ILAC FOR CONSULTATION - CONSUMER LAW ILAC 1\/2 Robert is renovating his home kitchen and decides to replace the old electric oven He buys a new gas

ILAC FOR CONSULTATION - CONSUMER LAW ILAC 1/2 Robert...

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CONSUMER LAW ILAC 1/2: Robert is renovating his home kitchen and decides to replace the old electric oven. He buys a new gas oven from Nice Guys, who deliver and install it for him. A few days later, Robert is cooking a roast dinner in the oven and it explodes, causing substantial damage to his house. Does Robert have any rights against Nice Guys under the Australian Consumer Law? ANSWER Issue: Under the Australian Consumer Law (ACL): 1. Can Robert sue Nice Guys for breach of the consumer guarantees regarding acceptable quality and fitness for purpose? 2. If so, what remedies will be available to Robert? Law Legislation - Competition and Consumer Act (2010) (ACL) ss3(1)(a), (b), (c) & (2): Definition - Consumer s54: Guarantee - Acceptable Quality s55: Guarantee - Fitness for Purpose s236: Damages Cases None applicable Application Robert is the consumer of Nice Guys based on the definition of consumer which stated in s3(1) as a person who acquired particular goods if the amount payable for the goods did not exceed $40,000; or the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption; or the goods consisted of a vehicle or trailer for use principally in the transport of goods on public roads (“Slide”, p7). The gas oven Robert bought from Nice Guys fits the second qualification as a “household use” application (“Facts”). On the other hand, according to section 3(2), a person is not a consumer if they purchase the goods for re-supply, or to use them in the course of production. In this case, Robert only uses the oven for cooking purpose (i.e: roast dinner) (“Facts) so section 3(2) does not apply. Because Robert is a consumer of Nice Guys, this means he has guarantees from the company applied to him. And in this circumstance, Robert can sue Nice Guys for breach of the consumer guarantees regarding acceptable quality and fitness for purpose. Firstly, section 54 states that goods must be of an “acceptable quality” having regard to the type of goods, the price paid and any other relevant circumstances. Meanwhile, section 55 states that goods must be fit for any “disclosed purpose”. A disclosed purpose can be made known to the supplier or the manufacturer either expressly or by implication (“Slides”, p9). However, when Robert uses the gas oven it explodes which proves it does not satisfy both guarantees (“Facts”). Conclusion
On the balance of probabilities it is likely the Federal Court will find that Robert does have an action against Nice Guys for breach of the consumer guarantees regarding acceptable quality and fitness for purpose. Robert is likely to be able to recover damages under s236. ILAC 2/2: Mr Smith decides to sell his hotel, The King’s Feet Hotel, which operates 160 poker machines. Mr Jones, a potential buyer, inspects the Hotel, counts 160 poker machines in the gaming room of the Hotel, and inspects the financial records.

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