What Are Consumer Guarantees and When Do They Apply?

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Table of Contents

• Replacing Faulty Goods
• Manufacturer’s Warranties
• Postage and Handling
• Spare Parts 
• Minimum Guarantees 
• Key Takeaways 

Many people have misconceptions regarding what consumer guarantees are and when they apply. Consumer guarantees are automatic guarantees that all Australian consumers may rely on. Your business is required to comply with the Australian Consumer Law (ACL). As such, your business must comply with various consumer guarantees so your consumers’ basic rights can be protected. This article will discuss some of the most notable consumer guarantees and how you can ensure your compliance with ACL. 

Replacing Faulty Goods

There is a widely held misconception regarding replacing faulty products. It has been suggested that you, as a business, do not have to replace or repair goods that are older than three months. You need to know this is simply not true.

Under ACL, you are required to repair or replace any faulty good within a reasonable period of time. This is following your customer’s purchase of your product. Depending on the good you sold to your customer, what is considered a reasonable period of time may vary. For example, suppose you sold your customer electronic goods which are designed to last a long time. This item may be a dryer or an oven. If you gave your customer a guarantee of only a few months, this guarantee would likely be unreasonable. This guarantee would not be in accordance with the ACL.

You likely will have questions about the length of your business’s replacement guarantee. When in doubt, you should consult a consumer lawyer to ensure your business is in compliance with the ACL. 

Manufacturer’s Warranties

Consumers often mistakenly believe that business owners are under no obligation to replace or refund certain goods. Your consumers are particularly likely to make this assumption if the goods still fall within your manufacturer’s warranty period. Alternatively, your consumers may also believe this to be true if your manufacturer offers extended warranties policies. 

Unfortunately, business owners do not correct this wrongful assumption. This is their attempt at shifting liability and responsibility onto the manufacturer. You must know that this does not reflect the actual requirements under the ACL guarantees.

If you sell faulty products, you must provide your customers with some form of remedy. You must do this even if the goods are still covered by your manufacturer’s warranty policy. Naturally, you have every right to seek legal advice if you believe your manufacturer has sold you faulty goods. However, as the seller of the goods, you have an obligation to provide consumers with a remedy.

Postage and Handling

Business owners may tell their customers they must pay for the postage and handling costs when returning damaged or faulty goods. Likewise, business owners may also make this representation if a replacement product is sent back to the customer.

However, this is a fallacy. The ACL guarantees provide your customers with certain consumer rights protections should your customers wish to return the faulty product. If the goods you sold to your customer are substantially faulty, and represent a major failure, you must pay all reasonable costs. Specifically, you, as the business, must cover all costs incurred by your customer in returning the goods. Likewise, you must cover all costs you customer would otherwise incur in receiving the goods. You must do this as soon as your customer requests to return to you the faulty product.

However, for minor repairs, you as the seller of the goods can choose from the following options: 

• pay for repairs; or
• provide a refund.

Your customers should never be required to pay for the return of the goods. This is especially so after you have made the necessary repairs.

Spare Parts 

If you are the seller of goods, you are required to have spare parts available. Additionally, you must make sure the goods can be repaired within a reasonable period of time, following the sale. You may have to make sure your manufacturer has spare parts available to fulfil your obligation. The ACCC will fine your business if you do not comply with this requirement. 

Minimum Guarantees 

Any goods you sold to your customers after 1 January 2011 must meet certain minimum standards including that:

• the quality is acceptable;
• there is no discrepancy between the goods advertised (the description/appearance on the site) and the goods received;
• the goods do what they say they do, i.e. they satisfy the purpose for which they are advertised;
• no available warranties will be denied; and
• for a ‘reasonable time’, spare parts will be available when necessary.

If you are unsure whether the goods your business sells meet the above standards, we recommend you speak to a business solicitor. 

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Key Takeaways 

All goods that you sell must comply with the minimum standards discussed above. Further, you must honour all the guarantees ACL provides to your customers to ensure you are legally compliant. It also is prudent that you check your manufacturer’s policies to ensure they are compliant with the ACL obligations. 

If you are still unsure what the consumer guarantees are and if you are compliant with the ACL, contact our experienced consumer lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.