Retailers, beware of implied conditions!

Retailers, beware of implied conditions!


When a retailer purchases from a wholesaler or a manufacturer the retailer must ensure that they know the limitations of the goods purchased.  If the goods are faulty then the retailer may be liable to any subsequent buyer.

Whenever a retailer sells goods to a consumer there is a sale agreement and conditions are implied into that agreement.  Consumers may make use of these conditions to successfully claim against a retailer.

The stakes can be high!  If a product is not fit for a purpose it may cause damage and necessitate rectification works the cost of which may go well beyond the cost of the goods supplied.  A glue that doesn’t stick may cost the user more than a tube a glue.

What kinds of conditions may be implied into a contract between a retailer and a consumer?

In some instances a supplier may wish to undertake their own testing in order to ensure that they are not exposed to risk.

Fit for purpose

If a retailer is told, or it is implied that goods to be purchased by a consumer will be used for a particular purpose there is a condition implied into the contract that the goods will be suitable for that purpose.  This is so, even if the purpose is not a purpose for which the goods would normally be used. See section 55 of the Competition and Consumer Act 2010, Schedule 2.

The most obvious way to rebut this implied condition is to show that the consumer did not rely upon, or it was not reasonable for the consumer to rely upon the skill and judgement of the supplier.  The consumer may for instance have been obtaining expert advice from some third party who was better placed than the retailer to determine if the goods are suitable for the purpose.

 Quality

There is an implied condition in section 54 of the Competition and Consumer Act 2010, Schedule 2 that good are of acceptable quality.  In making this determination the following matters are considered:

(a)  the nature of the goods; and

(b)  the price of the goods (if relevant); and

(c)  any statements made about the goods on any packaging or label on the goods; and

(d)  any representation made about the goods by the supplier or manufacturer of the goods; and

(e)  any other relevant circumstances relating to the supply of the goods.

Obviously defects which are known or ought to be known by the consumer are not caught by this implied condition.

This implied condition places the onus on the retailer to know the quality of goods sold.

RIBA Business Lawyers

Strength Through Knowledge

Franchising, Leasing, Acquisitions

Head office:  34 Duporth Avenue, Maroochydore, Sunshine Coast, Queensland.

Maroochydore:  07  54791488

Brisbane:  31032115

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