Australia's leading provider of affordable DIY legal kits
Call our Customer Care Specialists on 1300 728 200
   
Legal Articles
The provider of this information is AussieLegal

CONSUMER PROTECTION

ENTERING INTO A CONTRACT

In simple terms a contract is a promise or set of promises which the law will enforce. Over many years, courts have developed principles which tell us whether there is a legally binding or enforceable contract in existence. In a contract for the sale of goods or services there is a legal agreement between you and the person from whom you are purchasing goods or services whereby they agree to sell you those goods or services and you agree to pay for them at an agreed price or an agreed rate. 

How do you know you have entered into a contract?

An agreement for sale of goods or services arises where the following elements are present:

  1. An offer and an acceptance of that offer. A few examples of how this happens in practice:
  • When you are purchasing goods in a shop the offer is made not by the shopkeeper displaying the goods but when you take the goods to the checkout and offer to buy them.
  • Generally, circulars and catalogues do not constitute offers but rather you sending in an order form is the offer.
  • At auctions, a bidder makes the offer and the offer is accepted by the auctioneer with the fall of the hammer.
  1. Consideration. This element of a contract does not mean that you have to have given consideration to whether to make the offer or to accept an offer! Consideration is a term which simply means that each of the parties has to give something for what they receive under a contract. For example, you get the goods and the seller gets your money. It is not always necessary that money must actually change hands before a contract comes into existence: often the consideration is just a promise to pay and that is sufficient. Accordingly you cannot rely on the fact that you have not actually paid for the goods as a basis for saying that there was no contract.
  2. An intention to be legally bound. Generally where there are agreements which relate to family, social or domestic relationships courts will presume that there is no intention to create a legally binding agreement. In commercial situations however, courts will presume that this intention existed.
  3. Legal capacity. Sometimes courts will not enforce contracts entered into by people who are mentally unable to understand what they are doing. Persons who are under 18 are said to lack the capacity to enter into some types of contracts but they can be held to other types of contracts.
  4. Requirement of writing. The general law position is that contracts do not have to be in writing to be enforceable. Parliament has however created certain laws which require writing in some circumstances. For example, if you were going to sue someone over a contract involving the sale of land you would need to have some evidence of the agreement in writing signed by the other person.

Even though it is not generally necessary to have a contract in writing, it is generally advisable when larger purchases are involved and especially where a contract is for the provision of services.

The contract should record the following details;

  • A description of the goods or services to be provided.
  • The price.
  • If a contract for services, when the services will be provided and the services will be completed.
  • If goods are to be supplied when they will be delivered.
  • If deposits are required how much deposit is paid.
  • If the contract is a lay-by contract, what payments will be required and over what period the goods can be subject to the lay-by.
  • The seller's name, address and phone number.
  • Your name, address and phone number.
  • The seller's signature and your signature.
  • Any special conditions of sale such as whether the seller will install the goods or whether the seller will make any additions or alterations to the goods as part of the sale including any extras you have requested.

RIGHTS UNDER A CONTRACT

The general law of contracts derived from the decisions of courts over the years gives you some rights if there is a breach of a term of the contract. The general law also may also give you some rights if the seller has engaged in certain types of conduct such as fraud.

There is also legislation called the Sale of Goods Act which may give you additional rights under a contract in some circumstances. The Act does this by saying that in certain types of contracts extra terms will be implied or read into the contract by courts unless the contract expressly says that these implied terms are excluded.

Some of these implied terms are:

  • If you sell goods, you are promising that you own them in the first place and have the right to sell them.
  • That the goods are free from any debt or charge. You would not be able to sell something which still had money owing on it unless the buyer agreed to accept that before they entered into the contract.
  • That where you are selling goods by description, that is where the buyer has not seen the goods, they must match the description. Similarly, if the buyer has bought something on the basis of a sample, the goods supplied must match the sample.
  • If a consumer makes it known to a seller the purpose for which they want to buy goods, there is an implied term that the goods must be fit for the that purpose.
  • That the goods must be of "merchantable quality". This means that they have to be fit for the purpose for which such goods are usually bought.

What rights do I have if a term of the contract has been breached?

If a contract has been breached, the general law of contract provides a range of possible remedies, depending on how important the term was to the making of the contract.

It may be possible for you to:

  • Terminate the contract. An example of this would be where you refuse to accept goods delivered to you on the basis that they are defective. Document 3 provides information about your rights when returning goods.
  • Obtain damages. An example of this would be where you have incurred some expense in addition to the price of the goods in having them repaired.
  • Obtain specific performance. This means that the court may order the other party to carry out the things they promised to do under the contract.

RETURNING GOODS

When can I return goods?

You can return something for either a refund of the monies you paid, repair of the goods or replacement of the goods if the goods are defective, the goods are not what was described by the salesperson or in advertising, both generally or at the place where you purchased the goods, or you let the salesperson know why you wanted the goods and the goods are not fit for the purpose you told the salesperson you wanted them for.

You do not have a right to a refund because you bought goods which are the wrong size or you changed your mind about the colour or decided you just do not like the goods any more. Some stores will give you a refund or exchange the goods for other goods or give you a credit note. They are not obliged to. 

What if I return the goods and I only want a cash refund?

If the goods were faulty or inaccurately described or not suitable for the purpose you made known to the salesperson you can insist on a cash refund and you do not have to accept a credit note even if the store has a "No Refund" sign. Do not be deterred by no refund signs as no refund signs only apply if you bought the wrong sized colour or changed your mind. They do not apply when the goods are faulty, improperly described or not fit for the purpose which you told the salesperson you were buying them for. 

How long can I keep the goods for before I demand a refund?

This depends upon the nature of the goods. For instance it may be considered unreasonable to purchase an article of clothing to wear and wash it numerous times and then to ask for a refund because stitching comes loose or the like. Each case needs to be decided on its merits but there is a difference between a defect and fair wear and tear. The nature of fair wear and tear depends upon the type of good purchased and the use to which it is put. It also depends upon the type of materials of which the goods are made.

In some cases goods may need small repairs. If the seller is able to make those repairs without difficulty, the seller may be able to insist on repairing the good rather than replacing it. 

PRODUCT SAFETY AND PRODUCT INFORMATION

A significant part of consumer protection law surrounds the schemes developed by state and federal Parliaments dealing with the prescription of standards.

For example, the federal Trade Practices Act gives the minister certain powers of regulation, including:

  • The prescription of product safety standards.
  • The notification that particular types of goods are unsafe.
  • The prescription of product information standards.
  • The imposition of permanent bans on particular classes of goods.
  • Issuing by the minister of orders that suppliers of particular classes of goods take specified action with respect to such goods, including the recall, repair, replacement of such goods, or the refund of the price paid.
  • The giving of notice that goods of particular types are subject to voluntary recall.
  • Investigation and supply of information to government authorities investigating the possibly dangerous or defective nature of goods, and the issue of public warnings pending investigation.

Once a standard is applied to goods or they are subject to a ban they must not be supplied.

If you have been supplied with goods which contravene a consumer safety standard and you suffer loss or damage which would not have occurred if the standard had been complied with, you may have the right to compensation.

You may also be entitled to recover from the supplier any money paid for the goods or a court can order that the goods be repaired or modified. 

The Fair Trading Tribunal

The Fair Trading Tribunal replaced the Consumer Claims Tribunal from 1 March, 1999. The purpose of the Tribunal is to resolve problems of claims by consumers against traders quickly and cheaply.

Different types of consumers may bring claims including natural persons, firms, small proprietary companies, bodies corporate under strata title schemes, incorporated associations, unincorporated bodies whose members are associated for a common purpose.

A consumer claim means claims by consumers, arising from a supply of goods or services to the consumer, whether under contract or not, for:

  • Payment of a specified sum of money
  • Supply of specified services
  • Relief from payment of a specified sum of money
  • Delivery, return or replacement of specified goods

The time limit for making a claim is three years from the date of supply of the goods or services or from the date on which they ought to have been supplied.

The Tribunal has a monetary limits: claims must be for amounts less than $25,000.

To have your claim dealt with by the Fair Trading Tribunal, you will need to complete the prescribed form and file the form with the Registrar or Clerk of the Tribunal and pay the appropriate filing fee. The Registrar then gives notice of the claim to the other party and every person who it appears from the claim form to have sufficient interest in the resolution of the dispute. A time and place is then given for the parties to attend the Tribunal to have the matter heard.

Legal representation is not generally permitted before the Tribunal. You may nevertheless wish to seek the advice of a lawyer in completing the claim form.

Once a dispute is resolved in the Tribunal, it is not possible to appeal the Tribunal's decision. 

Tell a friend about this information!
Enter their email address in the box below:

Print this page

Select another subtopic of this information

Need further information? Visit our legal forum where you can ask questions and search for similar topics.

Want to save money?

Check out our list of do-it-yourself legal kits.

Need formal advice?

Let us help you find a lawyer who specializes in your particular area of law.

Need further information?

Visit our legal forum where you can ask questions and search for similar topics.