumer guarantees. However,
despite the consumer asking the dealer
to repair the fault, the dealer is unable
to repair it because they only have
expertise to repair Japanese makes.
The consumer is therefore entitled to
take the vehicle to another repairer and
claim reasonable costs from the dealer.
A guide to Australian consumer law —Motor vehicle sales and repairs 33
Consequential loss
Consequential loss is the reasonably
foreseeable associated cost to a
consumer of a problem with products
or services. It is usually nancial but can
include other costs, such as lost time or
productivity.
A consumer can claim compensation
for consequential loss from a dealer
or independent repairer who failed
to comply with one or more of the
consumer guarantees. The loss or
damage must have been reasonably
foreseeable as a result of the failure
to comply with the relevant consumer
guarantee.
Dealers and independent repairers do not
have to pay for losses or damages:
• that are not caused by their conduct
or the products they supplied, and
• that are caused by something
completely independent of their
business, after the products left
their control.
Compensation should put the consumer
in the position they would have been in
if the products or services had complied
with the consumer guarantees.
Example:
A consumer was driving her new four-
wheel-drive vehicle when the engine
started smoking, then burst into ames.
The cause of the re was investigated
and determined to be the result of a
manufacturing defect.
Although the driver escaped without
injury, the vehicle and its interior
were severely damaged. The re also
destroyed the consumer’s wedding
dress, which she had placed on the
back seat.
As the cause of the re was a
manufacturing defect and this
occurrence amounted to a major failure
to meet the consumer guarantees,
the consumer was entitled to choose
a refund or replacement for her
vehicle. She was also entitled to claim
compensation for consequential loss
from the vehicle’s dealer for the cost of
her wedding dress as it was reasonably
foreseeable that any personal
belongings that were in the vehicle
would also be damaged.
For more information on consequential
loss, see Consumer guarantees: a guide
for businesses and legal practitioners,
available from the Australian Consumer
Law website.
34
Novated leases
A novated lease is a three way agreement
between an employer, employee and
leasing company. The employee leases
a vehicle from the leasing company,
and the employer agrees to take on the
employee’s obligations under the lease.
Either the leasing company buys the
vehicle from the dealer or the consumer
buys the vehicle, transfers it to the leasing
company and then leases it back through
the novated leasing agreement.
Any rights or remedies under the
consumer guarantees belong to the
person acquiring the vehicle, even
though they may not have the direct
benet of any remedy (such as a refund,
replacement or repair).
However, where the person acquires
the vehicle for the purpose of re-
supplying it, the person would not
have any rights under the consumer
guarantees and would have to pursue
alternative remedies, if any, under the
contract or the state or territory sale of
goods legislation.
Resupply includes a sale, exchange, lease,
hire or hire-purchase of the vehicle.
Resupply may not occur where a
consumer acquires a vehicle and
subsequently transfers title to the leasing
company without consideration. In that
case, the consumer may still be able to
seek a remedy against the dealer for a
breach of the consumer guarantees.
Vehicles purchased on credit
A consumer (whether an individual or a
company) who buys a vehicle on credit
has the same rights under the consumer
guarantees as someone who has
paid cash.
If the consumer purchased the vehicle
from a dealer, with the credit supplied by
a nance company, the rights are against
the dealer.
If the consumer purchased the vehicle
from the nance company, the rights are
against the nance company.
In both cases, if the consumer is entitled
to reject the vehicle and receive a
refund because of a major failure, the
consumer is also entitled to cancel the
nance contract.
The consumer should notify both the
dealer and nance company (as the
case may be) that they are rejecting
the vehicle.
The dealer or the nance company
(depending on who supplied the vehicle
to the consumer) will have to refund
the deposit, the value of any trade-in,
as well as any repayments on the loan.
The consumer may also be entitled to a
refund of any interest paid on the loan
for the period they were unable to use
the vehicle.
The terms and conditions of the nance
contract may require the consumer
to pay certain fees and charges upon
termination of the contract.
A guide to Australian consumer law —Motor vehicle sales and repairs 35
If nance has been arranged through
a linked provider, both the dealer
and nance company may be jointly
responsible for returning the amount of
any such fees or charges to the consumer.
A linked credit arrangement is where
the dealer supplies the vehicle to the
consumer either directly or by requiring
the consumer to collect it from a nance
company with which the dealer has a
contract or arrangement.
If the nance company is not a linked
credit provider for the dealer, the
consumer may be able to recover
any termination fees or charges as
consequential loss only from the dealer.
Minor failures with a vehicle purchased
on credit
For minor failures with a vehicle
purchased on credit, the dealer will
ultimately be responsible for xing the
problem. Consumers should not stop
making payments on their credit contract
while the vehicle is being xed. This could
result in penalty interest or late payment
fees, or the nance company taking steps
to repossess.
36
BUSINESSES AS CONSUMERS
Under the ACL, a business has certain
consumer rights when it purchases
products or services. You cannot refuse
a remedy to a customer simply because
their purchase was made for or on behalf
of a business.
A business is protected by consumer
guarantees if it buys:
• products or services that cost up to
$40 000
• products or services that cost more
than $40 000 and are of a kind
ordinarily acquired for domestic,
household or personal use or
consumption
• a vehicle or trailer primarily used to
transport goods on public roads.
However, the consumer guarantees will
not apply if a business buys products to
resell or transform into a product to sell.
Example:
A small business owner buys a motor
scooter costing $3000 to make
deliveries for her business. She tells the
dealer she wants it to be able to carry
up to 40 kgs on its carry rack, and he
tells her it can.
However, when she takes delivery of the
scooter and reads the owner’s manual,
she discovers it is not t for the purpose
she had specied to the dealer. She
takes it back and seeks a refund so she
can buy another, more suitable vehicle.
The small business owner can rely on
the consumer guarantees for a remedy
to this problem. However, if she had
bought the scooter to resell to a
consumer, she would not be able to rely
on the consumer guarantees.
Where a product is not ordinarily
acquired for personal, domestic or
household purposes, liability for failure to
comply with a consumer guarantee can
be limited by contract to one or more of
the following:
• replacement of the product or the
supply of an equivalent product
• repair of the product
• payment of the cost of replacing the
product or acquiring an equivalent
product
• payment of the cost of having the
product repaired.
A guide to Australian consumer law —Motor vehicle sales and repairs 37
CONSUMER PROTECTION
AGENCIES
State consumer protection
agencies
Your local consumer protection agency
can help you with your consumer rights.
They may also be able to assist you with
any other issues you have with goods or
services generally.
Australian Capital Territory
Access Canberra
GPO Box 158
Canberra ACT 2601
Telephone: 02 6207 3000
Australian Capital Territory: Access
Canberra website
New South Wales
NSW Fair Trading
PO Box 972
Parramatta NSW 2124
Telephone: 13 3220
New South Wales: Fair Trading website
Northern Territory
Northern Territory Consumer Affairs
PO Box 40946
Casuarina NT 0811
Telephone: 1800 019 319
Northern Territory: Consumer Affairs
website
Queensland
Ofce of Fair Trading
GP O B ox 3111
Brisbane QLD 4001
Telephone: 13 QGOV (13 74 68)
Queensland: Ofce of Fair Trading
website
South Australia
Consumer and Business Services
GPO Box 1719
Adelaide SA 5001
Telephone: 13 1882
South Australia: Consumer and Business
Services website
Tasmania
Consumer, Building and
Occupational Services
PO Box 56
Rosny Park TAS 7018
Telephone: 1300 654 499
Tasmania: Consumer, Building and
Occupational Services
Victoria
Consumer Affairs Victoria
GPO Box 123
Melbourne 3001
Telephone: 1300 55 81 81
Victoria: Consumer Affairs Victoria
website
Western Australia
Department of Mines, Industry Regulation
and Safety
Consumer Protection Division
Locked Bag 100
East Perth WA 6892
Telephone: 1300 30 40 54
Western Australia: Department of Mines,
Industry Regulation and Safety (Consumer
Protection) website.
38
ACCC and ASIC
You can nd more information and other
resources about the Australian Consumer
Law on the ACCC and ASIC websites. To
report a problem use their online forms.
The ACCC and ASIC do not provide
dispute or complaint resolution services.
Australian Competition and
Consumer Commission
GPO Box 3131
Canberra ACT 2601
Telephone: 1300 302 502
Australian Competition and Consumer
Commission website
Australian Securities and
Investments Commission
PO Box 9827
(in your capital city)
Telephone: 1300 300 630
Australian Securities and Investments
Commission website
Published by The Australian
Consumer Law.
