Do you tell your customers, “All repairs are guaranteed for 90 days”?

If so, make sure you are ready for a change in the law that starts on 8 June 2019.

The change aims to ensure that consumers of services understand that your warranty is in addition to their other rights under the Australian Consumer Law (ACL).

Terminology

A ‘warranty against defects’ (WAD) in services means a statement to a ‘consumer’ around the time of supply that you will rectify the services if they are defective or compensate the customer.

A ‘consumer’ is not limited to consumers of household items but includes anyone who purchases goods and/or services worth less than $40,000 (with limited exceptions), even if they are purchased for commercial purposes.

Penalties for breach

You do not have to give a WAD for your services, but if you do, after 8 June 2019, you will need to comply with the ACL or risk fines of up to $50,000 for companies and $10,000 for individuals for each breach.

The new law covers WAD’s for services only, and for goods and services (such as repairs to computers with replacement parts).

Similar rules already apply to WAD’s in goods, including manufacturer’s warranties, and have been in force since 2011.

Relevance to IT professionals

IT professionals provide a wide range of services from computer hardware repairs, software upgrades, establishing networks, virus removal, data back-up and recovery, to name a few. If you offer a WAD in relation to any of your services, the new rules will apply. (Note that software is classified as “goods” under the ACL and are already covered by its WAD provisions.)

The new law

A WAD must:

· Be in a document that is clearly presented, legible and in plain language

· State what the person giving the WAD must do for it to be honoured

· State what the consumer must do to claim on the WAD

· State the procedure for the consumer to claim the WAD, including the address where the claim may be sent

· Prominently state the giver of the WAD’s name, business address, phone number and email (if any)

· State the period(s) within which a defect must appear for the consumer to be able to claim on the WAD

· State who will bear the expense of the claim, and if it is the giver of the WAD, specify how the consumer is to claim these expenses

· State that the benefits to the consumer given by the warranty are in addition to other rights and remedies of the consumer under a law in relation to the goods or services to which the warranty relates.

Compulsory wording

In addition, the WAD document must include one of two alternative sets of compulsory wording, depending on whether the WAD relates to services only or to goods and services:

Version 1 – Services only

Our services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled:

· to cancel your service contract with us; and

· 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.

Version 2 – 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:

· to cancel your service contract with us; and

· 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.

Not giving a WAD

If this seems too complicated, an alternative is to simply not give a WAD.

For services, the ACL already gives consumers guarantees that:

· services will be rendered with due care and skill;

· services and any resulting product will be reasonably fit for purpose;

· services might reasonably be expected to achieve a particular result; and

· services will be supplied within a reasonable time (unless a time is specified).

(Liability for breach of these guarantees can be limited for non-household services.)

If you wish to make a statement that shows that you stand by your products and services, you could say something like:

Our business stands by its products and services in accordance with the Australian Consumer Law.

Alternatively, you could offer a ‘satisfaction guaranteed’ warranty, where you agree to fix any problem arising from your services or give a refund, whatever the cause of the customer’s dissatisfaction. The WAD rules do not apply to this because your guarantee applies even if there has been no ‘defect’ in the good or services.

This is general information only and is not intended to be legal advice specific to your circumstances.