Changes to monetary threshold for consumer contracts

For businesses that provide goods or services to non-consumers, the recent Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020 (Amendment) has the effect of widening the scope of the consumer guarantees regime under the Australian Consumer Law (ACL).  This means that, as of 1 July 2021, contracts that were not previously subject to the consumer guarantee protections (because the value of goods or services was less than $40,000) will be captured under the new regime.

What is the monetary threshold?

Under the ACL (as it presently stands), a consumer is any person who has acquired goods or services if the amount paid is $40,000 or less.  This is just one (1) of a series of statutory tests used to define whether person is a consumer for the purposes of the contract.

The monetary threshold functions to provide consumer protection to persons, including small businesses, who do not fall within the other definitions of consumer, most commonly because they do not purchase the goods for personal, domestic or household use.

Consumers obtain the benefit of certain non-excludable rights and guarantees, including that goods and services:

  • are of an acceptable quality;
  • are fit for purpose; and
  • match the description provided.

A supplier’s failure to satisfy these requirements will allow a consumer to claim different remedies, such as repair, refund, replacement depending on the defect in the goods or services.  Compensation or damages may also be payable in some cases.

Changes to the threshold

The recent Amendment has extended the monetary threshold from $40,000 to $100,000.  This means that contracts which previously did not provide the consumer guarantee protections (because the value of goods or services was less than $40,000) will be captured under the new regime.

The increase was in response to a review of the ACL by Consumer Affairs Australia and New Zealand, which found that the protection afforded to consumers under the existing threshold has been diminished due to inflation, and the broad category of goods and services that were initially intended to be protected were no longer captured within the $40,000 threshold.

What does this mean for you and your business?

In light of the changes, businesses should review their standard form contracts to make sure that their contracts are compliant with the new monetary threshold from July 2021, such as:

  • Standard terms and conditions should be reviewed as the compulsory consumer guarantees wording will need to be included in the contract. Additionally, the ACL may void any contractual terms that do not comply with the new consumer guarantees requirement.
  • New report keeping processes – new processes may be required to track ‘sales to consumer’ for the purpose of maintaining compliance with ACL.

Further references

Competition and Consumer Act 2010 – Schedule 2 The Australian Consumer Law

Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020

Related articles by Dundas Lawyers

Unfair contract terms, small businesses and changes to the Australian Consumer Law

Businesses obligations when trading online – Competition and Consumer Act 2010 (Cth)

The Competition and Consumer Act 2010 (Cth) and consumer transactions

Further information

If you need assistance with to comply with your business’ obligations under the Australian Consumer Law, please telephone me for an obligation free and confidential discussion.


Franchising lawyersMalcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
Telephone: (07) 3221 0013 | Mobile: 0419 726 535




This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances

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