INCREASED ACCESS TO CONSUMER GUARANTEE REMEDIES
A key change to the meaning of ‘consumer’ under the Australian Consumer Law (ACL) commencing on 1 July 2021 may increase the ability of your business and individuals to access consumer guarantee remedies
The change is the increase in the monetary threshold for the meaning of ‘consumer’ from $40,000 to $100,000.
According to the Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020 (Cth) explanatory memorandum, the reason for the change is to increase access by individuals and businesses to applicable ACL remedies following a decrease in such access due to increasing inflation.
What is the change to the meaning of ‘consumer’?
The monetary threshold for an individual or business to be a consumer for the purpose of the ACL will change from goods or services acquired for $40,000 or less, to $100,000 or less, on and from 1 July 2021. This change will be reflected in the Competition and Consumer Regulations 2010 (Cth).
When is an individual or business a ‘consumer’ for the purpose of the ACL?
Where goods are acquired by an individual or business, they will be a ‘consumer’ under the ACL if:
• the amount paid or payable for the goods (as worked out under section 3 of the ACL), did not exceed $100,000; or
• the goods were of a kind ordinarily acquired for personal, domestic, or household use or consumption; or
• the goods are a vehicle or trailer acquired for use principally in the transport of goods on public roads,
and the individual or business did not acquire the goods, or hold themselves out as acquiring the goods, for:
• the purpose of re-supply (or for gift cards for the purpose of re-supply in trade and commerce); or
• the purpose of using them up or transforming them in trade or commerce in the course of a process of production or manufacture, or in the course of repairing or treating other goods or fixtures on land.
Where services are acquired by an individual or business, they will be a ‘consumer’ under the ACL if:
• the amount paid or payable for the services (as worked out under section 3 of the ACL), did not exceed $100,000; or
• the services were of a kind ordinarily acquired for personal, domestic, or household use or consumption.
What if the good or service costs over $100,000?
Except for the change to the monetary threshold, the meaning of ‘consumer’ remains unchanged. This means that if the good or service costs more than $100,000, the individual or business may still be a ‘consumer’ if, subject to any other limitations, the type of good or service is ordinarily acquired for personal, domestic, or household use or consumption, or, in relation to goods, the vehicle or trailer was acquired principally for the transport of goods on public roads.
When considering whether the good or service was ordinarily acquired for personal, domestic, or household use or consumption, the central assessment is the type of good or service, regardless of its description.
For example, the court has found that carpet of a commercial quality is a type of good ordinarily acquired for domestic consumption (Carpet Call Pty Ltd v Chan (1987) ATPR (Digest) 46-025), meaning that the definition of ‘consumer’ would be applicable to a business purchasing carpet of a commercial quality subject to any other limitations (for example: re-supply).
Calculating the cost of the goods or services
At times, the calculation of the monetary threshold may not be clear, for example, if the goods or services are purchased together with other property or services but without a specified price. If this is the case, then the ACL sets out how the price is to be assessed.
Considerations in light of the change
If your business does not generally supply goods or services over $40,000, then this change may not impact the operation of your business, except to the extent that if your business makes a purchase of goods or services of $100,000 or less, then the ACL may apply (subject to any limitations).
However, if your business does sell goods or services over $40,000, and the contracts used by your business do not limit the application of the ACL to the extent permitted by law (noting that the consumer guarantees cannot be excluded, only limited to the extent permitted under the ACL), then your business may wish to consider reviewing its contracts.
The key takeaways are:
• the monetary threshold for an individual or business to come within the definition of ‘consumer’ under the ACL will increase from $40,000 or less, to $100,000 or less, with effect from 1 July 2021;
• this change expands the application of the ACL meaning of ‘consumer’ and consequently, the circumstances to which the ACL may apply;
• the remainder of the ACL meaning of ‘consumer’ is unchanged; and
• businesses selling goods or services over $40,000 may wish to review their contracts to ensure the ACL is limited to the extent permitted by law.
This document is intended for general information purposes only and should not be regarded as legal advice. Please contact Industry Legal Group if you require legal advice.
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