Warranty against defects or warranty documents.

 Introduction

If you are a supplier of services, or a supplier of service and goods combined, take note of this important change to Australian Consumer Law (ACL)! As of the 9th of June 2019, mandatory wording will be required to be included if you offer warranty against defects to your customers. For those failing to comply with the new amendments in the Competition and Consumer Regulations 2010 (Cth), civil and/or criminal penalties may apply under the ACL.

The warranty against defects requirements of the ACL can arise in a number of types of documents, for example where you offer a warranty in documents including the following:

  • Terms and Conditions
  • Warranty Agreement
  • Receipts
  • Customer Contract Labels; and
  • All other documents as that term is widely defined in the ACL (“warranty documents”).

Yes, even the tiny labels or pamphlets found with the goods you purchase may be considered as warranty documents. So long as writing containing promises about warranty against defect exists, regardless of whether the document is formal or not, a warranty against defects could be evidence.[1]

The Law Now and After

Before the 9th of June 2019, only businesses concerned with the supply of goods required mandatory text to be included in their warranty documents if they offer warranty against defects.

After the 9th of June 2019, businesses supplying services, or services and goods together, will need to insert mandatory writing into their warranty documents if they offer warranty against defects.

Consumers: Who are They?

The warranty against defects requirements applies to “Consumers”, as the term is defined in the ACL to include people, or even businesses, that purchase:

  • Goods or services costing less than $40,000; or
  • Goods or services, while costing more than $40,000, are those that are commonly purchased for personal, domestic or household use or consumption; or
  • A trailer or vehicle mainly utilised to transport goods on public roads.

If you purchase goods for the purpose of reselling them or making them into sellable goods though, you’re sadly not considered a consumer.

What Documents do You Need to Watch Out For?

What Do I Need to Include in These Documents?

The amendment to the ACL provides two sets of mandatory text that applies to service supplier or goods and service suppliers individually.

For supplier of services, you need include in your warranty documents the following:[2]

“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 the supplier of goods and services, you need include in your warranty documents the following:

“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.[3]

For the supplier of goods, mandatory text has been required for a while and consumer rights under the ACL have been around since its inception, the mandatory text for the supply of goods is:

“Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure.”[4]

Conclusion
So, if you haven’t done so update your warranty documents as required from the 9th of June 2019! Also, feel free to Contact Us at AMK Law for advice on your warranty documentation, or you can book an appointment Here with us now.

 

[1] Australian Competition & Consumer Commission, Warranties Against Defects

[2] See Competition and Consumer Amendment (Australian Consumer Law Review) Regulations 2018, Schedule 2 4(3).

[3] See Competition and Consumer Amendment (Australian Consumer Law Review) Regulations 2018, Schedule 2 4(4).

[4] See Competition and Consumer Amendment (Australian Consumer Law Review) Regulations 2018, Schedule 2

 

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