“Free Repair If Faulty” Is No Longer Enough Under New Laws – Make Sure Your Business Is Doing It Right (2025 Updated)

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The Australian Consumer Law (ACL) has introduced a significant update affecting businesses all across Australia as we move into 2025.

This amendment came into effect on 9 June 2025 and mandates that businesses include specific, mandatory wording for warranties against defects.

What does this mean exactly? Who does it apply to? And how will it affect your business?

This article will break it down for you: we’ll explain what these warranties are, detail the updated laws, and discuss the impact on your business in today’s fast-evolving market.

What Is A “Warranty Against Defect”?

A number of warranties already exist under the ACL. Some are implied by law and cannot be excluded, while others are voluntary promises businesses may offer in addition to these baseline guarantees (read more about the different warranty types here).

Often, businesses promise to repair, replace, fix or resupply goods and services if they are defective.

This is what we call a ‘warranty against defects’: a voluntary promise by a business that the goods or services provided include specified remedies if they are found to be defective. It is termed “voluntary” because these warranty terms go beyond the mandatory guarantees set out in the ACL.

Generally, such warranties are provided with a simple statement, for example: “Replacement guarantee if the machine fails to operate within five years.”

Whenever such wording is used—whether on in-store signage, in your Terms and Conditions, on receipts, or on your website—it is likely that this qualifies as a ‘warranty against defects’ under the ACL.

The Australian Competition and Consumer Commission (ACCC) provides some examples of the different types of warranties against defects here.

What Are The New Laws?

With the latest update to the ACL, businesses that offer services—or a combination of goods and services—must include precise, mandatory wording in their warranty documents. (Note that, for businesses that only sell goods, mandatory wording is already prescribed here.)

This means that a simple statement is no longer enough – the ACL now requires every eligible service business to include the exact wording in their warranties against defects.

If your business offers services to consumers and makes warranties against defects, you will need to use the following wording in your warranty documents:

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 issue does not amount to a major failure, you may require that it be rectified within a reasonable time; failing which, you can cancel your contract and obtain a refund for any unused portion.

If your business offers goods AND services together, you will need to include the following wording in your warranty against defects:

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 service does not amount to a major failure, you’re entitled to have the issue rectified within a reasonable time. If not, you may cancel the service contract to obtain a refund for any unused portion, and you’re entitled to be compensated for any other reasonably foreseeable loss or damage resulting from the failure.

Who Does It Apply To?

This new mandatory wording specifically applies only to businesses that offer services—or goods and services—to consumers.

The ACL outlines the specific definition of who is considered a “consumer”.

But, there are exceptions.

The new laws do not apply to services if they are not supplied directly to a consumer.

For example, if you have a contract to transport or store goods for another business to reuse, develop or resell, you do not have to use this wording.

This wording is only mandatory for businesses that offer services not intended for further commercial use by another trade or profession.

If you’re unsure whether your business model falls within this requirement, it might be useful to review our contract essentials guide to help determine if these warranty provisions apply to your operations.

Further, this mandatory wording does not apply to service or supply contracts with insurance, gas, electricity or telecommunications services.

What Does This Mean For My Business?

If your business offers goods or services (or both!) directly to customers, then it is almost certain that you will need to comply with these new requirements.

This means that if your warranty documentation was last updated before these new requirements were introduced, you should revise it to incorporate the exact wording provided above, ensuring compliance with the ACL as of 9 June 2025.

If you don’t, then you may be in breach of the ACL and could face enforcement action.

The ACCC outlines the fines and penalties for breaches of the ACL here.

Related Requirements

It is also important to understand the additional requirements surrounding warranties for defects.

The ACL mandates that you include specific information in your warranty documentation and present that information in a prescribed manner.

In addition, any warranty against defects must be provided with the actual good or service you are selling, rather than being merely referenced in an external document.

If you’re still confused, more information on warranties and the new laws can be found here.

Given the evolving regulatory landscape in 2025, it’s more important than ever to regularly review all your consumer-facing documents. We recommend cross-checking your warranty wording alongside other crucial business documents, such as your website terms and conditions and your service agreements, to ensure full compliance. Remember, non-compliance with the ACL may result in significant fines as outlined by the ACCC. For the latest legal updates and practical guidance, be sure to visit our guides section.

Want a consultation with a lawyer to advise you on what to do next? Or need help redrafting your Terms and Conditions to suit the new laws?

We’re here to help! Feel free to call us on 1800 730 617 or drop a line at team@sprintlaw.com.au.

Regie Anne Gardoce

Regie is the Legal Transformation Lead at Sprintlaw, with a law degree from UNSW. Regie has previous experience working across law firms and tech startups, and has brought these passions together in her work at Sprintlaw.

Tomoyuki Hachigo

Tomo is the co-founder of Sprintlaw and a commercial lawyer with a broad range of legal experience. Before starting Sprintlaw, he was an M&A lawyer at a top-tier law firm advising businesses of all sizes from large corporates to startups.