This article explains The Australian Consumer Law (ACL) generally, if you are covered by the ACL, the changes to the ACL that are being introduced from 1 July 2021 that may affect you, and what terms and conditions can really do.
The ACL provides protections to a consumer of goods and services (Consumer) in Australia. The protections cannot be excluded by the terms and conditions of supply.
WHAT IS THE ACL?
Generally, the protections in the ACL are broad, and include:
- A guarantee that goods are fit for purpose (for example, if a Consumer states that the goods are required for a purpose and the goods are sold to the Consumer by the retailer, they must meet this purpose);
- A guarantee that goods are of acceptable quality (for example, the goods must work, and must last a time reasonably reflective of the quality and price of the goods);
- The goods/services will be delivered within a reasonable time.
ARE YOU PROTECTED UNDER THE ACL?
You have to be a Consumer to be protected under the ACL. So, what is a Consumer? Consumer is defined by someone who acquires goods or services (ie. not a reseller) and either of the below options apply:
A. that the amount payable for those goods or services is $40,000 or less (for example, an item purchased for $30,000);
FROM 1 JULY 2021 THIS THRESHOLD IS TO BE INCREASED TO $100,000.
This will result in many more acquirers of goods and services falling within the definition of Consumer, and therefore many more customers receiving the protections of the ACL.
B. the goods or services (regardless of price) are of a kind that are ordinarily acquired for personal, domestic or household use or consumption.
This provision is not changing, however there is no monetary limit or threshold that applies if the goods or services fit this description. Accordingly the acquirer of the goods or services will be a Consumer and be provided the protections in the ACL regardless of price (for example, carpeting or tiling regardless of value).
WHAT HAPPENS WHEN I PURCHASE AN ITEM WITH TERMS AND CONDITIONS?
The ACL cannot be excluded by terms and conditions of items purchased. This means that terms such as “no warranty” or “no refunds” or attempts to provide limited warranties (for example, a short period of warranty cover for an expensive item) will not be successful as they try to exclude the legal effect of the ACL.
However… in business to business (“B2B”) transactions, liability can be limited to some things, including the replacement of the goods, reperformance of the services, or repair. This “limited liability” can help to reduce exposure under the impending increased threshold for goods and services when a business supplying goods or services so long as they are not ordinarily provided for personal, domestic or household use or consumption.
Terms and conditions limiting liability in this way must be clear and precise to be effective. If you are in the sales industry, it is important that you ensure that the terms and conditions of the supply and sale of the goods and/or services are drafted carefully and in accordance with the above.
If your business need assistance drafting terms and conditions or with the consumer law more generally, please contact our office for a confidential discussion.
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