This briefing note details the particular changes and suggest actions that businesses which are subject to the ACL can take to ensure compliance with the ACL and to minimise their risk.
The ACL provides general protections to consumers by creating standards of business conduct in the market. Under the current definition in section 3(1) of the ACL, a person is a ‘consumer’ if the person acquires:
A person is not a ‘consumer’ however if they acquire goods for the purpose of resupply or to use up or transform in the process of production or manufacture, or in the course of repairing or treating other goods or fixtures on land.
From 1 July 2021, $100,000 will be the new price threshold, increasing the current threshold of $40,000 for the purposes of paragraph 3(1)(a) of the ACL. This means that a customer can purchase goods or services with a price of up to $100,000 and will fall within the definition of ‘consumer’ within the ACL.
Note: A customer can still fall within the definition of ‘consumer’ if the purchase price of goods exceeds $100,000, if the circumstances set out in Category 2 or 3 above apply.
The significant increase in the monetary threshold amount will result in a wider range of goods and services falling within the definition of ‘consumer’ goods or services. It is likely that more commercial goods and services will therefore also be captured within the amended definition.
No change to existing consumers
Where a business sells good or provides services for under $40,000, the ACL will continue to apply as it always has done to consumer transactions.
Other consequences of the change
The definition of ‘consumer’ applies to other consumer transactions under the ACL, such as unsolicited consumer agreements and lay-by sales agreements.
The changes will also amend the definition of ‘consumer’ in the Australian Securities and Investments Commission Act 2001 (Cth), which contains consumer protection provisions that mirror the ACL, but which relate to financial products and services.
that goods will be:
and that services will be:
Consequences for a breach of the ACL
Contracts that purport to exclude the operation of the consumer guarantees are void under section 64 of the ACL.
However suppliers of goods and services priced up to the $100,000 threshold may limit their liability for a breach of consumer guarantee to the repair or replacement of the goods, or supply of equivalent goods or the payment of the cost to repair or replace the goods; or the re-supply of the services or the payment of the cost of having the services supplied again.
** Note that this limitation only applies where the goods or services are not of a kind ordinarily acquired for personal domestic or household use.
It is suggested that businesses should start to consider the impact of the changes to the ACL well in advance of 1 July, 2021. Suppliers and manufacturers of goods and services valued at up to $100,000 will now be within the scope of what the ACL considers to be ‘consumer’ goods and services. This is likely to capture more B2B transactions.
The expanded definition of consumer within the ACL will have practical consequences for all sellers of goods or suppliers of services having a price up to $100,000.
The change to the ACL will significantly add to the scope of consumers protected by the provisions of the ACL, in particular the consumer guarantee regime. While consumer advocates will welcome the change as being long overdue, businesses must be mindful of the changes and take such necessary actions so as to be prepared in advance of 1 July, 2021.
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This publication is © Nexus Law Group and is for general guidance only.
Legal advice should be sought before taking action in relation to any specific issues.
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