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Important changes to ‘warranties against defects’

Do you make promises to customers about what you’ll do if the goods or services they buy from you are defective?

Any promises or guarantees relating to goods or services are classified as a ‘warranty against defects’, if made at or around the time they are supplied.

As these promises are voluntary and often go beyond the protections provided under Australian Consumer Law (ACL), the Australian Competition and Consumer Commission (ACCC) has introduced new mandatory wording which you must give customers to help them understand their rights if the goods or services don’t meet what was stated in the warranty against defects.

What are the requirements of the new warranty against defects?

In addition to meeting the existing warranty information requirements, as outlined by the ACCC, from 8 June 2019 you must include the following mandatory text.

Mandatory text for the supply of goods

“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.”

Mandatory text for the supply of services

“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.”

Mandatory text for the supply of 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.”

How should this information be provided?

All warranty information, including the new mandatory text for warranties against defects, must be provided in writing with the product or service. The customer cannot be referred to an alternative information source, like a website, for this information.

What happens if I don’t meet the new requirements?

Failing to comply with the ACCC’s new mandatory requirements could lead to a maximum civil penalty of $50,000 for a body corporate or $10,000 for an individual. Criminal penalties for the same amounts may also apply.

More information

Visit the ACCC website to find out more about warranties against defects and your requirements as a business owner or call the ACCC Small Business Helpline on 1300 302 021.

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