FOR BUSINESSES WHO SELL, SUPPLY, MANUFACTURE OR IMPORT GOODS – BETTER CHECK YOUR PRODUCT WARRANTIES!
From 1 January 2012, if you provide a warranty against defects to consumers then the warranty document which evidences the warranty must comply with specific content requirements that are set out in the Australian Consumer Law (‘ACL’).
In September 2012, the transitional enforcement arrangements which provided certain allowances for goods packaged in the supply chain prior to November 2011 came to an end. We expect ACCC’s enforcement of this area to now be stepped up.
It is therefore vitally important that any persons who are involved with the supply of goods which contain a ‘warranty against defects’ ensure that these warranties comply with the strict ACL content requirements.
WHO DO THE WARRANTY REQUIREMENTS APPLY TO?
The warranty requirements under the ACL will affect any business or persons who:
- Supply any goods or services on a wholesale basis which contain a warranty against defects
- Sell on a retail basis any goods which contain a warranty against defects
- Import from an overseas manufacturer goods for re-sale in Australia which contain a warranty against defects
- Manufacture goods in Australia which come with a warranty against defects
The above persons can be liable for a failure of goods to contain warranty documents which do not comply with the requirements of the ACL.
WHAT IS A WARRANTY AGAINST DEFECTS?
A warranty against defects is a representation to a consumer that a business will repair or replace goods or provide compensation to the consumer, if the goods or services are defective.
WHAT MUST WARRANTY DOCUMENTS FOR ‘WARRANTIES AGAINST DEFECTS’ NOW STATE?
The ACL provides that warranties against defects must include the following wording:
“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 for 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.”
The warranty document must then comply with the following content requirements:
- What the business giving the warranty will do if goods are faulty or defective (eg. repair or replace)
- What the consumer must do to entitle them to claim the warranty
- The warranty period
- The name, address, telephone number, email address of the business giving the warranty
- How the consumer can claim under the warranty
- Whether the consumer or business are responsible for expenses associated with a warranty claim and how the consumer can claim back the expenses incurred
- That the benefits provided are in addition to other rights and remedies available to the consumer at law
ENFORCEMENT AND CONSEQUENCES OF NON COMPLIANCE
The ACCC will be enforcing compliance by businesses with the warranty against defects requirements. For businesses that do not meet the requirements outlined in the ACL, there are potential penalties of up to a maximum of $50,000 for corporations and $10,000 for individuals.
In addition, misleading representations may incur a maximum penalty of $1.1 million for corporations and $220,000 for individuals.
Due to the long lead times associated with many consumer products and the supply chain issues associated with the packaging of those products, there are transitional provisions
WHAT SHOULD YOU DO NOW?
Persons involved in the supply of goods should now:
- Review the warranty against defect documents to check if they comply with the ACL requirements
- If the warranty wording does not comply, importers and manufacturers must include warranty wording which complies with the ACL requirements.
- Retailers need to follow up with their product wholesalers, importers and manufacturers of products sold to ensure that the warranty against defects in the products being sold are compliant with the ACL requirements
- Consider negotiating indemnities from other parties in the supply chain who are responsible for preparing the warranties, to ensure that you can be indemnified for any claims against you as a result of non compliance due to another party’s failure to provide correct warranties.
Pointon Partners has been assisting its clients with drafting new warranty documents.
If you have any queries or require any assistance in relation to the warranty requirements or preparation of new warranty documents, then please do not hesitate to contact Anthony Pointon or Phill Grundy of our office on 03 9614 7707.
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