Warranties against Defects

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I was recently asked to speak for the Australian Institute of Company Directors to provide a business legislation update for 2012, for the Sunshine Coast chapter.

One of the topics that I discussed was the amendments to the Australian Consumer Law.

From 1 January 2012 if you are in business and choose is to provide a warranty against defects to consumers, then the document that you provide must comply with the specific requirements of the Australian Consumer Law.

What is a Warranty against Defects?

A warranty against defects is a representation given by you to a consumer, that as a business you will repair or replace goods (or part of them), resupply or fix a problem with services (or part of them) and provide compensation to the consumer if the goods or services (or part of them) are defective.

Who must adhere to the requirements?

If you provide goods or services to consumers with a document evidencing a warranty against defect, you must adhere to the requirements of the Australian Consumer Law;

Who is a consumer?

A consumer is a person or a business if they purchase goods or services at costs less than $40,000.00, or goods or services that do cost more than $40,000.00 that are of a kind ordinarily acquired for domestic, household or personal use or consumption, or a vehicle.

What is a “document” evidencing a warranty against defects?

A document includes any material where there is writing or printing, such as a label, sale docket or formal warranty.

What information must be included in documents which evidence a warranty against defects?

This is very important.  The document must state:

  1. What you as the business giving the warranty must do if goods are faulty or defective;
  2. What the consumer must do to claim under the warranty;
  3. The name, business address, telephone number and email address of your business;
  4. The warranty period;
  5. What a consumer must do to claim under the warranty;
  6. Whether you or the consumer are responsible for expenses incurred with a warranty claim and how the consumer can claim back any expenses incurred;
  7. The benefits provided to the consumer by the warranty are addition to any other rights and remedies available to the consumer under law;
  8. Mandatory text as required by the legislation;
  9. Limiting liability.

It is very important that you take care to ensure that any information or words in the warranty do not limit or negate the mandatory requirements and text.

Consumer Guarantees

Warranties against defects are provided in addition to consumer guarantees required under the Australian Consumer Law.

The requirements of the Australian Consumer Law are very important, and place a significant obligation on businesses. It is very important to ensure that your systems, procedures and documentation (including your warranties) are reviewed very carefully ensure complaints with the Australian Consumer Law. Please do not hesitate to contact me should you require any assistance with this.

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