News & Insights

From 1 July 2021, the definition of a “consumer” under the Australian Consumer Law (ACL) will be significantly broadened. As a result, more businesses will be deemed to be a “consumer”, and more business-to-business transactions will be captured under the “consumer” protections of the ACL.

Accordingly, “business consumers” will enjoy new rights under the ACL, including the protections offered by the regime of statutory consumer guarantees. At the same time, manufacturers and suppliers to those businesses will be required to comply with the strict provisions of the ACL that relate to refunds, warranty wording and limitations of liability.

how has the definition changed?

Currently, a person or business is considered to be a “consumer” for the purposes of the ACL if they purchase goods or services for their own use that:

• are of a kind ordinarily acquired for domestic, household or personal use or consumption (irrespective of cost); OR
• cost up to $40,000 (irrespective of their kind or purpose).

From mid-2021, the above monetary threshold will increase from $40,000 to $100,000.

which businesses will have new obligations?

This change will affect manufacturers and sellers in particular, where the goods they supply are not of a kind ordinarily acquired for domestic or household purposes, and typically cost more than $40,000 (which are currently not covered by the ACL) up to $100,000. These businesses will have new-found obligations under the ACL relating to refunds, warranties and permitted exclusions of liability.

For further information on the specific obligations of manufacturers, please see our previous article “do you make and sell consumer goods? no? think again… changes to the australian consumer law widen consumer rights”.

which businesses will have new rights?

On the other hand, businesses that will fall within the new broadened definition of a “consumer” will have new rights under the ACL.

Notably, these businesses will be able to enjoy the protections offered by the ”statutory consumer guarantees” (which cover, amongst other things, the quality, safety, durability and fitness for purpose of goods and services). It will also be easier for these businesses to make a claim against a supplier or manufacturer if there is a fault with the goods or services.

It is worth noting that a business that on-sells goods or uses them up in the course of manufacturing other goods is not a consumer for the purposes of the ACL. Rather, the end-customer of those on-sold goods or new goods will likely be the ”consumer” in that scenario.

It is extremely important for businesses to establish whether they owe any new obligations under the ACL, as a failure to uphold such obligations can attract significant financial penalties. Likewise, businesses should be aware of any new rights they may be afforded under the ACL, of which they can take advantage.

If you have any questions about how your business will be affected by this legislative change, please contact a member of our Trade Team.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.