Insights / July 29th, 2021

What’s in a definition? Major changes to the consumer guarantees under the Australian Consumer Law

Prior to 1 July 2021, the consumer guarantees – one of the foundational components of the Australian Consumer Law – generally only applied to transactions involving goods and services ordinarily acquired for a personal, domestic or household purpose or if the price paid was less than $40,000.

On 1 July, this threshold increased to $100,000 - extending the consumer guarantees (such as the guarantee that goods and services are fit for purpose and are of acceptable quality) to a broader range of business-to-business transactions and services.

What does this mean for your business?

If you operate a business that provides goods or services to individuals and businesses for a price between $40,000 and $100,000, this change creates a new compliance obligation for you. You should:

  • make sure that you understand the obligations to comply with the consumer guarantees and their related provisions under the Australian Consumer Law;

  • train staff to be aware of the consumer guarantees and the potential rights of customers under such guarantees; and

  • ensure that your trading terms and express warranty terms comply with the Australian Consumer Law.

For small businesses that provide services or acquire goods for a price between $40,000 and $100,000, this change provides new protections that cannot be excluded by contract. New statutory remedies such as a refund or repair of goods, or re-delivery of services may now be available to your customers.

Terms of trade and supply contracts

As mentioned above, the change in how the consumer guarantees apply also means that businesses should review their existing terms of trade and supply contracts to ensure they are not excluding rights customers may have at law.

Advising a customer that they do not have rights under the Australian Consumer Law when in fact they do amounts to misleading and deceptive conduct.

If providing goods to customers with a value up to $100,000, it is advisable to review any upstream supply contracts to ensure that you are protected if a product manufactured by a third party and on-sold by you is later found to be defective and a customer makes a claim against your business.

Capacity to comply

Businesses should now ensure that they can comply with the consumer guarantees. This includes a requirement to provide repair and spare part services for all goods sold (up to $100,000) for a reasonable period of time and that the administrative capacity exists to support customer-facing staff with this change.

If you need help understanding what this change means, Cowell Clarke can assist you in determining whether you are required to comply with the consumer guarantees, ensure that you are Australian Consumer Law compliant, and review any agreements you have in place. Please do not hesitate to contact us if you have any questions or require assistance.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.

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