It’s in the warranty: New mandatory wordings introduced

From 8 June 2019, businesses supplying services or the supply of goods and services together to consumers must include new mandatory text in any warranty issued to consumers against defects in their products. The amendments to the Competition and Consumer Regulations 2010 (Cth) now equip consumers with the same level of protection from warranties against defects for services as they currently do from warranties against defects for the supply of goods.

As of June 2019, the following wording must be included in any warranty against defects given in connection with the supply of services, or goods & services:

Services

Our services come with guarantees that cannot be excluded under the Australian Consumer Law.

For major failures with the service, you are entitled:

1.             to cancel your service contract with us; and

2.             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.

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:

1.             to cancel your service contract with us; and

2.             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.

This mandatory text informs consumers and other parties involved in a transaction that the consumer guarantees set out in the Australian Consumer Law (ACL) cannot be excluded by warranty.

Exceptions

Exceptions the requirement of including the mandatory text are limited to very specific services which are either:

  1. already regulated under other legislation (for example, insurance contracts); or
  2. services supplied under 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.

What this means for Businesses

Any businesses which provide consumers with the supply of their services or both goods and services must update their warranty documentation to include the new mandatory text, ensuring they are compliant with the new requirements by 8 June 2019.

It is an offence under the ACL to give a consumer a warranty against defects that does not comply with the requirements prescribed in the regulations. While the amendment only becomes enforceable in June, incorporating these mandatory terms early into a business’ warranty will minimise the risk of contravening the ACL, which, if breached, can lead to significant civil and criminal penalties.

This article was co-authored by Matthew Rozario, Josephine Gardiner, Lucy Meadley, Jessie Buchan and Melinda Upton.