Businesses that offer warranties on services, or goods combined with services, need to be aware of new requirements coming into force from 9 June 2019.

By Jennifer Foreshew

Up until now, the Australian Consumer Law (ACL) prescribed set wording for warranties for defects in goods only.

From next month, this will be extended to mandatory text requirements for ‘warranties against defects’ when supplying services, or when supplying goods combined with services.

The change will help consumers of services, and goods combined with services, be aware that a warranty offered by a business is in addition to their other rights under the ACL.

This will mostly affect manufacturers of consumer goods, though could also include retailers that offer extended warranties at a cost, or service contracts that include warranties.

What is a ‘warranty against defects’? 

A ‘warranty against defects’ (WAD) in services, or goods combined with services, is a statement to a consumer made at (or around) the time of supply to rectify them if they are defective or to compensate the customer. For example, the business 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.
The requirements relate to goods and/or services supplied at a cost of $40,000 or less. It also applies to goods and/or services worth more than $40,000 if they are usually acquired for personal, domestic, or household use or consumption.

What is changing?

If you offer a WAD when supplying services, or goods combined with services, you must display the new mandatory text.

If you offer a warranty against defects when supplying services, you will need to display the following:

Our services combined 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 entitled to be compensated for any other reasonably foreseeable loss of 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.


If you offer a warranty against defects when supplying goods combines with services, you will need to display the following:

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 the 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 service does not amount to a major failure, you are entitled to have the failure rectified at 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 for any unused portion. You are also entitled to be compensated for any reasonably foreseeable loss of damage from failure in the goods or service.


When it needs to change?

If a business offers a WAD when supplying services, or when supplying goods combined with services, it will need to display the new mandatory text from 9 June 2019.

Next steps

If you have any questions about the required changes, call our Advice Line on 13 29 59. You can also find out more about warranties against defects on the Australian Competition and Consumer Commission website.