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Phar Lap, pavlovas and consumer guarantees

Phar Lap, pavlovas and consumer guarantees

Many of my clients sell products to consumers in both Australia and New Zealand. That is always interesting – how do you know if you are complying with consumer guarantees law in both countries?

The Aussies have had a sort of beefed-up warranty provision in their Trade Practices Act for 35 years, which implies terms like merchantable quality into consumer contracts (a really transparent concept that consumers all readily understand – yeah right). But the Act gave Australians no clear remedies, and in any case, where terms are implied into a contract there is often confusion as to which other terms apply.

So it has quietly been eyeing up our world-leading Consumer Guarantees Act. My advice to clients over the years is that if your warranties comply with New Zealand warranty law, they will comply with Australian law, but not the other way around. Of course, Australia has a real problem when it comes to law reform like this – it has a Federal government plus all the states and territories to deal with.

But now there is a new Federal law, a schedule to the Trade Practices Act, called the Australian Consumer Law. It has all that country’s existing Fair Trading Act provisions plus a lot of other consumer law all bundled together, and 47 new provisions – our Consumer Guarantees Act. It has only minor changes, some of which we are contemplating ourselves, but is fundamentally the same. Non-contractual guarantees, clear remedies and all the bells and whistles that make our Consumer Guarantees Act work. It comes into effect in January next year.

I recently attended a conference in Perth entitled “Where in the world is Australian consumer law?” A good question, I thought. I sat with consumer law academics and regulators, and came away very proud of the way our consumer law – and our community - operates.

Take product safety. When you have a 20 minute debate with a law professor untangling why our product safety system works and theirs doesn’t, it gives you an insight into more than just law. His argument went like this: Theoretically, because we have accident compensation (we are the only country to do this) and therefore can’t sue someone if a product is unsafe, there is no incentive for the manufacturer of an unsafe product to take it off the market. Therefore, we need a statutory provision requiring all manufacturers and suppliers of unsafe products to notify the regulators (the Ministry of Consumer Affairs and the Commerce Commission) about the product.

I puzzled over this, because in my long experience of dealing with consumer products and safety issues, every time I’ve run across a product safety issue, everyone - consumers, the medical profession, retailers, manufacturers, importers, ACC - jumps into action notifying the regulators. The non-regulators are just as important – Consumer magazine,Fair Go and the media.

“But what’s the incentive?” he asked. “Dead kids” I replied, trying not to be too terse. “That wouldn’t happen here,” he said. I’d like to think he was wrong, but other comments highlighted the fact that unlike Australia, in our small country with two degrees of separation between people, no-one feels constrained about picking up the phone and passing on important information.

Now that Australia has the guarantee of acceptable quality, with its safety element giving consumers unequivocal and direct rights to sue a manufacturer, there will be a pretty good incentive to pull unsafe products from the market, I suspect.

So where in the world in Australian consumer law? Well, it has just moved quite a few kilometres east.

Rae Nield is a solicitor specialising in marketing law. This article is intended for general information, and should not be relied on as specific legal advice. You should consult a lawyer for advice relating to your own specific legal problems. Rae Nield can be contacted at raenield@marketinglaw.co.nz.


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