Implied conditions and warranties

The Trade Practices Act (and the Fair Trading Act), build automatic conditions and warranties into all contracts for the sale of goods and services to consumers. These conditions and warranties are 'implied' into the contract, which means you can assume that they will apply in addition to any express conditions and warranties agreed to as part of the contract. However, they only apply to the supply of goods or services to ‘consumers’.

The Trade Practices Act defines the word 'consumer' in s. 4B, which states that a person is a consumer if they:

buy goods or services for less than $40,000; or
buy goods or services for more than $40,000 but the goods or services are for personal, domestic or household use or consumption or consisted of a commercial road vehicle;

and they:

do not acquire the goods for the purpose of re-supply; and
do not use the goods in a production or manufacturing process in trade or commerce.

Consumers?

A farmer buys feed oats to fatten his prime lambs. He is ‘using up’ the oats in a production process in trade and is therefore, for the purpose of that transaction, not a consumer, regardless of the purchase price (see the Trade Practices Act s. 4B).

A farmer buys a ute to deliver his goods to a market is a consumer.

A business woman buys $10 000 worth of carpet for her business premises. As the cost of the carpet is less than $40 000, she is a consumer under the Trade Practices Act for the purpose of that transaction. It is irrelevant that the carpet is not for ‘personal, domestic or household use’.

A farmer buys a tractor to be used on his farm is not a consumer.