If you supply services or goods combined with services and offer your customers warranties against defects, you will need to comply with new warranty requirements which came into effect on 9 June 2019.
The Office of Fair Trading explains that a warranty against defects is “a representation to a customer that if goods or services provided (or part of them) are defective, you will provide a remedy. A representation only counts as a warranty against defects if it’s made at the time the goods or services are provided.”
These warranties are voluntary but, if given, will apply in addition to any consumer guarantees which are mandated under Part 3-2 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law or ACL).
The changes
From 9 June 2019, any document that ‘evidences’ a warranty against defects, such as a warranty card, warranty statement or any other document that sets out, or refers to, the terms of an express warranty against defects must comply with the prescribed form and content requirements.
What you need to do
You will need to include mandatory wording in all your warranty documentation, for example, your:
customer contracts;
terms and conditions/terms of trade;
marketing materials;
website;
receipts; and
product packaging.
Suppliers of goods only
The ACL already requires businesses who supply goods to consumers and offer a warranty against defects to include mandatory text in their documentation.
There will therefore be no change to the current mandatory text that traders use for warranties against defects when supplying goods alone.
Suppliers of services only
If you offer a warranty against defects when supplying services, you will need to display the following mandatory text with the service:
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.
* Note that the above mandatory wording must be available with the service itself. It is not sufficient to refer your consumers to information on a website or in-store.
Suppliers of goods combined with services
If you offer a warranty against defects when supplying goods combined with services, you will need to display the following mandatory text with the 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.
* Note that the above mandatory wording must be available with the goods and services. It is not sufficient to refer your consumers to information on a website or in-store.
Other warranty requirements
The ACL requires that you present your warranty documentation in a particular way and requires it to include specific information. For example, your warranty documentation must also:
be written in plain language and legible;
be provided to your customers where the supply takes place, or at the time it takes place or be made available with the product;
include details of what your business will do if the goods or services are defective;
explain clearly what your customer must do when a defect arises;
set out your contact information;
state how long the warranty will apply for;
explain how your customer must make a claim under warranty;
state who is responsible for any expenses in making a warranty claim (e.g. postage); and
contain a statement that the warranty is additional to the consumer’s rights and remedies at law.
Contact us
The ACCC may impose penalties on businesses that do not comply with these requirements, therefore you should seek legal advice before offering a warranty against defects to ensure that you are complying with the ACL requirements.
Our commercial team can provide advice regarding your obligations and assist with reviewing or drafting your warranty documentation.
Please contact Helen Kay on hkay@crlawyers.com.au or call (07) 3009 6555 for assistance.