April 29, 2021

Australian Consumer Law (ACL) imposes a number of mandatory consumer guarantees on those providing goods or services of a certain nature. Application of the ACL is set to broaden as of 1 July 2021, meaning more suppliers could find themselves caught out.

The ACL can be found in Schedule 2 of the Competition and Consumer Act 2010 (Cth). Generally speaking, the ACL aims to protect vulnerable consumers against goods and services that are misleading, unfit for purpose, unsafe or unfair. 

As it currently stands, a “consumer”, to which ACL protections apply, is any person who purchases goods or services:

  • For personal, domestic or household use or consumption; or
  • The cost of which did not exceed $40,000.00.

As of 1 July 2021, this threshold is set to broaden to include any goods or services where the cost of which does not exceed $100,000.00.

The amendments will have a significant impact on manufacturers or suppliers who fall within this range. For those who historically fell outside the previous range but are now at risk of having the ACL apply to them, now is the time to refresh your understanding of the consumer guarantees, which cannot be waived, with a view to sharpen supply contracts and marketing campaigns accordingly.

The consequences for falling foul of the protective provisions of the ACL can have a significant impact on a business’s bottom line. Depending on the nature of the breach, suppliers can face civil penalties as well as have obligations to repair, replace, refund or reimburse customers for their defective supply. In addition, the increased applicability of the ACL and greater potential liability could become a headache for your products liability insurance premiums.

The Australian Competition and Consumer Commission (ACCC) have demonstrated a prioritisation of protecting Australian consumers in the wake of COVID-19 (see link). It is therefore imperative that those currently operating in the ‘grey area’ take steps to ensure compliance with the ACL.

If you require any assistance with more detailed advice on your rights or obligations under the ACL, review of your current supply contracts, or have general concerns that the ACL may now apply to you where it did not previously, please do not hesitate to contact a member of our Commercial Division for an initial consult with no ongoing obligations.