returnoninvestment.auWhat spending brings back to a business
Notch 6 of 6 · Checking the weights
Claims about savings and returns
A seller’s figure for what a product will save or earn is a claim about its value, benefits or performance, and the ACCC says such claims must be accurate, truthful and based on reasonable grounds. A claim about the future, such as a projected saving, needs reasonable grounds at the time it is made, and the business making it is responsible for showing that it had them.
A guide published by Dotto. General information, not legal advice, written for a business on the buying side. The ACCC’s pages, listed at the foot of this page, give the rules in full.
- The load
- The seller’s figure
- The counterweight
- The grounds behind it
- The reading
- Whether the claim holds
The rule, in short
The ACCC’s rules on false or misleading claims apply whatever a business intends, and they reach a quotation and what staff say or write as well as advertising. For a buyer the sharpest part is the rule on forecasts: a claim about future matters, such as a projected saving, needs reasonable grounds at the moment it is made, and the business that made it must be able to show those grounds. Silence can mislead as well, when a business gives some information but leaves out important details a buyer needs for the decision.
When a business is the buyer
“A business can be a consumer too,” the ACCC says. Consumer guarantees reach a purchase made for business use if it meets one or more of these conditions:
- “it costs less than $100,000 including GST”
- “it is a product or service commonly bought for personal, domestic or household use”
- “the good is a vehicle or trailer that is used mainly to transport goods on public roads.”
Even when one applies, a product is not covered when it is bought “for resupply”, “for use or transformation in production or manufacturing” or “to repair or treat other goods”.
ACCC, Consumer rights and guarantees. ACCC material is © Commonwealth of Australia, CC BY 4.0.
The same ACCC page also sets out other exceptions and special rules. Among them: “Services to transport or store goods for business purposes are not covered by consumer guarantees”, and the consumer guarantees “don’t apply to financial products such as insurance, as these are covered by other laws”.
The ACCC gives an example of each side of the line. A dental practice that buys a $500 portable air conditioner for the practice is covered. A farmer who buys $20,000 of grain to feed cattle he will later sell is not, because the grain is used in producing the cattle.
Promises about performance
Three guarantees bear most directly on what a purchase was said to deliver.
- Extra promises must be kept If a business or manufacturer makes extra promises about a product’s quality, condition, performance or characteristics, spoken or written, it must meet them. The law calls these express warranties.
- Fit for the purpose made known This applies when the buyer tells the business what they want the product for, when the buyer relies on the business’s advice, or when the business advertises the product for a particular purpose. It does not apply if relying on the business’s skill or judgement would be unreasonable, or if the business said the product would not meet the purpose and the buyer bought it anyway.
- Services done with due care and skill Work must be at least as good as a competent provider with average skill and experience would do, with reasonable steps taken to avoid loss or damage.
Questions to put to a savings figure
These questions are this guide’s own, drawn from the earlier notches. They are prompts for reading a figure, not legal tests.
- Saved compared with what? The Office of Impact Analysis compares the world with a change against the world without it, not before against after. See costs and benefits, the government’s way.
- Over how many years, and counted when? A saving spread over many years is worth less in today’s dollars than the same total received soon, which is why the government discounts later years.
- Against which cost? The ATO counts transport, installation and improvements in an asset’s cost. For a replacement, NSW guidance weighs the extra over like-for-like. See the real cost of an asset and payback on an energy upgrade.
- What else changes?energy.gov.au lists downtime, maintenance, training and project risks among the costs that can sit beside an energy saving.
- Where is it written down? The ACCC’s rule reaches a quotation and what staff say or write, and express warranties can be spoken or written.
The ACCC’s pages on false or misleading claims and on consumer rights and guarantees, listed below, set out the rules in full, with more of its own examples.