Australian Consumer Law and your goods or services — what every SME needs to know

Almost every Australian business sells something — a product, a service, or a bundle of both. The Australian Consumer Law (ACL), which sits as Schedule 2 to the Competition and Consumer Act 2010 (Cth), attaches legally binding obligations to those sales whether you know about them or not. The guarantees cannot be excluded by contract, and getting the remedies wrong can expose a business to complaints, enforcement action, and civil penalties.

This article explains the key concepts that govern your supply of goods and services: what counts as a consumer under the ACL, what the statutory guarantees require, how the remedy framework operates, where the common compliance traps are, and the practical steps that keep your business on the right side of the law.

What qualifies as goods and what qualifies as services

The ACL defines both terms broadly. Most things a business sells will fall into one category or the other, and some transactions span both.

Goods includes tangible products — clothing, electronics, furniture, food, vehicles, machinery — as well as animals and gas and electricity when supplied in trade or commerce. Downloadable digital products such as desktop software and e-books are also treated as goods. Second-hand and refurbished items remain goods.

Services covers almost any activity performed for a customer in exchange for payment. Professional services (legal, accounting, IT, marketing), accommodation, repairs and maintenance, personal services (hairdressing, wellness), education and coaching, and SaaS or cloud platforms are all services. The distinction matters practically: ongoing access to a cloud platform is typically a service, while a downloadable product sold once is typically goods.

Where a business bundles a product with installation, support, or after-sales maintenance, the transaction may attract both the goods guarantees and the services guarantees simultaneously for their respective parts.

Who is a consumer under the ACL

The consumer guarantees — and most of the ACL's protections — apply whenever you supply to a "consumer". A person or business is a consumer under the ACL if any one of the following tests is met:

The price paid or payable is $100,000 or less; or
The goods or services are of a kind ordinarily acquired for personal, domestic or household use or consumption (regardless of price); or
The goods are a vehicle or trailer used primarily to transport goods on public roads.

The $100,000 threshold has been in place since 1 July 2021, when it was raised from the previous $40,000 limit.

A key point many businesses overlook is that business customers can still be consumers. A company buying a $15,000 printer or a $60,000 software licence that is ordinarily acquired for household use will likely be a consumer. There are exceptions — most importantly, purchases made for the purpose of resupply, and purchases of goods to be consumed or transformed in a manufacturing or production process. If your customer profile sits near these edges, it is worth reviewing whether those sales are covered.

The consumer guarantees for goods

When you supply goods to a consumer, the ACL automatically imposes a set of guarantees. The most important are:

Acceptable quality: Goods must be safe, durable, free from defects, and acceptable in appearance and finish, judged by what a reasonable consumer would expect given the product type, price point, and any representations made.
Fit for disclosed purpose: If a consumer tells you what they need the goods for, or you represent that the goods are suitable for a particular purpose, they must actually be fit for that purpose.
Match description, sample, or demonstration: Goods must correspond to how they were described or shown before purchase.
Clear title and undisturbed possession: The supplier must have the right to sell the goods and the buyer must be able to use them without interference.

On spare parts and repairs availability: under the ACL, it is the manufacturer — not the retailer — who guarantees that reasonable steps will be taken to ensure repair facilities and spare parts remain reasonably available for a reasonable period after purchase, unless the manufacturer clearly discloses at the point of sale that they will not be available. Retailers should be careful not to make representations about spare parts availability that go beyond what the manufacturer has confirmed.

The consumer guarantees for services

When you supply services to a consumer, the ACL requires that the services are:

Provided with due care and skill: The work must be performed competently, consistent with professional standards for the relevant field.
Fit for any disclosed purpose: If you or the consumer identifies a particular outcome or purpose for the services, they must be reasonably fit for it.
Completed within a reasonable time: Where no timeframe is agreed, services must be supplied within the time a reasonable person would expect.

These guarantees cannot be excluded by your terms of engagement, no matter how clearly drafted. A clause attempting to exclude liability for "any guarantee implied by statute" does not override the ACL.

How the remedy framework works

The remedy available when something goes wrong depends on whether the failure is minor or major. This distinction is central to the ACL and is often misunderstood.

Minor failure: Where the failure can be fixed, the supplier chooses the remedy. For goods, that typically means repair or replacement. For services, it means re-performing the work or fixing the defect. The supplier must act within a reasonable time.

Major failure: The consumer chooses their remedy. For goods with a major failure, the consumer can reject the goods and obtain a refund or replacement, or retain the goods and recover compensation for the reduction in their value. For services with a major failure, the consumer can cancel the contract and recover a refund for the unused portion. In either case, the consumer can also claim compensation for reasonably foreseeable losses caused by the failure.

A failure is major if the goods or services would not have been acquired by a reasonable consumer who knew of the problem, if the goods or services are substantially unfit for their purpose and cannot easily be fixed, if the goods are unsafe, or if the goods differ so significantly from their description or sample that a reasonable consumer would not have purchased them.

Note that multiple minor failures with the same goods or services can accumulate into a major failure. If a repair fails repeatedly, or a service requires re-performance several times for the same issue, the consumer may become entitled to the major failure remedies even if no single event was individually serious.

Change of mind: There is no requirement under the ACL to accept change-of-mind returns. A voluntary change-of-mind policy is a commercial choice. If you offer one, document it clearly and make sure it sits alongside — not in place of — the ACL remedies, and that the conditions (timeframe, condition of goods, proof of purchase) are stated plainly.

Common compliance traps

"No refunds" signage and blanket exclusions. Displaying a "no refunds" sign, or including a clause in your terms that purports to exclude all remedies, is inconsistent with the ACL for consumer supplies. The ACCC treats these as misleading conduct in their own right.

Misleading or deceptive conduct. Under s 18 of the ACL, a business must not engage in conduct that is misleading or deceptive in trade or commerce. Intent is irrelevant — what matters is the overall impression created in the minds of the audience. This reaches product descriptions, pricing displays, promotional claims, advertising, and even silence where disclosure was reasonably expected. Claims like "90% faster" or "Australian-made" need to be accurate and verifiable.

Unfair contract terms. Since 9 November 2023, proposing, applying, or relying on an unfair term in a standard form contract is prohibited and attracts civil penalties. Businesses that have not reviewed their standard form consumer or small business contracts since that date should do so as a priority.

Digital products and SaaS. Many businesses assume consumer guarantees do not apply to their app or cloud platform. They do. Downloaded software and digital products are goods; cloud access, subscriptions, and streaming are services. Uptime commitments and support response times need to be considered in light of the due care and skill and reasonable time guarantees.

Practical steps to align your business with the ACL

Assess your typical transactions against the consumer test — remember the $100,000 threshold and the household-use limb both matter.
Review all product and service descriptions across your website, app, and marketing to confirm they are accurate, specific, and substantiated.
Audit your refund and complaints policy to ensure it reflects minor and major failure remedies correctly, without purporting to exclude or limit ACL rights.
Update standard form contracts to remove any unfair terms — particularly one-sided limitation clauses, unilateral variation rights, and broad exclusion clauses.
For SaaS and digital products, align your uptime SLA, support commitments, and refund flow with the services guarantees.
If you collect personal information, confirm whether your business is an APP entity under the Privacy Act 1988 (Cth) and, if so, publish a compliant privacy policy.
Train customer-facing staff on your complaint-handling process so responses are consistent with what your written policy says.

How Artificer Legal can help

Consumer law compliance for a product or service business is not a one-time exercise. The ACL touches every contract you sign with a customer, every claim you publish in an advertisement, and every remedial conversation your team has when something goes wrong. Getting the documents and internal processes right from the start is materially easier than retrofitting them after a complaint or enforcement inquiry.

Artificer Legal works with Australian SMEs and founders to:

Draft and review customer terms and conditions, supply agreements, and SaaS terms that reflect ACL obligations and correctly allocate remedial risk
Audit existing standard form contracts for unfair terms and redraft non-compliant clauses
Advise on the characterisation of digital products and services for ACL purposes
Build compliant refund and warranty policies that work for both the business and the customer
Prepare privacy policies and assist with APP compliance for businesses collecting personal information

If you are unsure whether your current terms, policies, or advertising copy are compliant, a document review is the fastest way to identify exposure and fix it before it becomes a dispute.

Key points

The Australian Consumer Law's reach is wider than most businesses expect. A few points worth keeping in mind:

The $100,000 threshold and the household-use test mean that many B2B sales are still consumer transactions.
Consumer guarantees cannot be contracted out of — any attempt to do so is itself a potential ACL breach.
The minor/major failure distinction determines who controls the remedy, and accumulating minor failures can become a major failure.
Misleading conduct does not require intent — it requires only that the overall impression is likely to mislead.
Unfair terms in standard form contracts now attract penalties, not just voidability.
Digital products and SaaS are not exempt from the ACL; the goods/services characterisation determines which guarantees apply.

Reviewing your contracts and policies with these principles in mind is the most direct way to reduce your exposure and build the kind of customer trust that supports long-term growth.