The Australian Consumer Law (ACL) provides a mechanism for consumers to terminate contracts with suppliers of services if they fail to comply with certain statutory guarantees. The recent case of Coliban Heights Pty Ltd v Citisolar Vic Pty Ltd [2018] VSCA 191 discusses the prerequisites for valid termination under section 267 of the ACL. The case considered whether several contracts to supply and install photovoltaic (solar power) systems had been validly terminated by the applicant, where:

  • the respondent had failed to comply with one or more consumer guarantees in the ACL (the systems that it installed for the applicant were unsafe);
  • those "major failures" entitled the applicant to terminate the contracts under section 267(3) of the ACL; and
  • the applicant had purported to terminate the contracts with the respondent and then subsequently accepted rectification works from the respondent.

The court upheld the primary judge's decision (that the applicant had not validly terminated the contracts) because "The applicant's acceptance of the goods, manifested in particular by its acceptance of rectification works, was simply inconsistent with it having terminated the contracts for services." 

The key conclusion to be drawn from this case is that a mere statement of termination is not enough to terminate a contract under section 267, if a party then adopts a course of action that is inconsistent with an intention to terminate (for example, by failing to return goods or accepting rectification work). All of the circumstances of the case are relevant, including the parties' actions.