Warranties against defects

From 1 January 2012 if you choose to provide a warranty against defects to consumers then the warranty document you provide must comply with specific Australian Consumer Law (ACL) requirements. A warranty against defects is provided in addition to consumer guarantees and does not limit or replace them.

Warranties against defects

A warranty against defects is a representation communicated to a consumer that if the goods or services (or part of them) are defective, 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.

A representation will only be a warranty against defects if it is made at or around the time that goods or services are supplied.

A promise about what you as a supplier or manufacturer will do if something goes wrong with a good or service can be a warranty against defects under the ACL even if it is not provided in a formal document.

Any material with writing on it could evidence a warranty against defects, for example wording on the packaging or on a label, if those words contain such a promise.

Example for what is a warranty against defects

Definition of a consumer

A person—or in some cases a self-employed individual or a business—will be considered a consumer if they purchase:

  • goods or services that cost less than $40,000 or
  • goods or services that cost more than $40,000 but are of a kind ordinarily acquired for domestic, household or personal use or consumption or
  • a vehicle or trailer primarily used to transport goods on public roads.

A purchaser will not be considered a consumer if goods are purchased to be resold or to be transformed into a product that is sold.

Who the requirements apply to

If you provide goods or services to consumers with a document evidencing a warranty against defects you must adhere to the requirements of the ACL.

The ACCC and other ACL Regulators expect compliance with the requirements at all levels of the supply chain (that is, suppliers and manufacturers alike).

Example for who the requirements apply to

When the required information must be provided

If providing a written warranty against defects, the information must be expressed in reasonably plain language, be legible and presented clearly either when:

  • the supply of the good or service takes place—for example, when a consumer purchases a good
  • about the time the supply of the good or service takes place—for example, a warranty may be provided with a good when it is delivered even though the consumer purchased it at an earlier time.

Examples for when the required information must be provided

Warranties against defects requirements

Many goods are sold with a warranty against defects. This is often highlighted on a label or packaging or attached to a sale docket or receipt—for example, statements like ‘2 year warranty’ or ’12 month replacement guarantee’. The warranty against defects is also often described in a document inside the product’s packaging.

All 'documents evidencing a warranty against defects' must be presented in a certain way, and must include specific information to ensure that consumers understand the warranty and know how to make a claim.

A ‘document evidencing a warranty against defects' includes any material on which there is writing or printing, or on which there are marks or symbols, which contains a description of the features or terms of a warranty against defects. While such a document will usually be a piece of paper or pamphlet outlining the terms and conditions of a warranty and be provided by a business inside the product’s packaging, in some circumstances, the packaging itself may also be considered a document evidencing the warranty against defects.

Where a product’s packaging is considered to be a 'document evidencing a warranty against defects' and there are also warranty documents inside or otherwise attached to the product, ACL Regulators will consider the warranty against defects requirement has been met provided that:

  • the information required by the ACL and the mandatory text are included with warranty documents inside or otherwise attached to the product, and
  • this information is not inconsistent with the statement on the packaging.

The mandatory information must be available with the product itself—it is not sufficient to refer consumers to information on a website or in-store.

Example for warranties against defects requirements

Promotional material

Promotional material is unlikely to trigger the warranties against defects requirements when it is:

  • not considered to be a document
  • not given to the consumer close to the time of supply.

However, promotional material constituting a document and given to the customer close to the time of supply may amount to a warranty against defects and therefore must include the information required by the ACL.

At all times, businesses must be careful not to mislead customers about their warranty and consumer guarantees rights. You should ensure that information provided in warranty documents complies with the warranties against defects requirements and are consistent with statements on promotional material.

Information that must be included

A 'document which evidences a warranty against defects' must state:

  • what you as the business (giving the warranty) must do if goods are faulty or defective – for example, repair or replace the goods
  • what the consumer must do to entitle them 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
  • the following information about the business giving the warranty:
    • name
    • business address
    • telephone number
    • email address (if any)
  • the warranty period—how long the warranty lasts for
  • what a consumer must do to claim under the warranty—how to contact you and where to send the claim
  • whether you or the consumer are responsible for expenses associated with a warranty claim and how the consumer can claim back any expenses incurred
  • that the benefits provided to the consumer by the warranty are in addition to other rights and remedies available to the consumer under the law.

Mandatory text

In addition to the requirements above, a document evidencing a warranty against defects must include mandatory text to ensure consumers are aware that any warranty against defects operates in addition to consumers’ rights under the ACL. This mandatory text is:

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 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.

Example for information that must be included

Additional words to explain consumers' rights

Businesses are free to include extra information in a warranty against defects to explain how the consumer rights in the ACL apply. However, businesses must take care to ensure any extra information they include in their warranty does not limit or negate the mandatory text.

This may be relevant in situations where goods are sold to different types of purchasers—for example, those who fall within the definition of ‘consumer’, and those who do not.

If you sell goods to different types of purchasers, some of whom are ‘consumers’ within the meaning in the ACL, you must comply with the warranties against defects requirements regardless of whether you also sell to purchasers who are not considered ‘consumers’ within the meaning in the ACL.

You may include extra information to explain how the consumer rights in the ACL are limited in circumstances where a purchaser does not fall within the meaning of ‘consumer’ in the ACL.

If you provide a warranty against defects in relation to goods that are not ordinarily acquired for personal, household or domestic use and your business chooses to limit its liability to the extent allowed by the ACL, you may also include extra text to explain this.

It is important to remember that you must honour any promises—whether verbal or in your warranty—that you make, regardless of how the rights in the ACL apply to that particular transaction.

Consumer guarantees

Warranties against defects are always provided in addition to the consumer guarantees contained in the ACL.

In some instances a warranty against defects will provide the consumer with remedies that exceed those provided by the consumer guarantees. However, in other cases, consumers may be entitled to a remedy under the consumer guarantees after a warranty against defects period has expired.

You must take care to ensure that consumers are not misled, either through oral representations or in the words of a warranty against defects, into thinking that their rights are limited to the remedies or timeframe set out in a written warranty against defects.

Example for how warranties interact with consumer guarantees

Express warranties

The ACL contains requirements in relation to express warranties under the consumer guarantees. An express warranty relates to the quality or standard of a good, whereas a warranty against defects relates to the steps that you will take to fix a problem with a good or service.

Warranties against defects often contain an express warranty. If your warranty against defects includes an express warranty you must ensure that you honour the express warranty and comply with the requirements in relation to warranties against defects.

Compliance with the ACL

Any action taken by the ACCC and other ACL Regulators with regard to non-compliant stock will be:

  • considered on a case-by-case basis
  • proportionate to any consumer detriment associated with the non-compliance
  • consistent with the ACL Compliance and Enforcement Policy.

When providing a warranty against defects, you must also comply with the broader requirements of the ACL, in particular the rules against misleading or deceptive conduct and false or misleading claims.

You must also ensure that when you make oral representations to consumers, you do not mislead them about their rights or about the goods or services they are purchasing.

Example for broader requirements of the ACL

Call the ACCC small business helpline

ACCC Small Business Helpline: 1300 302 021

More information

Australian Consumer Law