Chapter 7: Consumer goods and services

7.1 Common types of consumer debt 

A consumer is a person who purchases goods and services for personal or household use. Consumer activities include buying a new car, fridge or bike, hiring a plumber, or getting dental work done. A consumer will usually agree to pay a certain amount of money in exchange for the provision of goods or services. The money may be payable upfront, or at a future date. In legal terms, this type of transaction is called a contract. People often find themselves in debt because they’ve agreed to purchase more than they can afford, their circumstances change, or because the costs involved turn out to be more than they expected. 

Sometimes, you may disagree with a business about the terms of the contract or the quality of the goods or services delivered. There are special consumer protection laws, known as the Australian Consumer Law (ACL), that apply nationally. These laws regulate sales practices and provide guarantees and protections for consumers. Additionally, inexpensive dispute resolution options are available in NSW to help you resolve consumer disputes quickly and efficiently. 

This chapter explores key legal principals relating to contracts, consumer laws and alternative means of resolving consumer disputes. Understanding your rights as a consumer might help you avoid court action, reduce the amount you must pay or even get your debt wiped clean.

7.2 Careful consumers 

If you’re thinking of making a big purchase, you should keep the following in mind: 

  • be sure about what you want or need 
  • don’t let salespeople pressure you into signing up on the spot 
  • carefully read all the terms of a contract before you sign 
  • ask questions, or get legal advice, if you don’t understand terms in the contract 
  • don’t sign a document with blank spaces in it 
  • shop around for the best deal 
  • check the quality of goods or ask to see samples of previously delivered services 
  • keep a copy of any documents you sign 
  • keep a copy of receipts and itemised bills. 

You should be aware that payment of a deposit, or signing a document, may mean that you have entered into a legally binding contract. If you pull out before completion, you may need to pay a penalty (where provided for in the contract), or compensation for loss incurred by the other party. 

7.3 Contracts 

A contract is a legally binding agreement — which means that courts have the power to enforce the terms of a contract or order monetary compensation (damages) for breaches. When you purchase goods or services, you are entering a contract with the provider. In most cases, the fundamental laws of contract apply, as well as consumer protection laws that deal specifically with consumer products and services. It’s essential to have a basic understanding of these laws to protect yourself as a consumer.

What is a contract? 

A contract is essentially a formal agreement between two or more people or legal entities (such as businesses). For a contract to be valid, there are some standard features, including: 

  • Offer and acceptance — for example, when you hand over goods at a cash register, you are making an ‘offer’ to the retailer to buy the goods at the advertised price, and taking your money constitutes ‘acceptance’ of the offer by the retailer. 
  • Intention to be legally bound — this element is often missing in non-commercial arrangements between family members or friends. 
  • Consideration in exchange for a promise — generally, each party must agree to give some benefit (consideration), in return for the other party’s ‘promise’ to do something (for example, I will promise to fix your car, if you promise to pay me $1000). 
  • Certainty of terms — the terms of the agreement must be complete, concrete and precise. 
  • Legal capacity to enter a contract — usually, you must be over 18 to enter a contract and have the mental capacity to understand the nature of the agreement. 
  • Genuine consent — parties must freely and voluntarily agree to enter the contract. 
  • Formal requirements met (where necessary) — contracts can exist in oral or written form. However, some types of contracts will only be valid if certain ‘formalities’ are met (for example, the purchase of land has specific documentary requirements). 
  • Not contrary to law — an object or purpose of a contract that is contrary to the law will not be enforceable. 
  • Privity of contract — only parties to a contract can enforce a contract.

Legal capacity to enter contracts 

Intellectual disability and mental illness 

A person with an intellectual disability or mental illness is legally capable of entering a binding contractual agreement. However, they may have the contract set aside if they can show that: 

  • they were incapable of understanding the nature of what they agreed to at the time they entered the contract; and 
  • the other party knew, or ought to have known, of the disability/condition. 

The required level of understanding varies, depending on the nature and complexity of the contract. For example, a person might understand a contract to buy groceries, but not a mortgage agreement. Even where a contract is set aside due to incapacity, the person is still liable to pay a reasonable price for any goods or services that are ‘necessities’ (for example, groceries). These rules also apply where a person is intoxicated at the time of entering a contract. 

Contracts with minors 

People over 18 can legally enter contracts. People under 18 are called minors. Minors can still enter legally binding contracts, provided that the contract is for their benefit, and they understand that they are entering a legally binding arrangement. A minor can ‘repudiate’ (end) the contract if these requirements are not met. If a minor believes an unfair or exploitative transaction has occurred, they can make a complaint to NSW Fair Trading, who will try to resolve the matter. If that is unsuccessful, they can make an application to the NSW Civil and Administrative Tribunal (NCAT). 

Bankruptcy and contracts 

Bankrupts must inform the other party of their bankruptcy where they seek to obtain credit, or purchase goods and services, over certain set limits. Apart from this restriction, they retain their capacity to enter contracts. 


Sometimes a contract will not be upheld because there is a lack of genuine consent from one or more of the parties. Lack of real consent may arise in cases where there is a mistake of fact as to the circumstances, where there is misrepresentation by one party as to a critical fact or where there is undue influence, duress or other forms of ‘unconscionable’ conduct. If you think any of these situations might apply to you, and you want to get out of a contract, you should consider getting legal advice from a community legal centre or Legal Aid NSW. The Australian Consumer Law offers certain protections to consumers where contracts are unfair or unconscionable. 

Terms of the contract 

The counter promises that make up a contract are called the ‘terms’ of the contract. The terms of a contract may be express or implied, written or oral. Standard terms in contracts include conditions, warranties, exclusion clauses and cooling-off periods. A careful consumer should understand the terms of any contract they enter. 

Express and implied 

Terms of a contract may be express or implied. Explicit terms in an oral or written contract are called ‘express’ terms. There are other terms in contracts that are ‘implied’ due to law and custom. For example, consumer protection legislation adds implied terms to consumer contracts, to the effect that goods and services will be of a certain quality, fit for purpose and so on. 

Written and oral 

Terms of a contract may be either written or in oral form, or a mixture of both. Ideally, written contracts will be signed by the parties to the contract. You can still be held to written terms, even if not signed, if the other party can show you were aware of the terms or that they took reasonable steps to draw your attention to the terms.

Conditions and warranties 

A ‘condition’ is a term in the contract that is vital for the operation of the contract. Breach of a condition will entitle the other party to terminate the contract. A ‘warranty’ is a less critical term, where a breach can only result in compensation for loss or damage. 

Exclusion clauses 

An exclusion clause is one that limits liability for defects in goods or damage done to a consumer’s property. Be careful to check for these clauses in contracts. If you sign a contract with an exclusion clause, you are bound by it. In cases where there is a written but unsigned contract you will still be bound if you knew about the term, or it was brought to your attention before the contract was made. The Australian Consumer Law implies some ‘guarantees’ in contracts — for example, goods must be of acceptable quality and fit for purpose. Retailers cannot contract out of these guarantees, but they can limit their liability for breach of these guarantees (provided the limits are fair and reasonable). 

Cooling-off periods 

A cooling-off period is a set amount of time, after a contract is signed, for you to change your mind without penalty (or with minimal penalty). There is usually no ‘right’ to a cooling-off period, but if there is one and you do change your mind, be sure to act quickly to inform the other party of your decision (preferably in writing — so you have proof). Cooling-off periods commonly apply in real property transactions (five days) and where motor vehicles are purchased on credit (one day) unless extended or agreed otherwise. See section 66S of the Conveyancing Act 1919 (NSW) and section 80 of the Motor Dealers and Repairers Act 2013 (NSW).

Ending a contract 

You can terminate a contract in various ways, including fulfilment of the terms, agreement to end the contract, frustration, repudiation or breach. Early termination of contracts may result in the defaulting party being liable for loss suffered by the innocent party. 

Contracts will commonly come to an end in the following circumstances: 

  • Performance — a contract ends naturally when all parties have fulfilled their contractual obligations. 
  • Agreement — a contract can be ended by an agreement between all the parties to the contract. Parties may also agree that the contract will end at a set time or be terminated if certain events occur. 
  • Frustration — this is where unforeseen events occur that make the contract unworkable. For example, when one of the parties dies and can no longer perform contract promises (see Frustrated Contracts Act 1978 (NSW)). 
  • Repudiation — this is where one party communicates to the other that they are not willing to perform their obligations under a contract. In these cases, the innocent party is usually entitled to terminate the contract and sue for damages. 
  • Breach — this is where there is a failure to perform obligations under a contract. Serious breaches may allow the innocent party to terminate the contract and sue for damages. In other cases, they cannot terminate the contract, but they can claim compensation for the loss incurred. 

Understanding the basic principles of contract law may help you effectively defend a claim made against you by a retailer or service provider. If you have suffered a loss due to an unfair contract or breach of contract terms, you may be entitled to a remedy. You should seek legal advice if you think any of these issues relate to your matter.

7.4 Australian Consumer Law (ACL) 

Australia has a national consumer protection regime known as the Australian Consumer Law (ACL), contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth). The ACL is administered nationally by the Australian Competition and Consumer Commission (ACCC), and by state-based consumer protection agencies (Fair Trading in NSW). The ACL applies to all businesses selling goods and services in Australia and deals with consumer rights and protections in all sorts of purchasing situations. For example, it covers refunds, consumer guarantees, unsafe and defective products, lay-bys, and unsolicited consumer contracts made by door-to-door sellers or telemarketers. 

You may have options to get out of contracts or related debt where the supplier failed to meet ACL requirements. If you believe a supplier has breached your consumer rights, you should take the following steps: 

  1. Do your research (the ACCC and NSW Fair Trading websites are excellent sources of information for consumers). 
  2. Try to resolve your dispute directly with the supplier. 
  3. Contact NSW Fair Trading for further information and assistance. 
  4. Commence proceedings in the NSW Civil and Administrative Tribunal (NCAT), if direct negotiation is unsuccessful. 
  5. Consider alternative avenues, such as court action (but seek legal advice first, so you understand your prospects of success and the likely costs involved). 

The remainder of this chapter will explore standard consumer protections, avenues for assistance and dealing with specific types of consumer complaints in NSW.

Unfair contract terms 

The ACL has introduced national ‘unfair contract terms’, which protects consumers by removing unfair terms from standard consumer contracts. A standard form contract is one that is prepared by the business, contains a set of generic terms and conditions, is not negotiated between the parties and is presented on a ‘take it or leave it’ basis. Consumers enter standard form contracts every day, typically for home loans, credit cards, mobile phones, gym memberships, travel, health insurance and utilities. 

Standard form contract terms may be considered ‘unfair’ where: 

  1. The term is ‘one-sided’ and significantly favours the supplier over the consumer. 
  2. There is no satisfactory commercial reason why the supplier needs the term. 
  3. Enforcement of the term would cause consumer loss or disadvantage. 

Examples of unfair terms in contracts include: 

  • terms that allow the supplier to make one-sided (unilateral) changes to essential aspects of the contract (such as changing the product supplied without notifying the customer) 
  • terms that avoid, limit or restrict the liability of the supplier for breach of contract 
  • terms that require customers who breach the contract, or end it early, to pay excessive cancellation charges. 

If you think a term of a contract is unfair, you should try to discuss it with the supplier first. You can also contact NSW Fair Trading for information and assistance. If that doesn’t work, the NSW Civil and Administrative Tribunal (NCAT) or the Supreme Court of NSW may be able to make a declaration that the term is ‘unfair’. When making this determination, the court or tribunal will consider the three-limb test outlined above, how the term is expressed and whether it is ‘unfair’ when the contract is viewed as a whole. If a term is found to be ‘unfair’ it will be void and cannot be enforced. However, the overall contract may continue (if it can operate without the unfair term). 

Unconscionable conduct 

There is no simple definition of unconscionable conduct, but it is generally considered to be conduct that is so harsh that it goes against good conscience. The concept has a broad meaning under the ACL, to protect vulnerable consumers. An example is using deception to enter a person’s home and then exerting high-pressure sales techniques to get them to purchase goods. 

Loss or damage to consumer’s property 

Suppliers must ensure that contract terms are performed with due care and skill. If a consumer’s property is negligently lost or damaged by the trader, the consumer may seek compensation to cover the loss. 

Misleading or deceptive conduct 

The ACL protects consumers from misleading and deceptive conduct, which means that businesses may be breaking the law if they create misleading impressions about the price, value or quality of goods and services. This conduct could include advertisements, promotions, quotations, statements or any representation made by a person. Whether the business ‘intended’ to mislead is not relevant — what matters is how the conduct could affect the thoughts and beliefs of a consumer. 

Proof of transaction 

Under the ACL, businesses must give proof of transaction (receipts) to consumers for goods and services valued at or over $75. They must also provide receipts for purchases under $75 within seven days, if the customer asks for one. Customers are also entitled to ask for an ‘itemised’ bill, without charge, within seven days of the request. It’s sensible to retain evidence of significant transactions, just in case problems arise.


A typical consumer myth is that you are ‘entitled’ to a refund if you change your mind about a purchase. This is not technically true. While many traders offer hassle-free refunds, you are only automatically entitled to a refund if the item you bought is: 

  • not of acceptable quality 
  • does not match the description, or 
  • does not match the sample, or demonstration, shown to you. 

If you are refused a refund in these circumstances, you should contact NSW Fair Trading for further assistance. 

Consumer guarantees 

Specific consumer ‘guarantees’ automatically apply every time you buy goods and services. These will operate in addition to any manufacturer or trader warranties. 

When you buy goods, the supplier guarantees that: 

  • goods will be of acceptable quality 
  • goods will be fit for purpose 
  • goods will match their description 
  • goods will match the sample or demonstration model 
  • they will honour express warranties 
  • you will have full title to goods purchased 
  • you will have undisturbed possession of the goods 
  • there are no undisclosed securities that apply to the goods. 

A manufacturer of goods guarantees that: 

  • goods will be of acceptable quality 
  • goods will match their description 
  • they will honour express warranties 
  • they will provide repairs or spare parts for a reasonable time.

When you pay for services, the trader guarantees that: 

  • services will be provided with due care and skill 
  • services will be fit for purpose 
  • services will be provided within a reasonable time frame. 

You may be entitled to a replacement, repair, refund or another remedy if consumer guarantees are breached. These guarantees apply to all goods and services that cost less than $40,000. They also apply to vehicle and other purchases over this amount, where used for personal or domestic use. 

Unsolicited consumer contracts 

Unsolicited consumer contracts occur when salespeople try to sell you goods or services using the following tactics: 

  • knocking on your door 
  • cold calling you 
  • approaching you in a public place such as a shopping centre 
  • leaving messages on your phone and asking you to respond. 

The most significant protection for consumers in these circumstances is a 10-business-day cooling-off period (allowing you to reconsider your purchase). There are also rules around when sellers can contact you, the information they must provide and the nature of the contract terms. You can terminate your agreement within the cooling-off period without penalty. Ideally, you should put it in writing so there can be no dispute. 

You are entitled to an extended three-month cooling-off period in cases where the salesperson: 

  • visited you outside permitted selling hours 
  • did not disclose the purpose of the visit 
  • did not produce identification 
  • did not leave the premises upon request.

You are entitled to a six-month cooling-off period where the salesperson: 

  • did not provide you with information about the cooling-off period 
  • was in breach of other requirements (for example, did not supply a written contract when required, or supplied goods or services during the cooling-off period). 

Some protections relate to the supply of ‘unsolicited goods’. This is where businesses leave you with products you didn’t request and ask you to pay for the goods if you want to keep them. 

You can contact the ACCC or NSW Fair Trading for further information about protections related to unsolicited contracts and products. 

7.5 Australian Competition and Consumer Commission (ACCC) 

The Australian Competition and Consumer Commission (ACCC) is an independent Commonwealth statutory authority responsible for administering consumer laws and protections across Australia. They also have extensive online resources available to consumers. If you have concerns about the general conduct of business, you can make a complaint to the ACCC. 

7.6 NSW Fair Trading 

NSW Fair Trading is responsible for regulating consumer laws within NSW. If you have a legitimate complaint about a product or service, you should speak to the trader first. If you’re unable to resolve your dispute, you can contact NSW Fair Trading to find out more information about your rights and options to settle disputes with traders. In some cases, Fair Trading staff can communicate with the business and attempt to negotiate a settlement. NSW Fair Trading can provide you with information and assistance in the following areas: 

  • consumer laws 
  • problems with car warranties and repairs
  • home building and renovating (including online licence checks for tradespeople) 
  • information about rights and responsibilities relating to residential tenancies 
  • information about buying/selling a home 
  • strata issues. 

If NSW Fair Trading cannot help to resolve your dispute, you may consider applying to the NSW Civil and Administrative Tribunal for a determination. 

7.7 NSW Civil and Administrative Tribunal (NCAT) 

The NSW Civil and Administrative Tribunal (NCAT) is the one-stop-shop for specialist tribunal services in NSW. NCAT’s Consumer and Commercial Division can determine consumer claims about the supply of goods or services in NSW, under Part 6A of the Fair Trading Act 1987 (NSW). 

Consumer disputes 

NCAT can deal with consumer claims up to the value of $100,000 (however, there is no upper limit for new motor vehicles purchased for private use). Consumers can only lodge NCAT claims against suppliers carrying on a business (this includes registered sole traders, but not private persons — in these cases, you can use the Local Court to dispute a contract). You must lodge claims within three years of the cause of action, and within 10 years of the initial supply. Applications can be filed online or in writing, and there is usually a small filing fee payable. Most people can self-represent in NCAT, and adverse costs orders are rare (so you won’t have to pay the other party’s costs if you lose at first instance). After lodging your application with NCAT, you can expect the first hearing within about six weeks. You should visit the NCAT website or contact a registry office for further information about lodgment, fees and conduct of proceedings.

In a consumer law context, NCAT can make the following orders under Part 6A of the Fair Trading Act 1987 (NSW): 

  • an order for money to be paid 
  • an order that money owed does not have to be paid 
  • an order for goods or services to be provided 
  • an order to fix or replace faulty goods 
  • an order for a refund and the goods to be returned. 

If you are in dispute with a trader about consumer debt, you may consider applying to NCAT to pre-empt court action against you. Advantages of NCAT, as opposed to Local Court proceedings, include: 

  • NCAT’s filing fee is less than court filing fees 
  • legal representation is not generally allowed (or necessary) 
  • the rules of evidence do not apply (so it will be easier to prepare your case) 
  • NCAT is required to resolve the ‘real’ issues in proceedings justly, quickly and cheaply, with as little formality as possible 
  • NCAT will encourage parties to mediate their dispute and reach consent agreements 
  • if unsuccessful, you are not usually ordered to pay the other party’s costs 
  • NCAT is obliged to help unrepresented parties understand and self-manage the process. 

If you’re unhappy with a decision made by NCAT, you have 28 days (from the date of becoming aware of the decision), to lodge an internal appeal. Appeals must relate to matters of law (such as legal errors in the decision), but you can seek to appeal on the merits, with leave (permission) of the Tribunal. If you want to appeal an NCAT decision, it is advisable to seek legal advice first as adverse costs orders may apply if you are unsuccessful.

NCAT cannot enforce its own decisions, but their orders may be registered and enforced through the Local Court of NSW (see Chapters 14 and 15 for further information about enforcement and how to stop it). Once a judgment is made, the creditor has 12 years to enforce the judgment debt. 

Home building disputes 

NCAT can hear and determine applications lodged by homeowners, traders and insurers about residential building work up to the value of $500,000 under the Home Building Act 1989 (NSW). ‘Home building’ refers to any residential building work done by a building contractor or tradespersons, such as the construction of a new home, the building of an extension to an existing home, installation of a swimming pool or a renovation of a bathroom or kitchen. Common home building disputes include: 

  • homeowner’s non-payment for building work 
  • building work not carried out as agreed in the contract 
  • incomplete or defective home building work 
  • insurance claims. 

If you’re disputing a debt with a home builder, you can get free legal advice from the Home Building Advocacy Service (HoBAS), funded by NSW Fair Trading. HoBAS is a free, statewide legal advice service for consumers. 

You can also visit the NCAT website or contact your local registry for further information on matters NCAT can determine, the application process and other procedural issues.

7.8 Bills for services 

Medical bills 

Inability to pay for gaps in medical expenses is an increasing problem, and non-payment of bills may put consumers at risk of future service refusal. Medical service providers are increasingly using debt collection agencies to recover debt. 

If you’re unsure about what services you’re paying for, you can ask for an itemised bill. Check the bill carefully and if you think there are mistakes, advise the service provider. Don’t ignore bills or creditors. If you can’t pay the full amount by the due date, you could ask for an extension or an instalment plan. In cases of severe financial hardship, or special need, you could seek debt write off, waiver or reduction. As with other debt, medical service providers can take you to court to recover unpaid bills. 

Legal bills 

In most cases, your lawyer should give you a costs disclosure document (with a quote or estimate of fees) and a written cost agreement before they start performing services for you. You have a right to negotiate what they charge you, but you will have to pay the costs you’ve agreed to (unless the agreement is set aside). You should receive a bill before you must pay for legal work, which contains a summary of the work done and the amount payable. If you want more information about bill calculation, you can ask for an itemised account (lawyers cannot charge you extra for this). 

Your lawyer can take court action against you if you fail to pay your bill within 30 days of having received your last bill. When you get your bill, you should also receive a notice about your rights to challenge legal costs. It can be hard to predict legal fees in advance, but your lawyer should always give you an up-front estimate of costs and notify you, in advance, of any substantial changes to estimated legal fees.

If you have concerns about your legal bill, you have the following options: 

  • Discuss your concerns with your lawyer
  • Costs mediation — this is where a neutral mediator allows you to discuss your cost concerns with your lawyer, to try to achieve a mutually agreeable outcome. You can lodge a costs dispute with the Office of the Legal Services Commissioner (OLSC) if you want assistance trying to resolve your dispute with your lawyer. This option is usually quicker and cheaper than ‘costs assessment’. 
  • Costs assessment — this is where an independent court-appointed expert considers the bill and your objections to it. The costs assessor will decide what is a ‘fair and reasonable’ amount for you to pay. You have 12 months from the date of the bill being given to you to apply for costs assessment. The Supreme Court of NSW will only grant time extensions in limited circumstances. 
  • Setting aside a costs agreement — if you believe that your costs agreement is not fair or reasonable, you can apply to a costs assessor to have the whole, or part of it, set aside. If the costs agreement is set aside, the costs assessor will then decide how much you should pay for the legal work performed (a fair and reasonable amount). 

Your lawyer cannot commence proceedings against you for recovery of costs until any costs dispute lodged with the OLSC is closed or resolved, and at least 30 days have passed since you were issued with a valid bill. 

Refer to Chapters 9–15 of this guide if your lawyer has already commenced proceedings against you in the Local Court. 

You can contact the NSW Law Society, the Office of the Legal Services Commissioner or the NSW Supreme Court (Costs Assessment Scheme) for further information regarding mediation, costs assessment and applications to set aside costs agreements.