Until this week, transport and storage service providers were exempt from complying with the consumer guarantees under the Australian Consumer Law (ACL). This reduced their liability risk profile for goods:
- damaged or lost in transit or during storage; or
- not delivered within a reasonable time.
Amendments to the ACL limit that exemption, effective from 26 October 2018, increasing the risk exposure of Australian transport and storage businesses to ACL claims.
Transport and storage providers should review their insurance, transport and service agreements to manage this risk and ensure they are ACL compliant.
1. What are consumer guarantees?
The following consumer guarantees apply to the supply of services under the ACL in relation to all B2C contracts and some B2B contracts:
- services will be supplied with due care and skill
- services supplied will be fit for purpose
- services will be supplied within a reasonable time
2. What is the new law?
- The new law limits the exemption to only apply when goods are transported for the consignee’s business. This means if the goods are for the consignee’s personal, or domestic, use the exemption will no longer apply. The exemption will also not apply to the storage of goods when the goods are for personal use.
- Transport and storage service providers may:
- be held liable for a breach of the consumer guarantees in certain circumstances; and
- unknowingly engage in misleading or deceptive conduct and/or make false or misleading representations in their marketing material, terms and conditions and refunds policies. Making a false or misleading representation may result in significant penalties and other civil and criminal liabilities.
- This table illustrates how the new law works in practice compared to the old law.
Party A, tradesperson, purchases a fluorescent jacket, for use in their business, and a sports t-shirt, to wear at the gym, from Party B’s online store.
Party C, the transport provider for Party B’s online store, is engaged to deliver those goods from Party B’s distribution centre to Party A’s house.
Party C fails to carry the goods with due care and skill, resulting in the fluorescent jacket and sports t-shirt being ripped in transit.
Party B has no recourse against Party C under the ACL for failing to supply its services with due care and skill because the goods were transported for the purpose of Party A’s business.
Party B can rely on the consumer guarantees in respect of the sports t-shirt because it was not transported for the purpose of Party B’s business, trade, profession or occupation. This means the transport provider may:
- be required to provide the transport services again; and
- importantly, be liable for any reasonably foreseeable loss or damage suffered by Party B (eg the value of the lost goods).
The consumer guarantees do not apply to the fluorescent jacket because it was transported for the purpose of Party B’s business.
3. What next?
Transport and storage service providers should review their:
- insurance contracts;
- transport terms;
- services contracts;
- refunds policies; and
- marketing material,
to ensure they are compliant with the ACL. Failing to do so may lead to penalties and increased contractual risks.
If you are a transport provider or storage company, get in touch with our Trade, Transport and Regulatory team to discuss how your business can comply with the new ACL requirements.
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Posted on: 31 October 2018