22 May Important Changes to Terms for Supply of Goods & Services
It is common for businesses to provide a warranty against defects to consumers such as to the nature, quality or performance of the Goods or Services. Warranties can be provided in documents, advertisements in your business premises, or in discussions with the customer. In such situations the warranty document you provide must comply with specific Australian Consumer Law (ACL) requirements. The ACL requirements override anything else you state.
You may say that you will:
- Repair or replace goods (or part of them)
- Resupply or fix a problem with services (or part of them)
- Provide compensation to the consumer
if any fault arises within 12 months of the purchase of the goods or the supply of services or a combination of goods and services by saying ‘1 year warranty’. In such circumstances the ACL may still give the consumer rights if defects occur after 12 months. Furthermore the ACL sets out what you need to state in a document about warranties, such as procedures to be followed.
There is also what is referred to as the Mandatory Text requirement. This is essential for you to state. It is specified in the ACL. The text relates to the guarantees that cannot be excluded. The text specifies the circumstances when the consumer has the choice to have goods or services repaired, replaced or resupplied or to receive compensation or to cancel the contract. Initially this text applied to the supply of goods only.
From 9 June 2019, the Mandatory Text applies to the supply of goods, or the supply of services, or the supply of a combination of goods and services.
WHO WILL NOW BE AFFECTED BY THE CHANGES?
Now, in addition to suppliers of goods, businesses that supply services must now make themselves aware of the requirements which apply to the services they supply. There are limited exceptions. The following service providers are some of those who will be affected:
- Designers, building trades and others in building and construction
- Professional services such as accountants and financial advisers
- Entertainment
- Mortgage broking and other money lending services
- Automotive services
BREACHING THE REGULATIONS
Providing a consumer with a warranty against defects that fails to comply with the regulations could be viewed by the ACCC as a breach of the ACL and may attract penalties of over $200,000 for an individual and over $1,000,000 for a company.
NEXT STEPS
For assistance in reviewing your existing contracts or terms of supply, or for guidance on whether you offer Services which require the mandatory wording in your warranty against defects, please feel free to contact one of the commercial lawyers at Belperio Clark on (08) 8212 1322, or by email at admin@bc-lawyers.com.au
