Update to warranty documentation – what businesses need to know
From 8 June 2019, the Competition and Consumer Regulations 2010 (Cth) (Regulations) require that additional mandatory wording is included in warranties against defects provided to consumers in relation to the supply of:
- services; or
- goods and services together.
Currently, the mandatory text is only required where a warranty against defects is provided in connection with the supply of goods.
But under the changes, businesses that supply services like building trades, automotive services, lending of money, insurance, professional services and entertainment will be required to comply
The mandatory text ensures consumers are aware of the existence of the Australian Consumer Law (ACL) and that there are statutory guarantees accompanying the services which cannot be excluded under the ACL The text outlines the consumer’s entitlement to recourse depending on the severity of the failure, including cancellation of the services, compensation for foreseeable loss, rectification within a reasonable time and refund for unused portion of the contract.
Exceptions to the new requirement apply to the following services:
- the transportation or storage of goods engaged in by the person for whom the goods are transported or stored;
- services of a kind specified in the regulations; and
- gas, electricity or telecommunication.
A warranty against defects is a representation communicated to a consumer that if the goods or services (or part of them) are defective, the business will:
- repair or replace goods;
- resupply or fix a problem with services; or
- provide compensation to the consumer.
A warranty against defects includes any document containing a description of the features or terms of a warranty against defects, for example, a pamphlet accompanying the goods/services or on packaging of the goods.
Warranties given by businesses to consumers must comply with existing requirements under the Regulations. Documents evidencing the warranty must be presented clearly and contain the following information:
- the business’s responsibilities if goods or services are faulty or defective;
- the consumer’s responsibility to entitle them to claim the warranty;
- details of the business giving the warranty;
- the warranty period;
- steps for a consumer to claim under the warranty;
- responsibility for expenses associated with a warranty claim; and
- that the benefits conferred by the warranty are in addition to other rights and remedies available to the consumer under the law.
It is an offence to provide a consumer a warranty against defects that fails to comply with the prescribed regulations.
The regulations are enforced by the Australian Competition & Consumer Commission, which has taken a strong stance on protecting consumer rights with a number of successful actions in the Federal Court recently.
Breaches of the ACL’s provisions for warranties against defects can attract penalties of $50,000 against a body corporate or $10,000 against an individual.
How can we help?
There is still time for businesses to ensure their warranty documentation is compliant with the amended Regulations. If you require our assistance in reviewing and updating your warranty documentation before 8 June 2019, please contact us.
This article was written by Dan Perera, Lawyer – Commercial.