New Warranties to Apply to the Provision of Goods and Services
Tal Williams, Partner and Georgie Philpott, Solicitor
Are you a manufacturer, distributor or retailer of goods or services? If so, changes to the Competition and Consumer Regulations 2010 are likely to make it necessary for you to review and amend the warranties contained in your Terms and Conditions of trade.
From 1 January 2012, it will be an offence for a company or an individual, in connection with the supply of goods or services, to give a consumer a non-compliant warranty against defects or to represent to a consumer that a non-complying warranty against defects applies to goods and services.
The Regulations prescribe that a warranty against defects must now:
• be expressed in plain English, be legible and clearly presented;
• must state what the consumer must do to be entitled to claim the warranty and what the warranty provider will do in honouring the warranty;
and, importantly, the terms must include the following text:
“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 to a 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.”
There are five other requirements that must be included in your terms that relate to the identity of the warranty-holder, information regarding the warranty period, confirmation of the procedures required, details regarding who will bear the expense of claiming the warranty and a statement in relation to the fact that this warranty is in addition to any other rights the consumer may have under the law.
If your company does not comply, it can be fined up to $50,000 per offence. Individuals can be fined up to $10,000 per offence.
If your Terms and Conditions do not include the paragraph referred to above or may otherwise be non-compliant then we recommend that a full review be undertaken to ensure that you are not exposed to the risk of prosecution for breach of the new requirements.
Tal Williams
Partner
T: +61 2 9390 8331
E: tal.williams@holmanwebb.com.au