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  • Writer's pictureArida Lawyers

Guide to consumer guarantees for motor vehicles

Updated: May 11, 2023

Understanding your responsibilities under Consumer Law can be a complex journey. Businesses often grapple with their duties under the Australian Consumer Law (ACL), while consumers may find it challenging to comprehend, identify, and enforce their rights under the same law.

At Arida Lawyers, we aim to simplify this complexity. In this article, we explore critical aspects of the ACL, specifically focusing on manufacturers' and dealerships' obligations to provide redress to a "consumer" when supplying a defective motor vehicle.

Consumer Guarantees: An Overview

The ACL outlines various consumer guarantees that apply to agreements related to the sale of motor vehicles. When a motor vehicle is supplied to a consumer in trade or commerce, it typically attracts consumer guarantees (subject to certain exceptions) outlined in the ACL. If these guarantees are breached, the consumer has the power to exercise their rights under the law.

These consumer guarantees include acceptable quality, fitness for the intended purpose, corresponding with the sample or demonstration model, and absence of inherent safety defects. If these guarantees are breached, the supplier and or manufacturer may be required to offer redress, including a repair, replacement, refund, or consequential damages such as consequential monetary loss (including, but not limited to, hire car fees, loss of income and interest paid on finance). However, consequential losses must be reasonably foreseeable and closely related to the contravening conduct for the consumer to recover this loss.

To qualify as a "consumer" under the ACL, one or more of the following conditions must be met:

  • The purchase price of the motor vehicle is less than $100,000; or

  • The motor vehicle is typically used in a domestic, household, or personal setting.

  • Certain other exceptions also apply.

How does the ACL impact manufacturer liability for motor vehicles?

The Australian Competition and Consumer Commission (ACCC) recently declared its Compliance and Enforcement Priorities for 2021. It has spotlighted the motor vehicle and caravan industry as areas where it aims to "empower consumers" and "improve industry compliance with consumer guarantees". This follows several rulings against well-known car brands and "lemon" caravan scandals.

The ACL defines a manufacturer as an entity that makes or assembles the goods, imports goods when no Australian-based manufacturer exists, affiliates with their brand identity, or presents themselves as the manufacturer to the public.

If a manufacturer supplies a vehicle or caravan that presents with a major failure (including multiple minor defects and safety defects that cannot be repaired or repaired within a reasonable period of time), the manufacturer and/or supplier is required to provide a remedy to the consumer, including a full refund (or market value of the vehicle), replacement, and consequential losses.

Even if the purchase of the motor vehicle and/or caravan doesn't satisfy the requirements of a consumer under the ACL, other remedies are available under the ACL, Fair Trading Act and common law.

The Way Forward

At Arida Lawyers, we can assist consumers disputes relating to the supply of the defective motor vehicles. Alongside our comprehensive consumer law services, we can provide assistance and legal representation in contract law and debt recovery matters.

Contact us today at 1300 146 390 or email to schedule a free consultation.

This article provides general information relevant to our expert services. It does not constitute legal advice and should not be relied upon as such. For personalised legal advice, please contact us for a free initial consultation.

Liability is limited by a scheme approved under Professional Standards Legislation.

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