I Am a Mechanic. What Legal Documents Do I Need for My Business?

Starting a mechanic workshop has the ability to be a very profitable business. However, decades of consistent lobbying by enthusiastic motor vehicle groups led the government to impose licensing laws for auto repair businesses, which means you will need this licence before starting. In addition, the Australian Consumer Law (ACL) will apply to your business. The ACL is Australia’s national consumer law, replacing previous consumer protection laws across the country. For example, the protections that it provides for mechanic workshops have many advantages, including:

• stopping unqualified car repairs;
• improving workshop conditions; and
• improving service standards.

This article explains which legal documents you will need to set up a mechanic workshop. It will also explain your rights and obligations to customers, and legal issues you may face.

Which Legal Documents Do I Need?

A motor vehicle repair business licence is required to operate your own vehicle repair business. Note that a sole trader, a partnership or proprietary company can make an application for this licence.

Any person working without supervision in such businesses also needs to be certified. Further licences and certification are required for certain classes of work. For example, some of the occupations under these classes of work include:

• approved examiners of secondhand vehicles;
• safety certification examiners;
• modifying or altering vehicles;
• operating a crane; or
• gas installation.

It is also important to ensure that you enter into a client agreement with every customer. This is a binding contract which protects both your business and your customers. Because it is a binding contract, you need to ensure it is drafted diligently to ensure you do not run into legal issues in the future.

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How Long Will My Business Licence Last?

Note that business licences are issued for three years and applications for renewal must be submitted 28 days before expiry. Additionally, as a mechanic, you should always be sure that you are applying for the relevant legal documents at the appropriate office (noting that mechanics in Victoria do not require a licence). 

For instance, listed below are the relevant offices for each state and territory:

Qualifications

In addition to the required legal documents, you will also need to ensure that you are operating with the correct qualifications to run a mechanic business. Therefore, you will need a motor vehicle repairer’s licence to operate as a qualified mechanic, and there are certain qualifications you must meet as an applicant. For example, you must have a suitable premise, and the required tools and equipment. You also must also employ trained and certified staff for each class of work that the business undertakes.

Note that licensing fees are not a tax imposed on the motor repair industry. Rather, licensing fees simply cover the cost of processing the application. For example, licensing of repair businesses provides protection from unlicenced mechanics that compete for your customers. In addition, penalties for unlicenced repair work can reach $50,000. Furthermore, licensing allows access to general legal advice services regarding technical matters, such as consumer disputes. For example, this could be advantageous if there is disagreement with a customer or employee.

The Australian Consumer Law (ACL)

In addition, when operating, you must comply with the ACL. For instance, the ACL requires that you must provide service at your car repair shop with:

• due care and skill;
• which are fit for the purpose the customer specifies; and
• within a reasonable time (if time is unspecified by the consumer).

Therefore, you must perform your mechanic work and repair cars at an acceptable level of skill. Note that you may face significant legal issues if you cannot perform proper repairs in line with the ACL.

Key Takeaways

Starting a motor vehicle repair business can become a profitable venture, but there are important legal considerations that you should understand before becoming an auto mechanic and beginning car repairs. For example, you should consider:

• which legal documents you will need;
• the term and expiry of these documents; and
• what qualifications will be required of your staff

If you have any additional questions about starting a mechanic business, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

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