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LEGAL “Breaches of these provisions can be significant for businesses. If the ACCC is successful in challenging your conduct, it could seek court orders.” disclosed purpose, and any purpose for which the supplier represents they are reasonably fit. • Guarantee relating to supply by description – goods that are supplied by description will correspond with that description. • Guarantee relating to supply by sample or demonstration model – goods that are supplied with reference to a sample or demonstration model must correspond with the sample or demonstration model in quality, state or condition. • Guarantee as to express warranties – that the supplier and manufacturer will comply with any express warranty they give in relation to goods. In addition to this, in relation to goods, there are guarantees that the manufacturer must ensure that spare parts and facilities for repair of the goods are reasonably available, guarantees as to title, undisturbed possession, and undisclosed securities. In relation to services, there are guarantees under the ACL in relation to the provision of services with due care and skill, that the services will be fit for a particular purpose, and in relation to a reasonable time for supply. Relevance of the ACL sections Section 18 of the ACL prohibits a person engaging in conduct that is misleading or deceptive, or likely to mislead or deceive. While this is very general, section 29(1)(m) of the ACL specifically prohibits a person making a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including the consumer guarantees). As a result, making blanket statements such as ‘no refunds’, or telling a consumer they are not entitled to a refund when, in fact, they may be entitled to one under the ACL, can fall foul of these sections. Similarly, contract clauses that seek to exclude liability in respect of fitness for purpose and warranties that goods are of merchantable quality and the like, are also liable to be found to be misleading and deceptive. This is the case even if they are prefaced with general wording such as ‘To the extent permitted by applicable law’. The recent Federal Court decision stands for the principle that this is too vague and will amount to an implied misleading statement that consumers do not have the remedies available for the guarantees that arise under the ACL. Breaches of these provisions can be significant for businesses. If the ACCC is successful in challenging your conduct, it could seek court orders such as: • Injunctive relief (a legal measure granted by the court to stop you from continuing to engage in the problematic conduct). • Orders for a penalty. • Order you to distribute corrective advertising and/or contact customers to notify them of your breach. • Orders for you to pay the ACCC’s costs of the proceedings. • Order you to put in place a compliance program, which may require all employees to comply with specific guidelines and/or training regarding marketing, together with reporting and auditing of that program by the ACCC. The penalties can be high. The maximum financial penalty for a corporation for a breach of section 29(1)(m) is the greatest of: • $10 million. • If the court can determine the value of the benefit that the corporation and its related entities have obtained directly or indirectly from the offence, three times the value of that benefit. • If the court cannot determine the value of the benefit, 10 per cent of the annual turnover of the corporation during the 12-month period ending at the month in which the body corporate committed, or began committing, the offence. Sole traders and other business structures aside from corporations are not immune. For a person other than a corporation the maximum penalty is now $500,000. Tips for avoiding misleading consumers about their rights under the consumer guarantees • Avoid statements such as ‘no refunds’. Blanket statements such as ‘no refunds’ or ‘final sale’ can be misleading, as they imply to a consumer that their rights under the consumer guarantees don’t apply. Suppliers and manufacturers cannot exclude their obligations under the consumer guarantees. • Train your frontline staff. It is important that all customer facing staff are aware of the consumer guarantees and how they apply to the products they sell. They are the first point of contact for a customer who may be having an issue with a product, and they need to be careful to ensure that the consumer is not misled as to what rights they have available to them. Staff training and internal returns and warranty policies can assist with consistent messaging to buyers of your products. • Check any terms and conditions or terms of sale. Terms and conditions should be reviewed to ensure they don’t imply to consumers that the consumer guarantees don’t apply to them. Often, terms and conditions from other jurisdictions will seek to exclude liability for such things as fitness for purpose, or merchantability, and such statements could be misleading to Australian consumers. About Lynne Lewis Lynne leads the firm’s Australian consumer law and brand practice with more than 23 years’ experience specialising in consumer law with emphasis on advertising law, consumer protection and brand development. About Megan Edwards Megan has extensive experience advising clients on legal issues affecting the marketing and sale of their products and provides advice should a dispute or complaint arise. About Bird & Bird Bird & Bird is one of the world’s leading international law firms advising industries where technology, regulation and intellectual property are driving change. With its strong Australian presence, clients enjoy global reach across various practice areas. AUG, 2020 RETAIL WORLD 73