April 3, 2013

B2B Transactions Captured by the Australian Consumer Law

The Australian Consumer Law (ACL) captures many business-to-business (B2B) transactions.

BUSINESS AS ‘CONSUMER’ UNDER THE ACL

Under the ACL, your business is a ‘consumer’ if it purchases:

  • goods or services at a price which does not exceed $40,000;
  • goods or services that are ‘ordinarily acquired for personal, domestic or household use’ (regardless of the cost of the goods or services); or
  • a vehicle or trailer.

The first and third limbs of the test leave little room for interpretation, but the meaning of goods or services ‘ordinarily acquired for personal, domestic or household use’ has been interpreted broadly by the courts.

CASES ON POINT

In Carpet Call Pty Ltd v Chan, the sale of industrial-strength carpet to be used in a nightclub was held to be “goods of a kind ordinarily acquired for personal, domestic or household use” because it was carpet.  Carpet is ordinarily acquired for domestic consumption, so the court concluded that the transaction was a consumer transaction, regardless of the fact that the carpet was commercial carpet, sold for commercial use in the context of a B2B transaction.

The case therefore, stands for the proposition that goods and services will be judged according to the “kind” of product sold, not the intended purpose or actual purpose of the goods subject to the sale.

Conversely, where goods are used for personal or domestic purposes, but are of a commercial nature, this may not make them a ‘consumer’ item. In Atkinson v Hastings Deering (Qld) Pty Ltd, a large tractor used for domestic purposes was not considered to be a ‘consumer’ product.

TAKEAWAY

If your business carries out consumer B2B transactions:

  • The consumer guarantee provisions of the ACL are applicable.
  • You cannot “contract out” of consumer guarantees – under s 64(1) of the ACL, a term which “has the effect of” excluding, modifying or restricting any consumer guarantees will be void.
  • If your business uses a standard template contract, it is important to have it reviewed and amended to comply with the ACL if it might be used in a “consumer” B2B transaction.

Rouse Lawyers is able to review and advise on your business transactions and assist you in:

  • evaluating how the ACL may affect your business and it’s transactions,
  • mitigating your risk under the ACL; and
  • enforcing rights that you may have under the ACL.