This article is for businesses who sell goods or services to consumers with a warranty. You do not have to provide a warranty against any defects to consumers, but if you do, it must comply with the Australian Consumer Law requirements.

What is a warranty against defects?

Your promise to consumers to repair or replace goods, redo or fix problems with services, or offer compensation is a warranty against defects.

For the representation to be a warranty against defects, it must be made around the time that the goods or services are supplied.

The warranty can be written as a formal document or a label on the packaging of goods. As long as it promises that you will do something if there is something wrong the with goods or services, it can be considered a warranty against defects.

What are the requirements?

If you are providing a warranty against defects, you must present the information in a way to make sure the consumers understand the warranty and how they can establish a claim if there is a defect.

Labels on packaging may be considered to be 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.

What information you need to include

Your warranty against defects documents needs to include certain information to comply with the requirements under the ACL.

In your warranty against defects, you will need to include details about:

  • what you promise to do if the goods are defective
  • the circumstances under which the consumer can make a claim for the warranty
  • the steps the consumer must take and how they can claim the warranty
  • information about your business including your name, business address, and contact details
  • the duration of the warranty
  • whether you or the consumer are to pay any expenses associated with the warranty claim
  • if the consumer can claim back the expenses incurred in a warranty claim, explain how to do so
  • the rights and remedies that the consumer has under the ACL in addition to the benefits of your warranty – there is a mandatory paragraph that you are required to include which covers this

Conclusion

Keep in mind that there are rules about misleading or deceptive conduct, so make sure your representations to your consumers are not false. The simple rule is to make clear promises to the consumer about what you will do and what they have to do, and then keep your word. If you need legal advice on the Australian Consumer Law, get in touch with LegalVision’s team of small business lawyers today.

Dhanu Eliezer

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