June 4, 2019

Professionals

If you are a supplier that provides warranties against defects, you need to review your terms and conditions before 8 June 2019.

Amendments to the Competition and Consumer Regulations 2010 (Cth) coming into force on 8 June 2019 require businesses that provide warranties against defects to consumers for the supply of services (or goods and services together) to include mandatory wording.

The amendments have been introduced to provide consumers with the same level of protection for warranties against defects for the supply of services as they currently have for the supply of goods. This means that businesses offering warranties such as “we guarantee our repairs for 120 days” will now need to have terms and conditions that are compliant.

What are warranties against defects?

When a supplier provides a warranty against defects, they are providing a representation to a consumer that if their goods or services (or any part of them) are defective, the supplier will:

  • repair or replace the goods;
  • resupply or fix a problem that has arisen; or
  • provide compensation.

Warranties against defects are regulated under the Australian Consumer Law (ACL) for representations made to a ‘consumer’ at or around the time goods or services were supplied.

Amendments to the mandatory wording.

If your terms and conditions provide a warranty against defects for services or goods and services, with effect from 8 June 2019 mandatory wording is required to remind your customers of their rights under the ACL.

The mandatory wording for warranties against defects for goods remains the same. The new mandatory wording for warranties against defects for services or goods and services is as follows:

For services only:

Our services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled:

  • to cancel your service contract with us; and
  • to a refund for the unused portion, or to compensation for its reduced value

You are also entitled to be compensated for any other reasonably foreseeable loss or damage.

If the failure does not amount to a major failure, you are entitled to have problems with the service rectified in a reasonable time and, if this is not done, to cancel your contract and obtain a refund for the unused portion of the contract.

For goods and services:

Our goods and services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled:

  • to cancel your service contract with us; and
  • to a refund for the unused portion, or to compensation for its reduced value.

You are also entitled to choose a refund or replacement for major failures with goods. If a failure with the goods or a service does not amount to a major failure, you are entitled to have the failure rectified in a reasonable time. If this is not done you are entitled to a refund for the goods and to cancel the contract for the service and obtain a refund of any unused portion. You are also entitled to be compensated for any other reasonably foreseeable loss or damage from a failure in the goods or service.

Any additional information that is included in your warranty must not limit or negate the mandatory wording.

Exceptions.

There are a few situations in which the mandatory text is not required to be included. These instances relate to:

  • if you do not make supplies of good, services or goods and services to “consumers”;
  • a contract for or in relation to the transportation or storage of goods for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported or stored;
  • services under a contract of insurance;
  • supply of gas, electricity or a telecommunications service; and
  • services contained in the regulations.

Another option is to simply not provide a warranty. This option does not negate consumers’ rights and guarantees under the ACL but can avoid you providing a broader warranty than is contemplated by law. The warranties that are provided by suppliers are in addition to guarantees.

What can happen if you don’t have the mandatory wording?

If your terms and conditions contain a warranty against defects in respect of services and they do not contain the mandatory wording, you may be subject to fines of:

  • $10,000 for persons other than bodies corporate; or
  • $50,000 for a body corporate.

How can McInnes Wilson Lawyer’s help?

If you provide warranties for the supply of services, goods and/or services, you should review your documentation to include the mandatory wording before 8 June 2019.

By contacting us, McInnes Wilson Lawyers can:

  • review and /or draft terms and conditions, including appropriate warranty clauses;
  • determine whether your business complies with the requirements under the ACL, including the mandatory wording requirement; and
  • help you comply with your requirements the ACL.