Under the Australian Consumer Law, certain consumer guarantees apply automatically, including that the supplier has the right to sell the product (clear title). The seller must ensure that no one will try to repossess or take back the product - for example, if it was stolen or sold without the owner's consent - and that there is no money owing on the product.
If a product is sold without clear title, the consumer is entitled to a remedy. The type of remedy depends on whether the problem is major or minor.
There is a major problem if a reasonable consumer would not have bought the product if they known beforehand that there would be no clear title.
Remedies for major problems
Consumers can choose whether to:
- reject the product and choose a refund or replacement, or
- keep it and accept compensation from the seller for any drop in value.
The problem is not a major problem, for example, if the supplier can fix the defect in title within a reasonable time.
Remedies for minor problems
The store chooses whether to:
- provide a replacement that is identical, or of similar value
- fix the issue within a reasonable time, or
- give a refund.
If products are sold with limited title, any other person with ownership rights – for example, a person owed money by the previous owner – can ask a court for permission to take the product back from the consumer. This happens most often when products are sold from deceased estates. While alive, the person may have pledged the products as security. People owed money by the deceased sometimes try to repossess the products after they were sold as part of the deceased estate.
Undisturbed possession of products
A supplier guarantees that no one will try to repossess or take back products bought by a consumer, or prevent the consumer from using those products.
No undisclosed securities on products
A supplier guarantees that products bought by a consumer are free of any hidden securities or charges and will remain so.
When this guarantee does not apply
This guarantee does not apply if:
- the consumer has not met their obligations under the sale, hire or lease contract
- before the sale, the supplier told the consumer that another person had a security interest over the product
- the consumer hired or leased the product and the hire or lease period has ended
- at the time of buying the product, the consumer was aware the supplier only had limited title
- the security or charge was either:
- placed on the product with the consumer’s permission
- brought to their attention in writing before they bought the product.
- the supplier can claim to have disclosed all known securities or charges over the product.