new mandatory wording requirements for service providers under the Australian Consumer LawJanuary 30, 2019

From 8 June 2019 amendments to the Competition and Consumer Regulations 2010 (Cth) come into effect requiring businesses which supply services to consumers (or goods and services together) to include new mandatory text in any warranty against defects given to consumers.

The changes will eliminate the inconsistency between warranties against defects given by businesses supplying goods to consumers – who have been subject to mandatory wording requirements since 2012 – and those providing services, who have to date been exempt from providing similar warnings.

For suppliers of goods and services, compliance with the new wording requirements is critical. Failing to comply exposes suppliers to the threat of ACCC action and significant civil and criminal penalties.
From June 2019 the following text must be included in any warranty against defects given in connection with 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:

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.

Warranties against defects – what are they?
A warranty against defects is a representation communicated to a consumer at or around the time that goods or services are supplied that, if the goods or services (or any part of them) are defective, the business will either:

repair or replace goods (or part of them);
resupply or fix a problem with services (or part of them); or
provide compensation to the consumer.
A warranty against defects is typically found in a supplier’s standard terms and conditions or services agreement, or in a specific warranty agreement enclosed with a product. It must concisely state (amongst other things) what the consumer must do to claim the warranty, the supplier’s obligations in honouring the warranty and state the period(s) within which any defect entitles the consumer to claim against the warranty.

Who is a consumer?
A person is a “consumer” under the ACL if they acquire goods or services and:
the price for the goods or services is less than AU$40,000; or
regardless of value, the goods or services are of a kind ordinarily acquired for domestic household or personal use or consumption; or
those goods consist of a vehicle or trailer primarily used to transport goods on public roads.
Exemptions
There are limited exemptions to the mandatory wording requirements for the supply of.

services 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 (i.e. if the consignee of goods is not carrying on or engaged in a business, trade, profession or occupation in relation to the goods, then the mandatory text must be displayed);
services under a contract of insurance;
gas, electricity or a telecommunications service; or
services that are of a kind otherwise specified in the regulations.

If your business provides services or both goods and services, you should update your standard terms and conditions or service agreements to ensure that any warranty against defects will comply with the new mandatory wording requirements by 8 June 2019.

Acting early will minimise the risk of your business breaching the ACL and being exposed to significant civil and criminal penalties.

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