The loop Buy
What is a business owed when it buys office furniture?
A business buying an office's worth of furniture is not outside the consumer law. It is inside it when the purchase meets one of the ACCC's conditions, and then the guarantees, the remedies, and a path through NSW Fair Trading and NCAT all follow the order.
General information from the ACCC, the NSW Government, NCAT and the Australian Consumer Law. It is not legal advice.
Who counts as a consumer
The ACCC's plain statement is that a business can be a consumer too. A product or service a business buys is covered by the consumer guarantees if it meets at least one of three conditions: its price is under $100,000 including GST; it is the kind of product or service people commonly buy for personal, domestic or household use; or it is a vehicle or trailer used mainly for carrying goods on public roads. The NSW Government's consumer page states the same test for goods and services bought for business use.
The threshold moved. The ACCC's consumer guarantee guide records the change: for anything supplied from 1 July 2021, the threshold amount rose from $40,000 to $100,000. The Act itself still carries the lower figure in its text, with a power to prescribe a greater amount in its place, which is how the $100,000 now applies.
Two edges are worth marking before the furniture arrives. A product bought for re-supply, for use or transformation in production or manufacturing, or to repair or treat other goods, is not covered even when it passes a condition. And the onus sits with the person who denies the buyer is a consumer: if it is alleged in a proceeding that someone was a consumer, the law presumes they were one unless the contrary is established.
Three purchases, run through the test
| The purchase | The condition it meets | Where that leaves the buyer |
|---|---|---|
| A single desk at $600 | It costs less than $100,000 including GST. | The guarantees attach: a business is a consumer for this purchase. |
| A fit-out at $120,000, desks and all | The price test fails. The guarantees still attach if the furniture is a kind of thing people commonly buy for personal, domestic or household use. | Otherwise, the guarantees do not attach on this purchase. |
| Ten vans for the delivery team | Vehicles and trailers used mainly to transport goods on public roads are covered however much they cost. | The guarantees attach to the vehicles, whatever the invoice total. |
What the guarantees promise
Once a purchase is inside the guarantees, the goods carry a set of promises. They must be of acceptable quality: safe, durable, free from defects, acceptable in appearance and finish, and doing everything products of their kind are commonly used for. They must fit any purpose the buyer disclosed to the seller, or that the seller's own advertising or advice suggested them for. They must match their description, whether it was written or spoken, and match any sample or demonstration model they were bought on. Any extra promise the business or manufacturer made about quality, condition or performance has to be honoured. The manufacturer or importer must keep spare parts and repair facilities available for a reasonable time after purchase, unless the buyer was told at the time that they would not be.
Where the order included services, such as assembly, those services carry their own guarantees: they must be carried out with due care and skill, be reasonably fit for any purpose the buyer made known, and be supplied within a reasonable time when no time was fixed. One service is carved out and worth knowing: services to transport or store goods for business purposes are not covered by the consumer guarantees at all.
A major failure, a minor one
What the buyer can ask for depends on how serious the problem is. A product or service has a major problem when it is unsafe, or creates an unsafe situation; is substantially unfit for its specific purpose and cannot easily be fixed in a reasonable time; would have stopped someone buying it had they known; or is significantly different from the sample or description. A product also has a major problem when it cannot be used for its normal purpose, or for another purpose the buyer told the seller about before buying, and cannot easily be fixed within a reasonable time.
On a major problem the buyer of goods chooses between a refund and a replacement of the same kind of product, and a refund is the full amount paid, with no deduction for the use the buyer has had. A buyer can also keep the product and be compensated for the drop in value the problem caused. On a major problem with a service the buyer can cancel the contract and get a refund, or keep the contract at a lower price that reflects the problem. The refund may not be a full refund, as the buyer needs to pay a reasonable amount for any work already completed and as expected.
A minor problem works the other way: the business must put it right with a free repair, and does not have to offer a refund or replacement, though it may choose to. The business is entitled to assess the product first. If the free repair does not come within a reasonable time, or the problem cannot be fixed, the buyer can have it repaired elsewhere and claim the reasonable cost back, take a replacement or refund instead, or recover compensation for the drop in value below the price paid. When it processes a replacement or refund, the business can consider: time since purchase, the type of product, how it was likely to be used, how long it could reasonably be expected to last, and the use it could reasonably be expected to tolerate.
What a contract cannot take away
The guarantees are not, in general, a matter of contract terms. Under section 64 a term is void to the extent that it purports to exclude, restrict or modify the guarantees, or the exercise of a right conferred by them, subject to the exception in section 64A below; the ACCC's general line is that the rights cannot be taken away by anything a business says or does. It also calls it illegal to rely on policies or terms that deny these rights, with a no refunds sign as its example. The exception in section 64A covers goods and services other than those of a kind ordinarily acquired for personal, domestic or household use or consumption. For such goods, a term is not void merely because it limits the supplier's liability for failing to comply with a guarantee (other than a guarantee under section 51, 52 or 53) to one or more of: replacing the goods or supplying equivalent goods; repairing the goods; paying the cost of replacing the goods or of acquiring equivalent goods; or paying the cost of having the goods repaired. For such services, a term is not void merely because it limits the supplier's liability for failing to comply with a guarantee to supplying the services again, or paying the cost of having the services supplied again. Neither limit applies if the buyer establishes that it is not fair or reasonable for the supplier to rely on the term.
Where a dispute goes in Sydney
If a complaint goes to NSW Fair Trading, it reviews the complaint and decides how best to resolve it: it may give the buyer information to help settle it, record the issues for future compliance work, or contact the other party to try to resolve the dispute.
NCAT is where a consumer claim can be heard and decided, up to the value of $100,000. It can order payment of money, a fix or replacement of faulty goods, the supply of services, the delivery of goods, and a refund with the goods returned. Where a business is not happy with a consumer guarantee direction from NSW Fair Trading, it can apply to NCAT for a redetermination, within 28 days of the supplier being notified of the direction.
The time limits are set. An application has to be made within three years of the cause of action arising, and the goods or services must have been supplied within 10 years. The other party has to be named correctly: a claim against a business or company needs its correct legal name and address for service. The first listing is for conciliation and hearing.