Get your standard terms in order: The ‘consumer guarantees’ are about to apply to a lot more B2B transactions

If you’re not in the business of supplying to retail consumers, you could be excused for thinking that the consumer guarantees under the Australian Consumer Law (ACL) were not something you needed to worry about.

However, given the definition of “consumer” in the ACL, the consumer guarantees already apply to a number of business to business transactions (in addition to business to retail consumer transactions), and from 1 July 2021 they will apply to a lot more.

The definition of “consumer” already applies to supplies (including to business customers) of goods and services:

• of a kind ordinarily acquired for personal, domestic or household use of consumption; or
• for a price of $40,000 or less,

but from 1 July 2021 the $40,000 threshold will increase to $100,000.

This means that any business that supplies goods or services to another business where the value of those goods or services is less than $100,000 will need to comply with the consumer guarantee regime in the ACL.

(There is no change to the exclusions from this regime, including for goods purchased for re-resupply or use in production or manufacture.)

There are 9 consumer guarantees that apply to goods and 3 consumer guarantees that apply to services. These include, for example: guarantees for goods relating to acceptable quality, fitness for purpose and compliance with express warranties and guarantees for services relating to fitness for purpose and being performed with due care and skill.

Among other available remedies, “consumers” (including business customers) can potentially claim uncapped compensation from a supplier (including for consequential losses) if they suffer loss or damage as a result of breach of a consumer guarantee (for example, for business losses resulting from goods or services that are found not to have met a guarantee relating to fitness for purpose.)

In many circumstances, however, a limitation of liability clause that meets the very specific requirements of the Australian Consumer Law can be effective.

Sierra Legal can assist by reviewing your standard terms to ensure that an appropriate limitation of liability clause is in place and advising on the consumer guarantees and other relevant obligations under the Australian Consumer Law.