Changes to the Australian Consumer Law, amending the definition of “consumer” have come into effect on 1 July 2021, which is a timely reminder for businesses to review their terms and conditions.
Definition of Consumer
Currently section 3 of the Australian Consumer Law, which is found in Schedule 2 to the Competition and Consumer Act 2010 (Cth) provides that a person is taken to have acquired goods and services as a consumer if and only if:
- The amount did not exceed $40,000; or,
- The goods or services were of a kind ordinarily acquired for personal, domestic or household use of consumption; or,
- The goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads.
A person is not a consumer if they purchased goods or services for resupply or for using them up or transforming them in the course of a process of production or manufacture or in the course of repairing or treating other goods or fixtures on land.
The passing of the Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulation 2020 has amended the definition of ‘consumer’.
The monetary threshold has increased from $40,000 to $100,000, meaning that more transactions will be considered supplies to “consumers” and the relevant provisions of the Australian Consumer Law will apply.
How will this impact you?
This change in definition will mean that more businesses will need to understand the obligations associated with supplying goods and services to “consumers” from 1 July 2021.
It is also important that businesses are aware that a business can be a consumer if the definition criteria is met.
If your business has not traditionally been caught by Australian Consumer Law and supplies goods or services worth between $40,000 and $100,000, then you should conduct a review of your existing documentation, which may need to be updated in light of this change, for example training terms and warranties against defects. It is also important to consider whether staff need training is required.
Consumers have rights under the Australian Consumer Law if goods do not meet certain consumer guarantees.
The remedies a consumer will be entitled to are dependent on whether the problem is a major or minor failure.
From 18 December 2020, the definition of Major Failure in the Australian Consumer Law was amended by The Treasury Laws Amendment (2020 Measures No.6) Act 2020.
The amendment clarifies that multiple, non-major failures can amount to a major failure, by inserting an additional test into the definition of major failure in section 260 and section 268 of the ACL.
The change means that a failure to comply with a consumer guarantee would be considered a ‘major failure’ if:
- It is one of a series of non-major failures, and,
- A reasonable consumer would not have acquired the goods or services if they were aware of the nature and extent of those non-major failures taken as a whole, at the time of supply.
The non-minor failures do not need to occur within the same time period, relate to reoccurring issues or if there is a minimum threshold of non-major failures to amount to a major failure.
Businesses that supply goods and/or services to consumers need to be aware of this change, as a consumer’s right and the applicable remedy will be impacted by this change.
If you have any questions or concerns relating to any of the information or you require assistance, please do not hesitate to get in touch with a lawyer in Coleman Greig’s Commercial Advice team, who would be more than happy to assist you.