BUSINESSES who provide warranties in relation to either products or services have until the end of the week to bring those warranties into line with changes to the Australian Consumer Law (ACL).

According to intellectual property law specialist at Mullins, based in Brisbane, Andrew Nicholson, if warranties and not brought into line with the ACL requirements that take effect this Sunday, June 9, 2019, they could face substantial penalties and fines – potentially up to 10 percent of annual turnover. 

Mr Nicholson said promises provided by suppliers (or manufacturers) to consumers about what they will do if goods have a fault are commonly known as ‘warranties against defects’. Those warranties are voluntary and, if given, will apply in addition to any consumer guarantees under the ACL.

Warranties against defects must also comply with prescribed requirements and include standard text from June 9, 2019.

Mr Nicholson released a detailed explanation of how the system now works.

The warranties which are required to be given are divided into three categories and are different for each of:

• Defects for goods only
• Defects for services only
• Defects for goods and services

CONSEQUENCES OF NON-COMPLIANCE

Penalties of up to $50,000 can be imposed for failing to include the prescribed text. Additional penalties can also be imposed if the text used is misleading about consumers’ rights, entitlements under warranty or guarantee provisions up to $10,000,000, or 10 percent of the annual turnover of the supplier in the past 12 months.

Businesses should review any document which contains a warranty against defects (such as terms and conditions, packaging, website, etc.) to ensure that it includes the new prescribed text. Warranty documents provided by sellers and manufacturers should:

• Be transparent.
• Concisely state what the business must do (for example, repair or replace the goods); and what the consumer must do to entitle the consumer to claim the warranty, for example, cease using the goods when a fault arises or contact the supplier or manufacturer and point to the defect.
• Prominently state the following information about the person who gives the warranty: the person’s name, the person’s business address, the person’s telephone number, and the person’s email address (if any).
• State the period or periods within which a defect in the goods or services to which the warranty relates must appear if the consumer is to be entitled to claim the warranty.
• Set out the procedure for the consumer to claim the warranty including the address to which a claim may be sent.
• State who will bear the expense of claiming the warranty and if the expense is to be borne by the person who gives the warranty—how the consumer can claim expenses incurred in making the claim.
• State 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.

ADDITIONAL OBLIGATIONS UNDER CONSUMER GUARANTEES

Any warranties should also be consistent with consumer guarantees, which automatically apply to goods and services purchased by consumers under the ACL. Manufacturers and importers must also comply with certain consumer guarantees and they cannot be excluded by agreement or under any terms of sale.

The guarantees include that those goods must:

• be of acceptable quality.
• be fit for purpose.
• satisfy any express warranty (such as warranties against defects).
• have spare parts and repair facilities available for a reasonable period of time, unless otherwise advised.

WHERE GUARANTEES ARE NOT MET

Consumers are entitled to a remedy, which could be either a repair, replacement or refund and compensation for any consequential loss, depending on the circumstances. For minor problems, the seller can choose whether to take a replacement, repair or refund the goods. For major problems the consumer can choose to reject the goods and obtain a full refund or replacement, or keep the goods and seek compensation for the reduction in value.

APPROACHING THE MANUFACTURER DIRECTLY

Consumers are entitled to approach manufacturers directly for a remedy and may take action against manufacturers to recover costs, which include an amount for reduction in the product’s value and in some cases compensation for damages or loss.

If the problem is the manufacturer’s fault, the consumer is still entitled to ask the seller to provide a remedy, and the seller must oblige. The manufacturer must then reimburse the seller, including for any compensation paid to the consumer for reasonably foreseeable consequential losses.

Consumer guarantees won’t apply where a consumer simply changes their mind. However, as suppliers must comply with consumer guarantees, signs which provide blanket statements such as ‘No refunds’ are unlawful because there may be instances where the consumer is still entitled to a remedy.

MISLEADING STATEMENTS

“Finally, it is important not to mislead consumers about their rights,” Mr Nicholson said.

“Within the last week, Jetstar was ordered to pay almost $2 million dollars in penalties for misleading passengers about their right to refunds on cheap fares, by indicating that only more expensive fares were refundable,” he said.

“That is misleading as, under the ACL, customers whose flights were cancelled or significantly delayed due to reasons within Jetstar’s control are entitled to refunds.

“Sellers must not tell customers they should approach the manufacturer or importer of the goods for assistance. Customers are entitled to deal with the seller, and sellers must deal with the problem when approached.

“Sellers also must not suggest that their consumer guarantees are limited to any warranty period. The consumer guarantees apply regardless of any warranties which have been given and may apply for a longer period than an express warranty, depending on the quality of the goods, sale price and consumer expectations.”

www.mullinslawyers.com.au

Andrew Nicholson is a partner with law firm Mullins based in Brisbane. He is a specialist in intellectual property and commercial law. Mullins is an Industry Expert member of Queensland Leaders, helping to foster the upcoming generation of leading companies in Queensland.

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A REPORT by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO)  on early debt recovery action by the Australian Taxation Office (ATO) has found that garnishee notices have been issued in a sizeable number of cases where tax disputes were before Administrative Appeals Tribunal (AAT).

In response to this finding, Ombudsman Kate Carnell has called for the ATO to immediately cease debt recovery action against any small business with a dispute before the AAT.

“We found ATO debt recovery action occurred in at least 12 percent of cases before the AAT, severely impacting a small business’s resources to prosecute its case and carry on its business,” Ms Carnell said. 

“Strong forms of debt recovery action by the ATO, such as garnishee notices, can destroy a small business because it effectively strips funds from a small business’s bank account.

“Consequently, the small business is not able to pay wages, rent, suppliers or bank loans and the follow-on effects of this – bad reputation, no credibility and potential bankruptcy – is significant."

GARNISHEE THREAT

“Despite the devastating impact on small businesses, the ATO alone has the authority to produce garnishee notices without any external oversight," Ms Carnell said.

“ATO garnishee notices must be actioned only with appropriate oversight and approval, such as the court system, before an order can be issued.

“The asymmetry in power between this large and powerful organisation and the small business sector has left these particular small businesses in a vulnerable position and with diminished access to justice," Ms Carnell said.

"They simply don’t have the same resources to fight where there is a legitimate dispute."

However, the ASBFEO has developed a solution that is helping many small businesses caught in this awful situation, offering affordable access to advice from a highly qualified tax lawyer.

“Small businesses taxpayers in dispute with the ATO now have the option of a simple, fast and cheaper external review through our new Small Business Concierge Service.

“Our case managers help them understand the AAT process, they get an hour with a small business tax lawyer at a cost of $100 and an additional hour free if they decide to go ahead with the appeal.”

www.asbfeo.gov.au

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By Leon Gettler >>

ALIFERY, an online start-up that provides freelance lawyers for ASX listed companies, law firms and small to medium sized enterprises, has found demand is running high.

These are not just any lawyers.

“The expert lawyers have an average of 15 years’ experience and we’re giving companies access to those people, “ Alifery founder Louise Hvala told Talking Business. “They are former general counsels, former partners, they have worked both locally in Australia and overseas.

“Their backgrounds vary from commercial to banking and finance, litigation and family law.”

Ms Hvala said Alifery has around 200 lawyers on its books at the moment. 

She said Alifery’s main business, Gatehouse, had found that more lawyers were going freelance “because the world is changing”.

“What we’re seeing is people want more flexibility, they want to be able to spend time with their children and travel the world. They’re tired of the old school ways within law,” Ms Hvala said.

“And some of them realise that reaching partnership level might be a very long process if they get there at all so they’ve decided to establish themselves as a sole practitioner but providing freelance services.”

The benefit of that is that Alifery provides the infrastructure. The lawyers don’t have to create it themselves.

Ms Hvala said the advantage for companies is they are getting lawyers at a cheaper rate as they would not be having to carry the traditional overheads of law firms.

She said Alifery’s lawyers were up to 50 percent cheaper than businesses were used to paying in-house.

Alifery’s lawyers set their own rates.

“Their clients can provide a budget, but if they don’t then freelancers will set their own rate,” Ms Hvala said.

Alifery lawyers’ rates are set on market trends.

Alifery also helps them to team up and cross refer to other experts.

So if one lawyer is experienced in commercial contracts, but needs someone with a background in litigation, Alifery will bring them together.

And business is booming, Ms Hvala said. Alifery is now planning to expand into the UK and the US. 

www.leongettler.com

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness.

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NEW ONLINE platform, Alifery is leading the legal profession into the future by connecting ASX listed companies, private businesses and law firms with highly experienced expert freelance lawyers for work opportunities, contracts and projects.

The new platform is capitalising on the growing ‘gig’ economy and freelance trend. A recent study by PayPal found that 70 percent of Australian businesses now use freelancers.

With over 700 users already registered to the Alifery platform and projects being successfully completed between corporate clients and expert legal freelancers, the platform is delivering value. 

The company is looking to raise capital in 2019, and is led by Louise Hvala, the founder of Alifery Freelance Lawyers and co-founder of leading specialist legal recruitment firm Gatehouse Legal Recruitment.

“More and more we are seeing our corporate and law firm clients seeking subject matter legal experts for short term or project based legal matters, rather than hiring a full time legal professional,” Ms Hvala said. 

“On the other side we have expert freelance lawyers coming to us daily wanting a change in lifestyle, more work-life balance, time for travel or time for family and they are choosing to work on a contract, project or temporary basis as freelancers.

“Our freelancers are experts in their fields here, including former general counsels of ASX listed companies and former partners of top tier law firms who have registered with us on the Alifery platform and offer their services to our company and law firm clients,” Ms Hvala said.

“While other professions have fully embraced the freelance economy and are reaping the benefits, we are only now starting to see this within the legal profession. Both sides, client and expert legal freelancer, are keen to try new ways of working which fits within budgets and project scope, while suiting lifestyle choices.”

Any idea that that this could be the ‘Upwork for legal professionals’ would be very wrong, Ms Hvala said.

“We vet every single legal freelancer who signs up on the Alifery platform to maintain quality and ensure our freelancers have the experience our clients need,” she said.

“This is not about a race to the bottom on price. Our expert legal freelancers have on average 15 years experience and are some of the best in their fields.

“They don’t have the bricks and mortar overheads as freelancers, and so they are able to deliver more value to our clients, which include leading law firms and ASX-listed companies, who are posting projects and accessing our freelance legal experts on an as needed basis.”

Ms Hvala said the technology behind the Alifery platform helped to ensure that its expert legal freelancers were being matched with the right opportunities via a complex set of algorithms, “with procurement and invoicing all being taken care of via the platform too”.

Alifery is set up to meet the needs of small, medium and large businesses increasingly having short term projects that require skilled legal professionals to be on call – but do not want to deal with red tape, unnecessary overheads and legal budget blowouts.

The legal profession is often attacked for a lack of affordable legal services and low consumer satisfaction, among other challenges such as mental health issues. 

Ms Hvala said Alifery was tackling these issues head-on, in a modern and innovative way, providing freedom, flexibility and value to both its expert legal freelancers and its clients.

www.alifery.com.au

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