The Federal Government has recently announced changes to how the Australian Consumer Law defines a ‘consumers’ 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’) is consumer protection legislation that 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 they could face hefty penalties for non-compliance.
The ACL’s guarantees require the goods sold to be of an acceptable standard and quality, (safe and durable), fit for their purpose, match their description, perform as requires, 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.
However, from 1 July 2021, goods sold for up to $100,000.00 will be protected by the legislation.
On sellers of goods or businesses that will use the goods in course of creating something else are not included. However, their customers of the on-sold goods will be considered a consumer and therefore the products must comply.
These changes will have considerable ramifications in the business to business space as a plethora of more expensive goods will fall within the definition, even if it was never contemplated that the buyers were consumers. For instance, a commercial refrigerator valued at $60,000.00 must comply with the ACL from 1 July 2021.
Impacts for Sellers
Sellers of goods costing up to $100,000 must now comply with all the strict requirements set out in the ACL, including the provisions surrounding refunds, warranties and liability for damage.
Depending upon the particular problem, the seller must repair, replace or refund the faulty good and are 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
Businesses that buy commercial equipment in the $40,000 to $100,000 range will now benefit from the protections offered by the ACL. This will have significant impacts on these types of businesses as it will mean that it will be easier to pursue sellers or manufacturers that sell them faulty goods, or goods that are substandard in their quality or how they operate.
Preparing for the Changes
Businesses that generally 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 inspected to ensure that there is no inconstancy wit the ACL.
Sellers should consider their insurance policies to ensure that it would cover claims relating to breaches of the ACL. Staff training on the impacts of the ACL would also be a wise move before the 1 July 2021 changes come into effect.
If you have any questions on the above information or you require assistance, please do not hesitate to contact our commercial law team at Burke & Associates Lawyers. We would welcome the opportunity to assist you.
Insight written by Stewart Davis