From 1 July 2021, more consumers will benefit from the statutory protection of the Australian Consumer Law (ACL) with the upper limit for consumer rights protection increasing from $40,000 to $100,000.[1]
Who is a consumer?
Previously, a ‘consumer’ under the ACL has been a person (and, importantly, this can include businesses and companies as well as individuals) who purchases:[2]
- goods or services that do not exceed $40,000 in value;
- goods or services of a kind typically acquired for personal, domestic, or household consumption or use; or
- trailers or vehicles used principally to transport goods on public roads.
With effect from the start of the new financial year on 1 July 2021, this cap of $40,000 has increased to $100,000. Businesses supplying consumers with goods or services with a monetary value of up to this new limit will be required to comply with the consumer guarantees set out in the ACL.
What is a consumer guarantee?
The ACL provides the following consumer rights against suppliers and manufacturers: 9 consumer guarantees applying to goods, and 3 consumer guarantees applying to services.
Certain consumer guarantees apply to both suppliers and manufacturers, while others apply either to suppliers or manufacturers only.
The consumer guarantees provide that goods:[3]
- are of acceptable quality;
- are accurately described;
- comply with any express warranties;
- are fit for purpose;
- match any sample or demonstration provided;
- come with clear title;
- come with undisturbed possession;
- are free from securities or charges; and
- have spare parts and repair facilities available.
For services, the relevant consumer guarantees are that the services:[4]
- are provided with due care and skill;
- are fit for the specified purpose; and
- are provided within a reasonable time.
If a supplier or manufacturer breaches a consumer guarantee, the consumer can look to the ACL for remedies. The remedies available to consumers include:[5]
- repairment;
- replacement;
- refund; or
- in certain circumstances, compensation for consequential loss.
The type of remedy available, and whether the supplier or manufacturer is liable, will depend on the nature of the problem and the consumer guarantee that was breached.
As more people and businesses will now fall within the definition of ‘consumer’, it is important that suppliers and manufactures of goods and services are aware of how this may impact their business processes.
What should you do?
Suppliers and manufacturers of goods or services valued up to $100,000 should take steps to review and update their terms and conditions, and their warranty policies to ensure compliance. This is crucial as the ACL automatically voids any terms that are inconsistent with the consumer guarantees.
Employee training on the ACL is also crucial to ensure that staff do not mislead or misrepresent consumers about the rights and remedies available to them under the consumer guarantees regime.
However, this amendment is not all bad for suppliers and manufacturers. Any business which satisfies the new definition of ‘consumer’ will itself enjoy the protection of the ACL’s consumer guarantees for all purchases of goods or services up to $100,000.
For further information, or a detailed discussion on how this may impact your business, please contact our commercial law team.
This memo presents an overview and commentary of the subject matter. It is not provided in the context of a solicitor-client relationship and no duty of care is assumed or accepted. It does not constitute legal advice.
© Moulis Legal 2021
[1] Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020 (Cth) regs 2, 77A; Competition and Consumer Act 2010 (Cth) sch 2 (‘Australian Consumer Law’).
[2] Australian Consumer Law s 3.
[3] Ibid ch 3 pt 3-2.
[4] Ibid ch 3 pt 3-2.
[5] Ibid pt 5-4.
