Increase to “consumer” monetary threshold

Recent changes to Australian Consumer Law (ACL) have increased the monetary threshold for determining whether a person acquires goods or services as a “consumer” under section 3(1)(a) of the ACL.

Previously a consumer was a person who acquired goods:

i. not exceeding $40,000; or

ii. of a kind ordinarily acquired for personal, domestic or household use/consumption; or

iii. consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads.

Now, the supply of goods and services valued up to $100,000 (previously $40,000 value), irrespective of the intended use of those goods/services, are subject to certain elements of the ACL, particularly the consumer guarantees.

As an example, suppliers who supply goods to consumers have the duty of ensuring that goods within this threshold will be of acceptable quality, fit for purpose, comply with their description and correspond with the sample or demonstration (if given) among other things.

Similarly, suppliers of services with a value of up to $100,000 must ensure those services are provided with due care and skill, are fit for purpose and are delivered within the stated time (or if no time stated, within a reasonable time). If these duties are breached, the ACL provides remedies ranging from entitlement to repair, replacement, refund and/or compensation which could (where claims are successful) involve payment of damages and consequential loss.

Practically, this means that many transactions that were previously excluded from the application of the ACL as business-to-business transactions over $40,000 are now subject to these guarantees.

While suppliers cannot contract out of these statutory guarantees, it is possible to limit liability for a breach of consumer guarantees to repair or replacement of the goods (or the equivalent cost) and to exclude certain forms of damages.

Business operators should consider what this change means for their operations and take the opportunity to review supply contracts and sales terms and conditions to ensure: 

1. They are meeting the relevant compliance obligations;

2. Appropriate liability limitations are incorporated to those documents; and

3. They provide updated training to personnel.

Operators in NSW may also have additional disclosure obligations under changes to the Fair Trading Act introduced in 2020 and discussed in our previous article.

Equivalent changes to the Australian Securities and Investments Commission Act 2001 sees similar obligations on providers of financial services to comply with the ACL.

Note however that the ACL does not apply where a person acquires goods or for the purpose of resupply, or to use or transform in the process of manufacture or repairing other goods. The changes discussed above do not alter this position.

To discuss any of the above or for further information regarding your rights or responsibilities under the ACL as a supplier or consumer, please contact our Commercial Team on (02) 4927 2900.