What is a ‘consumer’?
A central consideration under The Australian Consumer Law (ACL) is the definition of a ‘consumer’. Indeed, whether a customer is a ‘consumer’ for the purposes of the ACL determines their entitlement to certain protections and guarantees in relation to goods or services they purchase.
Broadly speaking, under the ACL, consumers are defined as those persons who:
- purchase goods which are less than $40,000; or
- where the goods exceed $40,000, they are of a kind ordinarily acquired for personal, domestic, or household use or consumption,
where those persons did not acquire the goods for the purposes of resupply, or for the purpose of using them up or transforming them, in trade or commerce, in the course of a process of production or manufacture, or of repairing or treating other goods or fixtures on land.
Where a person is a consumer under the ACL they will be entitled to particular consumer guarantees. Importantly, these consumer guarantees cannot be excluded, modified, or limited by contract or otherwise.
The most central of these consumer guarantees are:
- that goods supplied are of acceptable quality;
- that goods are reasonably fit for the purpose represented by supplier or disclosed by the consumer; and
- that services will be rendered with due care and skill, will be reasonably fit for purpose, and will be supplied within a reasonable time when there is no agreed date.
A failure to satisfy these consumer guarantees will entitle a consumer to various remedies, including repair of the goods, replacement of the goods or services with goods or services of the same type and of similar value, a refund of the purchase price paid for the goods or services, or compensation.
The type and extent of the remedy available to the consumer will depend on whether the defect or failure in the goods or services was a major or minor failure.
As of 1 July 2021 the $40,000 threshold will be increased to $100,000 and will apply in respect of goods and services acquired after that date.
This will mean that many more Australians will have the benefit of the consumer protections within the ACL for purchases of goods and services.
The changes will also apply to the Australian Securities and Investments Commission Regulations 2001 which contain mirror consumer protection provisions for financial products and services.
These changes have been implemented following the 2018 Australian Consumer Law review, which determined that, as the $40,000 threshold had not been changed since 1986, inflation had effectively lowered the bar for consumer protection in Australia, and the broad category of goods and services which were intended to be originally the subject of the consumer protection regime were no longer captured within the $40,000 threshold.
Business Practice Review
Businesses which have not previously supplied to ‘consumers’, should conduct a review of their product and services ranges, business practices and trading documents to ensure they are meeting their obligations prior to 1 July 2021. If they are not compliant with their obligations under the ACL, contractual terms could be deemed to be void or business practices could be deemed to be unlawful.
Given the enhanced liability that comes with making or selling these higher value goods, businesses should also review their product insurance policies, to ensure they cover “consumer” type claims.
Clinch Long Woodbridge lawyers are accredited specialists in business law and have been advising a range of businesses on compliance with the Australian Consumer Law for over 20 years.
Important Disclaimer: The content of this publication is general in nature and for reference purposes only. It is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.