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

The general rule is that the Competition and Consumer Act 2010 (Cth) (CCA) applies to businesses supplying goods or services to consumers (B2C), but also in their dealings with competitors.[1]  Whether the CCA applies will depend whether goods or services are supplied to a consumer.[2]

Is it a consumer transaction?

The effect of a transaction being classed as a consumer transaction is that the consumer guarantee provisions in the CCA for the provision of goods[3] and services[4] apply.

When does a consumer acquire goods or services?

A person acquires goods as a consumer if and only if:

    • the amount paid does not exceed $40,000[5] or an amount prescribed for that purpose[6];
    • the goods were of a kind usually supplied for personal, domestic or household consumption;[7]

However, the $40,000 threshold does not apply if the person held themselves out as acquiring the goods for the purpose of resupply,[8] or for the purpose of using them in trade or commerce.[9]

Are the goods or services ‘ordinarily’ used for personal domestic or household use?

This question is what the goods or services are ordinarily used for as opposed to what they might be used for.  Case law provides guidance on this issue.

What is the effect of mischaracterised consumer transactions?

A mischaracterisation of a commercial transaction as a consumer one may expose a business to statutory warranties which it is not liable for.  Conversely a business that sells goods or services under the misapprehension that they are not subject to the CCA may mean that they have incorrectly attempted to contract out of their obligations.   The essential question is whether their standard form terms and conditions are appropriate.

What is the effect of attempting to contract out of the CCA?

Section 64 of the CCA provides that a term of a contract:

….is void to the extent that the term purports to exclude, restrict or modify, or has the effect of excluding, restricting or modifying:

    • the application of all or any of the provisions of this Division; or
    • the exercise of a right conferred by such a provision; or
    • any liability of a person for a failure to comply with a guarantee that applies under this Division to a supply of goods or services.[10]

What limitation of liability is allowed?

That said, section 64A means that a term is not ‘void’ where the goods are acquired for personal domestic use or consumption because the term limits the person’s liability for failure to comply with a guarantee to any of the following:

    • (a) the replacement of the goods or the supply of equivalent goods;
    • (b) the repair of the goods;
    • (c) the payment of the cost of replacing the goods or of acquiring equivalent goods;
    •  the payment of the cost of having the goods repaired.

What does this mean for businesses involved in ecommerce?

Businesses should consider whether they are providing goods or services to a consumer.  This will subsequently determine whether their standard form contracts can correctly attempt to limit liability and whether the consumer protection provisions apply.

Links to legislation

Competition and Consumer Act 2010 (Cth) – Schedule 2.

Competition and Consumer Act 2010 (Cth).

Competition and Consumer Regulations 2010 (Cth).

Further information

If you need advise on the applicability of the CCA to your business, then please contact us for an obligation free and confidential discussion.

 

Malcolm-Burrows-009

Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.

Legal Practice Director

Telephone: (07) 3221 0013

Fax: (07) 3221 0031

e: mburrows@dundaslawyers.com.au

Disclaimer

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.


 

[1] Seafolly Pty Ltd v Madden [2012] FCA 1346.

[2] Competition and Consumer Act 2010 (Cth) Schedule 2, s3.

[3] Competition and Consumer Act 2010 (Cth) Schedule 2, s54 -s57.

[4] Competition and Consumer Act 2010 (Cth) Schedule 2, s60 – s62.

[5] Competition and Consumer Act 2010 (Cth) Schedule 2, s3(1)(a)(1).

[6] Competition and Consumer Act 2010 (Cth) Schedule 2, s3(1)(a)(1).

[7] Competition and Consumer Act 2010 (Cth) Schedule 2, s3(1)(b).

[8] Competition and Consumer Act 2010 (Cth) Schedule 2, s3(2)(a).

[9] Competition and Consumer Act 2010 (Cth) Schedule 2, s3(2)(b).

[10] Competition and Consumer Act 2010 (Cth) Schedule 2, s64.

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