Express warranties and warranties against defects
Suppliers and manufacturers often make extra promises (sometimes called ‘express warranties’) about such things as the quality, state, condition, performance or characteristics of goods.
An express warranty is not necessarily about the product breaking, it is about it living up to promises.
When a consumer buys a deck chair, the supplier says the chair can hold up to 100 kilograms. This is an express warranty about what the goods can do.
If you provide an express warranty, you guarantee the goods will satisfy that warranty.
A supplier tells the consumer that a bed will last for 10 years. If the bed only lasts for six years, the consumer will be entitled to a remedy.
Warranties against defects or ‘manufacturer’s warranty’
As a retailer or manufacturer, you may provide promises to consumers about what you will do if something goes wrong with a good or service. These promises are often referred to as voluntary warranties. Under the Australian Consumer Law (ACL), these are called ‘warranties against defects’.
A warranty against defects is an undertaking made at, or around, the time the goods or services are supplied. This promise is over and above the protections you have to provide to a consumer by law.
Examples of 'warranty against defects' include, as a business you will:
- repair or replace goods (or part of them) if the consumer is not ‘completely’ satisfied;
- resupply or fix a problem with services (or part of them) if the work is not completed by the time agreed; and/or
- provide compensation to the consumer if the goods or services (or part of them) is not the most competitively priced.
It is important to remember a warranty against defects is provided in addition to consumer guarantees and does not limit or replace them. As an example, under the consumer guarantees provisions you also have an obligation to address product failures. You cannot avoid or ignore your obligations by referring consumers back to the manufacturer.
All documents ‘evidencing’ a warranty against defects must be presented in a certain way, and must include specific information to ensure that consumers understand the warranty and know how to make a claim.
How to present your warranty against defects
Warranty documentation provided must state (under regulation 90 of the Competition and Consumer Regulations 2010):
- the name, business address, telephone number and email address (if any) of the business who gives the warranty;
- what the business will do to honour the warranty;
- what the consumer must do (or not do) to be able to claim the warranty;
- how the consumer can claim the warranty (including an address to send a claim);
- the warranty period; and
- whether the consumer is to bear the expense of claiming the warranty or how the consumer can claim back any expenses incurred.
Providing the information above and attaching a warranty against defects statement as additional information will help you comply with the mandatory text component of these regulations.
A consumer purchases a motor vehicle which comes with a three year or 100,000km written warranty outlining what the manufacturer will do if there are certain problems with the vehicle. This is a warranty against defects and must comply with the requirements of the ACL.
A business that purchases a printer press which cost less than $40,000 for use in their business will be considered a consumer under the ACL. If a business purchases the same printer to resell to consumers it will not be considered a consumer under the ACL.
A consumer hires a tiler to renovate his bathroom. The contract states the tiler will repair any tiles that become loose within five years of the tiling being carried out. This contract contains a written warranty against defects and the tiler must ensure the document complies with the requirements of the ACL.
Consumer Protection administers the ACL together with the ACCC and Australia's consumer protection regulators (the ACL Regulators). Until such a time as advice or guidance to the contrary is provided by the courts, the ACL Regulators take the position that both the manufacturer and supplier would need to ensure compliance with section 102 of the ACL. Consumer Protection suggests that you seek independent legal advice to assist you to comply with the ACL.
For further information about warranties against defects see the ACCC website. Failing to meet these criteria may lead to a maximum civil penalty of $50,000 for a body corporate and $10,000 for an individual.
Criminal penalties for the same amounts also apply.
When a warranty against defects includes an express warranty
Under the Australian Consumer Law, suppliers and manufactures guarantee goods will meet any express warranties made.
As outlined above, a warranty against defects differs from an express warranty:
- A warranty against defects deals with what the manufacturer promises to do when something goes wrong with goods.
- An ‘express warranty’ focuses on a promise or promises – for example, about what the goods will look like, will do (or are capable of doing) and for how long.
However, a warranty against defects may contain an express warranty.
When a consumer buys a deck chair, the written warranty (the warranty against defects) states that the chair can hold up to 100 kilograms. This is an express warranty about what the goods can do. If the chair breaks after a person weighing 50 kilograms sits on it, the consumer can insist that the express warranty contained in the warranty against defects be honoured. If not, they will be entitled to a remedy.
An advertisement or a promotional brochure that simply mentions that a car comes with a ‘four year warranty’ does not give enough detail about the nature of the warranty to determine whether it is a warranty against defects or an express warranty.
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