In 2021, the Federal Government changed how the Australian Consumer Law defines a consumer in the legislation. Critically, this means that far more goods sold in Australia must now comply with this consumer protection legislation.
The Australian Consumer Law (‘ACL’) requires sellers to provide goods and services that comply with minimum standards. Sellers cannot exclude these minimum standards through warranties and, if they do, their warranties will have no effect and the seller could face hefty penalties for non-compliance.
The ACL’s guarantees require goods sold to be of an acceptable standard and quality (i.e. safe and durable), fit for their purpose, to match their description, to perform as required, to have spare parts available and many more concerning refunds and liability.
Previously, ‘consumers’ were anyone who purchased goods that:
- are of a kind ordinarily acquired for domestic, household or personal use or consumption; OR
- cost up to $40,000, regardless of their kind or purpose.
From 1 July 2021, goods sold for up to $100,000 are protected by the ACL.
Sellers of goods or businesses that will use the goods in the course of creating something else are not included. However, their customers of the on-sold goods are considered a consumer and therefore those goods must comply.
These changes had considerable ramifications in the business to business space as a plethora of more expensive goods fell within the definition, even if it was never contemplated that the buyers were consumers.
Impacts for Sellers of goods in regard to Australian Consumer Law
Sellers of goods costing up to $100,000 must now comply with the strict requirements set out in the ACL, including refund provisions, warranties and liability for damage.
Depending on the particular problem, a seller must repair, replace or refund the faulty good and is also liable for all reasonably foreseeable loss or damage suffered by the consumer arising out of the fault.
The manufacturer of the goods can also be liable (for compensation) directly to the consumer in the event of a fault, or they must indemnify the retailer of their goods if the seller is to provide the remedy (such as refund).
Impact for Business Buyers in regard to Australian Consumer Law
Businesses that buy commercial equipment in the $40,000 to $100,000 range now benefit from the protections offered by the ACL. This has had significant impacts on these types of businesses as it has meant that it has been easier for them to pursue sellers or manufacturers that sell them faulty goods, or goods that are sub-standard in their quality or how they operate.
Businesses that did not traditionally sell to consumers should review their range and business practice to ensure that they meet the ACL standards and that they comply with their obligations. Their trading documents should also be reviewed to ensure that there is no inconstancy with the ACL.
Sellers should consider their insurance policies to ensure that they cover claims relating to breaches of the ACL. Staff training on the impacts of the ACL is also recommended.