Legal essentials

If you’re running a business, you need to be aware of your legal obligations.

Some legal obligations are obvious when you start your business, and others emerge or become more important as your business grows.

  • Fair trading

    As a business owner, you need to know your rights and responsibilities under fair trading laws.
     
    The main federal law, the Competition and Consumer Act 2010 (CCA), ensures that trading is fair for your business and your customers.
     
    The Australian Competition and Consumer Commission (ACCC) administers the CCA. It promotes good business practices for a fair and efficient marketplace. Go to the ACCC for information about federal competition, fair trading and consumer protection laws.
     
    You can check if your business is compliant using the small business self-assessment tool.
     
    In South Australia, Consumer and Business Services (CBS) administers the SA Fair Trading Act 1987. It provides businesses with information on fair trading laws, advertising, handling complaints and warranties.
  • Australian Consumer Law

    If you run a business in Australia, you'll be affected by the Australian Consumer Law (ACL), which came into effect on 1 January 2011.
     
    It's important to know your rights and obligations and how the consumer laws affect your business.
     
    The ACL replaced 17 existing federal, state and territory consumer laws, including:
    • standards of business conduct
    • unfair contract laws
    • harmful business practices
    • the regulation of specific types of business-to-consumer transactions
    • basic consumer rights for goods and services
    • the regulation of consumer product safety.
     
    The laws are administered and enforced jointly by the Australian Competition and Consumer Commission (ACCC) and the State and Territory consumer protection agencies.
     
    Here are some examples of the ACL in action:
    • If your customers ask for a bill, you must provide it free of charge.
    • If you sell goods or services worth more than $75 (excluding GST), you must give your customer a bill.
    • If you give receipts, they must identify you (the supplier), your ABN and/or ACN (if any), what was supplied, the date of supply and the price.
    • If there is a problem with your good or service, your customer has the right to ask you for compensation. This compensation can include a full refund, even if you have signs saying "no refunds".
     
    As a small business owner, it can be difficult to find the time to understand all the laws that relate to your business or industry. The ACCC has made several short videos to help you understand what the ACL means for your business.
  • Product and consumer safety

    If you sell products to Australian customers, including the sale of products online, you must meet product safety requirements under Australian Consumer Law (ACL). If you're a supplier or manufacturer, you are legally obligated to comply with mandatory Australian safety standards and only sell safe products. Mandatory standards are law, and there are penalties and consequences for selling products that do not comply.
     
    Suppliers should:
    • provide clear instructions for proper use. This includes warnings against possible misuses
    • be aware of and meet industry and mandatory safety standards
    • develop product recall plans and procedures including effective communication strategies to the public (eg. advertisements in papers)
    • incorporate safety into product design
    • develop appropriate safety standards through product improvement
    • implement a quality assurance program which includes consumer feedback
    • Respond quickly to safety concerns that arise.
     
    The Product Safety Australia website includes information regarding consumer products for both businesses and consumers. Please visit this site for product safety laws in relation to consumer products. This site also has useful general safety information.
  • Refund or returns

    Customers are entitled to automatic consumer guarantees for most goods and services they buy, hire or lease. Consumer guarantees include refunds, repairs and replacement of goods if a problem is identified.

     

    Refunds and returns
    If a problem has been identified with a good, businesses still operating must contact the manufacturer on behalf of the customer.

    Customers may choose their resolution if the problem with the good or service is major. These include:
    • a refund of their money
    • compensation when service levels have reduced
    • repairs or replacement of goods

    For minor problems with goods and services the business may provide free repairs rather than a refund or replacement of goods.

    Customer returns even include:
    • gifts (proof of purchase is still required)
    • used items
    • items that have had the packaging and tags removed
    • worn items (including underwear, swimwear and jewellery)
    • purchases from second-hand stores
    • online purchases from Australian business (does not include private sellers)

    Both businesses and customers need to consider how long ago the item was bought, the condition and the price of the product.

     

    When you may refuse returns for goods
    The automatic consumer guarantees do not cover all goods and services see 'Warranties and guarantees' section below for more details.

    As a business you may refuse to accept returns when:
    • the good was used incorrectly
    • damage occurred after the item was bought
    • faults were identified by the business and communicated prior to purchase
    • the customer didn't find faults they should have seen when inspecting the good prior to purchasing
    • customers change their minds - although as a sign of good will many businesses allow refunds or exchanges
     
    Returning faulty goods
    As a business you are allowed to request that you inspect the goods, this may mean the customer needs to send it back to you. Prior to them sending the goods back (where possible) advise of the (real) transport and inspection costs, these may need to be refunded and not charged respectively if the good is found to be faulty. If the good is found to have no faults, you do not need to refund the transport costs and you may charge your inspection fee.

    Prior to commencing any repairs on electronic goods you must provide a written repair notice. This must say:
    'The repair of your goods may result in the loss of any user-generated data. Please ensure that you have made a copy of any data saved on your goods.'

    If using secondhand parts when repairing the notice must include:
    'Goods presented for repair may be replaced by refurbished goods of the same type rather than being repaired. Refurbished parts may be used to repair the goods.'
  • Warranties and guarantees

    Warranties and guarantees do not replace consumer guarantees, they are in addition to them. Likewise, warranties are separate from and do not replace guarantees.
     
    Exceptions to consumer guarantees
    Consumer guarantees do not cover goods bought:
    • goods bought to on-sell
    • normally for business use and cost more than $40,000 (e.g farming equipment)
    • as part of a business to use on other goods (repair or fixtures) or to manufacture or produce something else
    • through private purchases
    • at auctions where the auctioneer acts as an agent for the private owner
     
    Guarantees
    If you provide guarantees there are a set of rights and responsibilities you must honour for those products or services customers buy, which are valid for a 'reasonable time'. 'Reasonable time' is determined by the quality and type of goods.

    Products need to:
    • match the samples, demonstration models or descriptions
    • work in the way that was intended
    • be of an acceptable quality
    • remain with the buyer if they wish, without being taken or restricting their use (where safe)
    • be free of debt owed on it

    If you offer a service contract the contract must be fair and not favour your business nor reduce or ignore consumer rights.

    Services need to be provided:
    • fit for purpose
    • within a reasonable time
    • with due care and skill

    Ensure you understand and follow the Australian Competition and Consumer Commission (ACCC) consumer rights and obligations when offering guarantees.
     
    Warranties
    Warranties are a voluntary promise from the supplier, manufacturer or seller to the customer. The promise becomes a consumer right once a good or service is purchased.

    Warranties include:
    • Warranties against defects
    • Extended warranties
    • Express warranties
    • Honour warranties

    The ACCC outlines in detail what to include and exclude when offering warranties.
  • Hiring a lawyer

    Good legal advice can help you protect your business interests and comply with legal obligations.
     
    There are many aspects of running a small business that may require you to obtain legal advice, including:
    • understanding, negotiating and developing business contracts
    • reviewing and negotiating a lease for business premises
    • determining your business structure
    • buying or selling a business
    • dealing with disputes or disagreements.
     
    To ensure you get the best advice and representation, select a lawyer that:
    • has experience and expertise in dealing with your legal issue
    • can communicate clearly using simple language
    • is easily accessible
    • you feel comfortable with
    • charges fees that are reasonable and acceptable to you.

Planning templates

Use these free planning templates and guides to help you better plan, prepare, manage, and exit a business. Investing time into proper research and planning can help turn your ideas into reality, and prepare you for what’s to come.

Business plan

A business plan works as a guide when your business is operating; how you operate, planning the future and preparing for risks. It is also often a required document for finance applications.

Marketing plan

An effective marketing plan can help you set clear, realistic and measurable marketing objectives for your business. It can boost your customer base increasing your bottom line.

Emergency plan

Your business is critical to your financial wellbeing, so you’ll want to protect it as much as you can against emergencies and disasters.

Succession plan

Planning for the day you leave your business is a valuable investment.

Our friendly team is here to help

If you need any assistance, please call 1300 142 820 for information relating to small business or visit our contact page for more information.