The SOG Act defines a contract of sale broadly to include an agreement to sell or a sale. On the other hand, the CPA defines a consumer agreement as an agreement between a supplier and a consumer in which the supplier agrees to supply goods or services for payment. A consumer agreement under the CPA can qualify as a contract of sale under the SOG Act, as the definition of a contract of sale in the SOG Act does not distinguish between consumer and non-consumer parties.

According to the CPA, a consumer is a person to whom goods or services are marketed in the ordinary course of the supplier’s business, a person who enters into a transaction with a supplier in the ordinary course of the supplier’s business (unless the transaction is exempt), or a user or recipient of the goods or services and a franchisee, where applicable under the CPA.

Section 14 of the SOG Act sets out certain implied warranties in relation to every contract of sale, unless the parties agree to vary or exclude them. It provides that there is an implied condition that the seller has the right to sell the goods (or will have such right when property passes) and an implied warranty that the buyer will enjoy quiet possession and that the goods are free from encumbrances.

Section 16 further sets out the circumstances under which implied warranties or conditions as to the quality or fitness of goods may arise in a contract of sale. As a general rule, there is no implied warranty or condition that goods will be fit for a particular purpose or of satisfactory quality except in certain prescribed cases.

The SOG Act allows parties to contract out of certain implied terms in consumer agreements. The purpose of this exclusion is to uphold the principle of freedom to contract, which recognises that parties are presumably on equal footing and are best placed to assess, allocate risks and negotiate terms as they see fit.

There is now tension between this right to exclude implied warranties and the prohibition to exclude contained in the CPA. The CPA states in section 5 that a supplier is deemed to warrant that goods or services provided in a consumer agreement are of reasonably merchantable quality. Importantly, the CPA states that any attempt to exclude or vary implied warranties or conditions in a consumer agreement, whether under the SOG Act or the CPA itself, is void. A consumer agreement containing such a provision would potentially be declined enforceability.

The CPA creates a statutory safety net that shields consumers from unfair contractual terms and presumed imbalances in bargaining power and appears to take away the flexibility afforded by the SOG Act.

Businesses must be mindful of the conflict between the two acts and should structure their consumer agreements accordingly to remain compliant and avoid legal risk.