Consumer guarantees to apply to more consumers

22 October 2021

The definition of 'consumer' under the Australian Consumer Law (ACL) has grown as of 1 July 2021. A consumer will be able to rely on the rights and remedies given to them under the consumer guarantees when buying goods and services acquired in more situations, including business to business.

As the law stood, a person was taken to have acquired goods or services as a consumer if the amount they paid was $40,000 or less – or if the goods or services were of a kind ordinarily acquired for personal, domestic or household use or consumption.

The monetary threshold has now increased from $40,000 to $100,000 under the Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020 (Financial Threshold Regulation). This is a significant increase in the monetary threshold.

There is now a broader range of goods and services being classified as ‘consumer’ goods or services as a result of this significant increase in the monetary threshold. In particular, there will be a new spotlight on goods and services (including commercial goods and services) that are not of a kind ordinarily acquired for personal, domestic or household use or consumption that are between $40,001 and $100,000. These goods and services currently fall outside of the definition of consumer but will soon be captured.

The ACL creates consumer guarantees regarding the quality and function of goods and services that automatically apply to every supply to a consumer. These cannot be waived, limited or excluded, or misrepresented. For example, where goods are supplied to a consumer, the supplier guarantees they are of acceptable quality, fit for any purpose specified, and matching with any description or sample given. Where services are supplied to a consumer, the supplier guarantees that the services will be provided with due care and skill, fit for any specified purpose and supplied in the time-frame agreed or within a reasonable time.

A failure to comply with the consumer guarantees entitles the consumer to remedies under the ACL including repair, replacement, refund, cancellation and compensation, depending on the nature and extent of the failure. Suppliers and manufacturers of goods and services valued at up to $100,000 will need to consider whether this increase is likely to bring their business operations within the scope of what the ACL considers to be consumer goods and services. 

As featured in Australian Automotive August 2021.