Home : About Us :commun-iT blog  

commun-iT blog

Avoid a $50,000 fine every time you sell a product or service for less than $40k with a warranty!

Monday, March 19, 2012

Many people still do not know about the new Regulation 90 (issued under the Australian Consumer Law), and its impact on suppliers' pricing of warranty services, contracts, websites and warranty cards.

It applies to all goods and services, not just ICT goods and services.

Regulation 90 came into force on 1 Jan 2012 and prescribes the form and content of a “warranty against defects”.  A failure to meet the requirements of Regulation 90 can be either a criminal offence or a civil contravention and can result in fines of up to $50,000 for a corporation and $10,000 for an individual per contravention.   In addition, providing incorrect statements about the existence or scope of warranties can result in penalties of up to $1,100,000 for corporations and $220,000 for individuals under other sections in the Australian Consumer Law (also known as the Competition and Consumer Act 2010).

This Regulation applies to all consumer contracts in Australia, which essentially is any contract for the supply of goods or services where the price is less than $40,000, or the goods or services are for domestic, household or personal use, irrespective of whether the buyer is an individual, a company or even a government body.

So what is a "warranty against defects"?

A 'warranty against defects' is any statement given at or about the time of supply of the goods or services to the effect that a person (not necessarily the supplier) will repair or replace the goods or part of them, rectify services or provide them again, or wholly or partly recompense the buyer for defective goods or services. 

The statement which comprises the warranty against defects could be oral (in which case it needs to be documented) or could be:

• in your terms and conditions (this includes your standard licence agreement or services contract).
• if the goods/services are purchased on a website, any statement made on the website.
• on any ‘warranty card’ that is included with your products.
• on product packaging, if you provide a warranty against defects on that packaging.
• at the point of sale, if you provide a statement about warranties at the point of sale.

What is required?

Where a ‘warranty against defects’ is given, Regulation 90 must be complied with.  Importantly, the warranty must be in a complying document which includes the exact text highlighted in bold below. 

'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 for 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'.

Presumably due to oversight, this text applies EVEN if you are only selling services despite the wording in Regulation 90 only referring to “goods”.   In addition to providing this text, there are a number of other requirements relating to providing certain pieces of information relating to the identity of the provider of the warranty services, the process of obtaining warranty services, what the service is and what costs are involved.

Based on our experience in amending IT suppliers contracts to comply with Regulation 90, there are usually at least a dozen specific amendments to be made to any 'standard' contract, and in some cases a significant review of business practices and pricing may also be required.

The Regulation 90 requirements also apply to both retailers and manufacturers. So if you resell other peoples’ goods and services, and the manufacturer’s terms and conditions, warranty card, packaging or similar have not been updated to comply with the regulation, you may be liable, as well as the manufacturer.

 

Need Help?

We would be pleased to assist you to review your current business practices, amend your contracts and/or provide advice in relation to how to become compliant with Regulation 90 and other aspects of the Australian Consumer Law.  For help, please call us on 02 9251 9664. 

Author: Mike Pym, Director, Pym’s Technology Lawyers.  A member of the Panel of Expert Bloggers on commun-iT and an expert on www.aiia.biz

Disclaimer: This is general information only. It is not legal advice, and is not a substitute for legal advice. Specific advice should be sought to take into account your particular circumstances. Pym’s Technology Lawyers Pty Ltd is a specialist IT and commercial law firm. It has liability limited by a scheme approved under Professional Standards Legislation.

 


Subscribe to the commun-iT blog RSS

 Recent Posts


Tags

Maat Solutions Peta Maloney 2020 Board of Taxation Discounted Deals small business owners AUSkey withholding rates industrial action compliance Corporate and Commercial Law personal income tax Alex Bodnar individuals restraint selling your business employment law Greg Tomkins Advanced Findings Fair Work Act tax law personal services income PAYG confidentiality clause IT Forum Gold Coast Falsify Fair Work Australia Fair Work Regulations Travel Guide natural disaster flood insurance enterprise agreement Federal Court of Australia Win an iPad 2 Survey data Supply Management Fee managed services Gold Coast ICT Forum unfair dismissal Independent Consumer Law term deposit ASIC fraudulent refunds patent Australian Workplace Agreements broker Clerical and Administrative Employees (State) Award Innovation Australia: AusIndustry company tax indemnity Fair Work Ombudsman Fringe Benefit Insurance employers ICT capability study loans NES Peter Nolle IT Lawyer R&D tax Credit warranties Fair Work Commission Information gathering Centennial Financial Services benchmarking Employment open source Greg Pearce Treadstone fuel tax credits breach of implied terms IAAS Compulsory Employer Superannuation Financial Planning reseller Contractor Stevens and Associates PAAS IP unpaid work sick leave Australian Information Industry Assocation copyright GST Software Research and Development Tax, contractual obligations Living Away from Home Allowance Capability Study 2011 Government Grants adverse action Software R&D Tax warranty against defects employee ATO director duties Contracting dividends Payment Summaries Benefits Balance Professional Services Panel of Expert Bloggers leave loading Professional Idemnity Michael Blumenstein government procurement employment contract moral right eServices David Scott Civil Aviation Regulations superannuation Queensland State Government SAAS Australian Business Register breach of employment contract Pym's Technology Lawyers Sham Procure IT underpayment Nick Stevens Tours termination SME Regulation 90 Hotel ITFGC Research and Development Tax Credit Confidential information ABN IT Professionals restraint of trade clause discounted travel AIIA Free Basic Listing AIIA.biz IT Law Mike Pym IT capability directory National Employment Standards Research and Development Tax Compliance Program IT Contracts Law Tax rates distribution agreement Tax small business 12 percent employment agreements Insurance Advisernet Division 7A Matthew Karpanen award Agreements fines Databases www.aiia.biz Superannuation Guarantee

Archive


    Our Expert Bloggers


    Mike Pym

    Mike is an entrepreneur and lawyer who leads two SMEs, one in the IT software industry, and a firm of lawyers specialising in IT law.


    Peta Maloney

    Company and commercial law, shareholder agreements, constitutions, directors’ duties, setting up companies, IT contracts, outsourcing, government procurement and privacy.

     
    Peter Nolle

    Government Grants from start up to export ready


    Alex Bodnar

    General insurance advisory for commercial & industrial risks, 
    Information Technology & Telecommunication exposures. 


    David Scott

    Investments, Superannuation,
    Life Insurance, Income Protection Insurance, Key Person Insurance, Debt Management, Gearing,
    Retirement Planning


    Mike Pym

    IT contracts, government procurement of IT, distribution agreements, outsourcing, contract management & dispute resolution.

     
    Nick Stevens

    Enterprise Agreements,
    Employment Contracts,
    Unfair Dismissal, EEO, 
    Workplace Surveillance & Privacy, OH&S

    Industry Associations

    fitt

    Contact

    Maat Solutions Pty Ltd
    Level 6, 60 Pitt Street
    Sydney NSW Australia

    T: +61 (02) 9247 9459
    F: +61 (02) 9247 9550













    Captcha Image