Mandatory Wording Required in Warranties for Service Work

From 8 June 2019, businesses who give consumer warranties against defects for the supply of services (as well as goods and services) will be required to include additional mandatory text in those warranties. The requirement is a part of an amendment to the Competition and Consumer Regulations 2010 (Cth).

Under the existing legislation, the mandatory text is only required to be included in warranties against defects for the supply of goods (such a motor vehicle), but not services (such as motor vehicle service and repair work).

The mandatory text alerts consumers to the existence of the Australian Consumer Law (ACL) and reminds consumers and others involved in the transaction that the consumer guarantees set out in the ACL cannot be excluded by the warranty.

It is an offence under the ACL (attracting civil and/or criminal penalties) to give a consumer a warranty against defects that does not comply with the requirements prescribed in the regulations.

There are exceptions to the requirement to include the mandatory text in warranty documentation. However, the exceptions are limited to very specific services which are either:

1. already regulated under other legislation (such as insurance contracts or telecommunications services); or
2. services supplied 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.

The exceptions do not apply to the supply of motor vehicle service and repair work.

In addition to the mandatory text, the existing provisions which prescribe the contents of warranties against defects will remain in force. These prescribed contents include that a warranty against defects must (for example):

1. be in a document that is transparent; and
2. concisely state:

(a) what the person who gives the warranty must do so that the warranty may be honoured; and
(b) what the consumer must do to entitle the consumer to claim the warranty.

Any businesses (including motor vehicle dealers) which provide consumers with a warranty against defects in connection with the supply of services must update their warranty documentation to include the new mandatory text by 8 June 2019.

This article was written by Evan Stents, Partner, and Christian Teese, Senior Associate.