A software platform does not perform as promised. New equipment starts failing within weeks. A consultant misses critical deadlines. The supplier then refuses to help because the agreement was “business to business”.
Many businesses assume that the Australian Consumer Law does not apply to B2B transactions. That assumption can be costly.
Under the Australian Consumer Law, a business can still qualify as a consumer when it purchases goods or services. This means consumer guarantees, misleading conduct laws and unfair contract term protections may apply even when both parties have an ABN and the contract is clearly commercial.
For business purchasers, the ACL may provide rights to a repair, replacement, refund, resupply or compensation.
For suppliers, it may mean that exclusions, warranty limits and “no refund” clauses do not provide the protection expected.
Australian Consumer Law and B2B contracts
The Australian Consumer Law, commonly called the ACL, is contained in Schedule 2 of the Competition and Consumer Act 2010.
Although the word “consumer” is often associated with individual shoppers, the legal definition is broader. A company, sole trader, partnership or other business entity may qualify as a consumer when buying goods or services.
The ACL can therefore apply to a wide range of business-to-business contracts, including agreements involving:
- software and IT services;
- professional and consulting services;
- commercial equipment;
- office furniture;
- marketing services;
- telecommunications;
- repairs and maintenance;
- business vehicles; and
- fit-out products and services.
Calling an agreement a “commercial contract” or “B2B agreement” does not automatically exclude the ACL.
The $100,000 ACL threshold for business purchases
A business may be treated as a consumer where it acquires goods or services and:
- the purchase price is $100,000 or less, including GST;
- the goods or services are ordinarily acquired for personal, domestic or household use; or
- the goods are a commercial road vehicle or trailer used mainly to transport goods on public roads.
The $100,000 consumer threshold has applied since 1 July 2021.
This captures many ordinary business purchases. For example, the ACL may apply where:
- a medical practice buys office furniture;
- a professional services firm purchases new computers;
- a retailer engages a marketing consultant;
- a construction business pays for software;
- a café purchases refrigeration equipment; or
- a growing company engages an IT provider.
The fact that the purchase is used entirely for business purposes does not necessarily remove ACL protection.
B2B purchases above $100,000
A transaction costing more than $100,000 may still be covered. The ACL may apply where the goods or services are of a kind ordinarily acquired for personal, domestic or household use.
The focus is generally on the ordinary nature of the product or service, rather than the buyer’s particular reason for purchasing it.
For example, a business purchasing an expensive vehicle, furniture package or household-style appliance may still qualify as a consumer, even if the item will only be used commercially.
Highly specialised industrial machinery is less likely to satisfy this test. Where a product has both commercial and domestic uses, the legal position may not be obvious.
Business purchases excluded from consumer guarantees
Not every business purchase under $100,000 is protected by the consumer guarantee provisions.
Goods may fall outside the consumer guarantees where they are purchased:
- for resupply;
- to be used up or transformed during production or manufacturing; or
- to repair or treat other goods or fixtures.
A retailer buying products to sell to customers is generally not acquiring those products as a consumer.
Similarly, a manufacturer buying raw materials for use in production may not receive consumer guarantee protection, even if the transaction is below $100,000.
Specific exclusions can also apply to certain transport and storage services involving business goods.
The purchase price is therefore an important starting point, but it does not always determine whether the Australian Consumer Law applies.
Consumer guarantees in B2B transactions
Where a business qualifies as a consumer, the supplier must comply with the ACL consumer guarantees.
Goods must generally:
- be of acceptable quality;
- be fit for a disclosed purpose;
- match their description, sample or demonstration model;
- comply with any express warranties; and
- come with clear title.
Services must generally:
- be provided with due care and skill;
- be fit for a disclosed purpose;
- achieve an agreed result where the purchaser relied on the supplier; and
- be supplied within a reasonable time where no timeframe was agreed.
These guarantees apply automatically. They are separate from the supplier’s voluntary warranty and may continue after a written warranty period has expired.
A common B2B software dispute
A growing business pays $45,000 for a new customer-management platform. During the sales process, the software provider says the platform will:
- integrate with the business’s accounting system;
- support its expected number of users;
- automate key reporting tasks; and
- be fully operational before an upcoming launch.
After implementation, the integration does not work. The platform regularly crashes and the launch is delayed.
The supplier relies on a clause excluding all warranties and says the purchaser accepted the risks of a commercial software project. That clause may not decide the dispute.
Because the purchase price was below $100,000, the purchaser may qualify as a consumer under the ACL. Consumer guarantees relating to due care and skill, fitness for purpose and achieving an agreed result may apply.
The sales claims may also raise issues under the prohibition against misleading or deceptive conduct.
The available remedy will depend on:
- what the supplier promised;
- whether the buyer relied on those promises;
- the seriousness of the failure;
- whether the problem can be fixed;
- the terms of the contract; and
- the losses caused to the business.
This is why a B2B contract dispute cannot always be resolved by looking at the exclusion clause alone.
Excluding the Australian Consumer Law in a B2B contract
Commercial contracts often contain clauses stating that:
- all warranties are excluded;
- no refunds will be provided;
- goods are accepted “as is”;
- the supplier is not responsible for business losses; or
- liability ends when the written warranty expires.
These clauses may still allocate some commercial risk, but they cannot remove consumer guarantees where the ACL says those guarantees apply.
A supplier may also breach the law by incorrectly telling a business purchaser that it has no consumer rights.
In some B2B transactions, section 64A of the ACL allows liability to be limited to particular remedies, such as:
- repairing goods;
- replacing goods;
- supplying equivalent goods;
- paying the cost of repair or replacement;
- supplying services again; or
- paying the cost of having services supplied again.
However, a limitation clause must satisfy the statutory requirements. It may not be effective where relying on it would be unfair or unreasonable.
A generic limitation of liability clause is not the same as a properly drafted ACL-compliant clause.
Misleading or deceptive conduct in business transactions
The ACL applies to more than defective goods and poorly performed services.
Section 18 prohibits misleading or deceptive conduct in trade or commerce. This can apply to B2B negotiations even when the purchaser does not qualify as a consumer under the $100,000 threshold.
The conduct does not have to be deliberately dishonest. A statement can be misleading even where the person making it believed it was correct.
Common B2B disputes involve claims about:
- product performance;
- likely cost savings;
- expected revenue;
- delivery dates;
- software compatibility;
- professional experience;
- customer demand;
- implementation timeframes;
- exclusivity; and
- future results.
For example, a supplier may say that a machine can handle a particular production volume or that software will integrate with an existing system.
If the purchaser relies on that statement and it proves inaccurate, the supplier may face a misleading conduct claim.
Businesses should keep copies of proposals, emails, presentations, demonstrations and meeting notes. These records can become critical when the parties later disagree about what was said.
Unfair contract terms in small business contracts
The ACL protects eligible small businesses from unfair terms in standard-form contracts.
For contracts made, renewed or varied from 9 November 2023, the rules may apply where at least one party has fewer than 100 employees or annual turnover below $10 million.
A term may be unfair if it creates a significant imbalance, is not reasonably necessary and could cause harm. Examples include one-sided rights to change prices, vary services, terminate, impose excessive penalties or automatically renew.
Not every one-sided clause is unfair, but using or relying on an unfair term can attract penalties.
Practical steps for businesses
Business purchasers should record important promises in writing, including what the product or service must achieve, delivery dates, performance standards and available remedies. If something goes wrong, notify the supplier promptly and keep evidence of the failure, your attempts to resolve it and any resulting loss.
Suppliers should review their contracts, sales claims, warranties, refund policies and limitation clauses to ensure they comply with the ACL. Sales teams should also avoid making promises that are not supported by the contract or evidence.
Do not assume that a broad exclusion clause removes your rights or obligations. Seek legal advice before signing a significant B2B agreement or as soon as a dispute arises.
Frequently Asked Questions
Does Australian Consumer Law apply to business to business contracts?
Yes. The ACL can apply to business-to-business contracts where the purchaser meets the legal definition of a consumer.
This commonly occurs where the purchase price is $100,000 or less.
Can a business claim a refund under the ACL?
Potentially. The available remedy depends on whether the failure is major or minor, whether it can be fixed and whether the transaction is covered by the consumer guarantees.
A business may be entitled to repair, replacement, refund, resupply, cancellation or compensation.
For best practices when drafting refund policies, see our comprehensive overview of sales refund terms and conditions.
Can a supplier exclude consumer guarantees?
Generally, no. A contract cannot remove consumer guarantees that apply under the ACL.
Some B2B transactions may permit liability to be limited to particular remedies under section 64A.
Does the $100,000 ACL threshold include GST?
Yes. The transaction value is assessed including GST.
Does section 18 apply to B2B transactions?
Yes. The prohibition against misleading or deceptive conduct can apply broadly to business dealings in trade or commerce.
It is not limited to purchases below $100,000.
Do unfair contract term laws apply to all business contracts?
No. They apply to qualifying standard-form consumer and small business contracts. Whether a contract is standard form and whether a term is unfair depend on the circumstances.
Whether your business is seeking a refund, responding to a customer complaint or reviewing its standard contracts, early advice can help clarify the available options and reduce the risk of the dispute escalating.
Speak with an Australian commercial lawyer at Prosper Law. Call 1300 003 077 or submit an online enquiry to arrange an initial consultation.
Updated August 2026.
About the Author
Farrah Motley
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