Warranties Against Defects - New Regulations from 1 January 2012

From 1 January 2012 a warranty against defects given to a consumer must comply with Regulation 90 of the Competition Consumer Regulations 2010.  Essentially Regulation 90 requires all suppliers, importers and manufacturers of products who offer warranties against defects with their goods to comply with a number of new requirements including detailing what the consumer must do to claim under the warranty, who bears the cost of claiming under the warranty and the benefits given by the warranty.

Offences against these requirements are punishable with fines of up to $50,000 per offence for body corporates and $10,000 for individuals.  Furthermore injunctions and damages may   be ordered for breaches.

As a result any business that provides goods or services to consumers should immediately review their warranty documents to ensure compliance.  These include printed warranty cards and any other documents, such as manuals and terms and conditions, in which warranties against defects are set out.

If you require any assistance in reviewing your warranties please contact David Beale on (02) 9957 3685 or dbeale@rbhm.com.au

Further Information on warranties/guarantees

There are in fact two types of warranties given by suppliers of goods and services to consumers.

Firstly, there are the implied guarantees given under Part 3.2 of the Australian Consumer Law (which has replaced the Trade Practices Act).  Legally these guarantees cannot be excluded and any contractual term which tries to do so is void.  These guarantees include:

• A guarantee of title.
• A guarantee that the goods are of acceptable quality.
• A guarantee that the goods are fit for any disclosed purpose.
• A guarantee that parts for any goods will be reasonably available.

It is still possible, as it was under the old Trade Practices Act, to contractually limit the liability for failure to comply with any of these guarantees to the replacement of the goods, the repair of the goods, the payment of the cost of replacing the goods or the payment of the cost of having the goods repaired.

Secondly, there are the additional warranties which a manufacturer or supplier voluntarily provides.  For example, a car manufacturer may provide a 3 year or 60,000km warranty.  There is no legal obligation on the manufacturer to provide that warranty but, if he does so, he must comply with the new regulations.

Retailers

Warranties remain a particular problem for retailers who sell goods which include a manufacturers warranty against defects.  Retailers will have to take steps to ensure that the warranty document supplied by the manufacturers/suppliers of the goods that they resell comply with the new regulations.