If you run a business that sells goods or services to consumers, you may wonder whether you need to offer a warranty against defects. While it is not a legal requirement in Australia to provide a warranty, if you choose to offer one, it must meet the requirements set out by the Australian Consumer Law (ACL). If a consumer purchases a product from you and it is faulty, they have the right to a repair, replacement or refund, regardless of whether or not a warranty is provided. However, a warranty can provide additional benefits to consumers, such as extended periods of coverage or additional services. It is important for businesses to ensure that any warranties they offer are compliant with the ACL, as failure to do so could result in penalties or legal action.
What is a Warranty Against Defects?
A warranty against defects is a voluntary commitment that businesses make to consumers, assuring them that they will repair, replace, resupply, fix or compensate the customer for problems with defective goods or services. It is crucial to note that for a representation to be considered a warranty against defects, it must be made when the goods or services are supplied, ensuring that consumers are aware of the warranty at the point of purchase.
What are the Requirements?
How a party presents a warranty can vary. For example, it can be a formal written document or a label on the packaging of goods. Since 9 June 2019, you must use mandatory wording in your warranty documentation when supplying goods or services.
Labels on packaging may be considered a document that evidences a warranty against defects, or there may be another document inside the packaging that details the terms and conditions of a warranty. If both are present on and inside the packaging, they must not be inconsistent with each other to satisfy the requirements.
By providing this information in a clear and easily understandable manner, businesses can ensure that consumers are aware of their rights and how to claim the warranty in case of any defects.
Continue reading this article below the formInformation You Must Include
To comply with the requirements under the ACL, it is vital to ensure that your warranty against defects document includes certain essential information. When creating your warranty against defects, it is crucial to include the following details:
1. Promise to Rectify Defects
Clearly state what actions you will take if the goods are defective. This may include repairing, replacing, or offering compensation for defective goods.
2. Claim Process
Outline the circumstances under which consumers can claim under the warranty and provide clear instructions on the steps they need to take to make a claim. This may include:
- contacting your business;
- providing proof of purchase; and
- returning the defective goods.
3. Business Information
Include your business name, business address, and contact details, such as phone number or email address. This helps consumers easily reach out to you in case of any issues or questions related to the warranty.
4. Duration of the Warranty
Clearly specify the duration of the warranty. This helps consumers understand the timeframe within which they can claim under the warranty.
5. Expenses Associated With Warranty Claim
Clearly state whether you or the consumer are responsible for any expenses associated with making a warranty claim, such as shipping costs or repair fees.
6. Expense Reimbursement
If consumers are entitled to claim back expenses incurred in making a warranty claim, provide clear instructions on how they can do so. For example, this may require them to provide receipts or contact your business for reimbursement.
7. Additional Consumer Rights
Explain the rights and remedies consumers have under the ACL in addition to the benefits provided by your warranty. There is a mandatory paragraph that you must include which covers this, as per the requirements of the ACL.
This guide provides key information on how to manage a business dispute as quickly and cost-effectively as possible.
Key Takeaways
As a business providing goods and services to consumers, you may provide warranties against defects. When doing so, it is essential that your warranty complies with the law. This involves making clear and honest promises to consumers about what actions you will take. Furthermore, you must specify what your business expects of the consumer. Lastly, you must follow through on the promises as per your warranty.
By providing a comprehensive and transparent warranty against defects, businesses can:
- enhance consumer trust;
- demonstrate their commitment to customers; and
- ensure compliance with the ACL requirements.
It is essential for businesses selling goods or services with warranties to understand and adhere to these requirements to protect both their interests and those of their consumers.
If you need help with your warranties, our experienced contract lawyers can assist 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.
Frequently Asked Questions
A warranty against defects is a voluntary commitment that businesses make to consumers, assuring them that they will repair, replace, resupply, fix, or compensate the customer for problems with defective goods or services. A warranty against defects should complement and not override the consumer guarantees under the Australian Consumer Law (ACL), which are inherent rights provided by law.
When creating your warranty against defects, ensure you include the following details: promise to rectify defects, claim process, business information, duration of the warranty, expenses associated with the warranty claim, expenses reimbursement, and additional consumer rights.
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