Under the Consumer Guarantees Act 1993, when can a real estate agency validly contract out of the Act's guarantees for its services?
Correct Answer
A) Both in trade, business services, agreed in writing, and fair and reasonable
Section 43 of the Consumer Guarantees Act 1993 stops suppliers contracting out with consumers. The exception in s 43(2) applies only where the services are supplied and acquired in trade, both parties are in trade, the agreement is in writing, and it is fair and reasonable to hold the parties to it. A home seller cannot waive the Act.
Why This Is the Correct Answer
Section 43 of the Consumer Guarantees Act stops suppliers contracting out with consumers. The exception in s 43(2) applies only where both parties are in trade, the services are acquired for business, the agreement is in writing, and it is fair and reasonable to hold the parties to it.
Why the Other Options Are Wrong
Option B: When the value of the property transaction is more than one million dollars
The Act draws no line on transaction value; what matters is whether the client is a consumer or a business contracting out under s 43(2).
Option C: Never, because agency services supplied to any client are always covered by the Act
Section 43(2) does allow parties in trade to contract out in writing where it is fair and reasonable, so the protection is not absolute.
Option D: When a home seller signs a written waiver of the Act in the agency agreement
A home seller acquiring services for personal purposes is a consumer, and s 43(1) makes any attempt to contract out with a consumer of no effect.
Deep Analysis of This Compliance Question
The Consumer Guarantees Act protects people who acquire services of a kind ordinarily acquired for personal, domestic or household use. Those guarantees cannot be removed by contract (s 43(1)). Since 2014, s 43(2) has let businesses dealing with each other in trade agree in writing to exclude the Act, provided it is fair and reasonable. For an agency, that means a commercial client such as a property company can contract out; a family selling their home cannot.
Background Knowledge for Compliance
Consumer Guarantees Act 1993, s 43: (1) contracting out is of no effect except as the Act provides; (2) contracting out is allowed where the goods or services are supplied and acquired in trade, the agreement is in writing, all parties are in trade and agree to contract out, and it is fair and reasonable that they be bound. Section 43(2A) lists factors a court considers when deciding what is fair and reasonable.
Memory Technique
Trade, Trade, Writing, Fair: both parties in trade, services acquired in trade, the deal in writing, and fair and reasonable. Miss any key and the Act still applies.
When an option lets a client waive the Act, check all four keys. A home seller fails the first one, so any waiver is void.
Exam Tip for Compliance
Contracting out is possible only business to business, in writing, and where fair and reasonable. Price thresholds and consumer waivers never work.
Real World Application in Compliance
A property investment company lists a commercial block and signs an agency agreement stating that the Consumer Guarantees Act does not apply. Both parties are in trade, the term is in writing and it is fair and reasonable, so the exclusion can stand. The same clause in a family's home listing would have no effect.
Common Mistakes to Avoid on Compliance Questions
- •Thinking a high transaction value removes the Act
- •Believing a consumer can sign away the Act
- •Forgetting the writing and fair-and-reasonable requirements for businesses
Related Topics & Key Terms
Key Terms:
More Compliance Questions
A real estate advertisement states 'Best value in the area' without any supporting evidence. Under the Fair Trading Act, this statement is:
Under the Fair Trading Act 1986, which statement about advertising a property for sale is correct?
A client provides a bank cheque for $30,000 as a deposit and mentions recently selling cryptocurrency to fund the purchase. Under AML/CFT requirements, what is the appropriate next step?
An agent holds $180,000 in trust across four transactions. One agreement is validly cancelled because the purchaser's finance condition was not met, and both parties' lawyers confirm the $60,000 deposit is to be refunded to the purchaser. What is the correct trust account procedure?
Under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, what is the minimum threshold for conducting customer due diligence when establishing a business relationship in real estate transactions?
- → An international client buying a $2.8 million commercial property provides a copy of their overseas passport but refuses any further identity checks or information, claiming diplomatic immunity. How should the agent proceed under AML/CFT requirements?
- → Which statement best describes the trust account requirements under the Real Estate Agents Act 2008?
- → An agency's trust account reconciliation reveals that interest earned on client deposits has been retained by the agency rather than distributed to clients. This practice is:
- → According to trust account regulations, how long must real estate agencies retain records of trust account transactions?
- → What is the primary purpose of the Consumer Guarantees Act 1993 in relation to real estate services?
- → Under the Consumer Guarantees Act 1993, if a real estate agent fails to exercise reasonable care and skill when marketing a property, what remedy might be available to the client?
- → A real estate agency's trust account shows a shortage of $5,000 during a routine audit. What is the most serious disciplinary order available under the Real Estate Agents Act 2008?
- → A real estate agent advertises a property as having a 'new roof' when they know it was repaired but not replaced. A buyer purchases based on this information and later discovers the truth. Which Acts could potentially apply to this situation?
- → Which statement best describes the primary purpose of trust accounts in real estate transactions?
- → A property advertisement states 'Guaranteed rental return of 8% per annum', although no one has contracted to pay that return. Under the Fair Trading Act 1986, this statement is:
People Also Study
Property Law & Legislation
56 questions
Agency Practice
89 questions
Sale & Purchase Process
63 questions
Professional Conduct & Ethics
46 questions