MCCA Direct Marketing Model Code of Practice

Appendix 1: Summary of the statutory warranty scheme

Goods and services supplied through a distance selling technique have to comply with any statutory terms implied into contracts by State, Territory, and Australian Government legislation. Requirements in the States and Territories differ. Information from local consumer affairs agencies or legal advice should be sought about the requirements that apply.

The post-sale provisions in Division 2 of Part V of the Australian Government’s Trade Practices Act 1974 apply to distance sellers who supply goods or services to consumers and who are corporations or are trading interstate or within a territory. (The fair trading provisions of the Act also apply to persons using the post, telephone, television or radio to conduct their direct selling business.)

Under the Trade Practices Act, the seller must be entitled to sell the goods and the goods must:

• match any sample or description given to the consumer;
• be fit for any particular purpose made known by the consumer; and
• be of merchantable quality.

Merchantable quality means that the goods must be as fit for the purposes for which goods of that kind are usually bought as it is reasonable to expect in light of the relevant circumstances, including the price paid and any description given. This means that this condition may still be effective after an express warranty given by the manufacturer or supplier has expired.

If goods supplied do not meet the implied terms, then the consumer may return the goods and get a refund, provided that the goods are returned, or the supplier is notified, within a reasonable time of the consumer having the opportunity to inspect the goods. In all cases, the consumer is entitled to monetary damages for any loss or damage suffered as a result of the failure of the goods to meet the implied terms.

Under the Trade Practices Act, services must be rendered with reasonable care and skill and be fit for any particular purpose made known by the consumer, and any materials supplied as part of the service must be reasonably fit for the purpose for which they were supplied.

If services supplied do not meet the implied terms the consumer is entitled to damages.

Claims under these provisions can be enforced through State and Territory small claims or consumer claims tribunals, or through the courts.

Distance sellers who are also the manufacturer of the goods they sell should be aware of the provisions in Division 2A of Part V of the Trade Practices Act. These provisions give consumers a right to compensation from the manufacturer if there are not reasonable facilities for repairs or reasonable availability of spare parts, or for a failure to meet an express warranty. Legal advice should be sought about whether Division 2A applies to a particular business.

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