Heads up: change in law affecting suppliers and service commences on 1 July 2021

From 1 July 2021, suppliers of goods and services to any person (including large businesses) will automatically give guarantees in relation to goods or services with a value of $100,000 or less.

Changes within context

Under the Australian Consumer Law (ACL), “consumers” are entitled to certain guarantees and remedies if those guarantees are not met. A consumer is a person that acquires goods or services for personal, domestic or household use. However, under the ACL, a consumer also currently includes any person that acquires goods or services where the price is up to $40,000, including business-to-business transactions.

There are nine guarantees that apply to goods, which are given by suppliers and, in some cases, manufacturers and importers.  The consumer guarantees that apply to goods include guarantees that the goods are of acceptable quality and are fit for purpose.

A service provider guarantees that the services are provided with due care and skill, are fit for any specified purpose and are provided within a reasonable time (where no time is set).

If a consumer purchases goods or services that do not meet the guarantees in the ACL, the consumer will be entitled to a remedy. The remedy will depend upon the nature of the transaction but, for goods, may include a repair, replacement or refund.

Why?

The dramatic increase (150%) in the price cap, which has not increased since 1986, seeks to address concerns that inflationary pressures have meant that “consumers” who were intended to be protected by the regime are no longer being afforded those protections.

ASIC regulations, which mirror the ACL and cover the provision of financial products and services will also come into effect to reflect the increased threshold.

Implications for businesses

Many businesses that are not presently subject to these provisions of the ACL due to the $40,000 value cap will soon find their transactions falling within the $100,000 cap. The increase will likely correspond with an increase in claims against suppliers, manufacturers, importers and service providers. 

It is important that businesses understand their obligations from a compliance perspective and a commercial standpoint. Points of action for businesses include:

    • reviewing which goods and services offered by the business are covered by the ACL or the ASIC regulations;
    • educating staff about product coverage and their obligations; and
    • updating contracts and T&Cs to reflect the changes.

If you have any queries or require any assistance regarding the changes, please contact a member of our team.