Warranties against defects in the supply of services

Commercial Directions

Recent amendments to section 90 of the Competition and Consumer Regulations 2010 (Cth) requiring mandatory wording for certain consumer guarantees came into force on 8 June 2019. The ACCC has also indicated that its focus this year includes ensuring that large retailers of electrical and white goods comply with statutory obligations in consumer guarantees [1].

The amendments oblige businesses to include mandatory text for warranties against defects for the supply of services (previously, this was only required for the supply of goods). The amendments now bring consistency to warranties for consumer transactions which involve both goods and services.

Under the amended regime, the following wording must be included in any warranty against defects.

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.

The mandatory wording for consumer guarantees on goods remains unchanged:

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.

The mandatory wording only applies for transactions involving consumer goods or services and is not required for business-related goods and services, or for contracts of insurance, or the supply of a gas, electricity or telecommunication service.

How to comply

If you supply consumer goods and services as part of your business, review your standard terms and conditions of sale and any product packaging to ensure they comply with the new requirements. Further, if you on-supply consumer goods and services, ensure your suppliers have updated their own terms and conditions to comply with the regulations.

Author attribution:

Further information / assistance regarding the issues raised in this article is available from the authors, Tina van Epen, Partner, or Emily Gagliardi, Paralegal, or your usual contact at Moray & Agnew.

[1] https://www.accc.gov.au/media-release/accc-2019-focus-on-consumer-guarantees-and-anti-competitive-practices


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