Warranties Against Defects Required Repair by 1 January 2012

8 March 2012

From 1 January 2012, new requirements under the Competition and Consumer Act 2010 (Cth) (‘Act’) apply to all retailers and manufacturers of goods sold to consumers with a warranty against defects.

Who is a Consumer?

Under the Act, a consumer is defined as a person or a company that purchases goods or services

  • that cost less than $40,000 (irrespective of the purpose of the goods); or
  • goods or services that cost more than $40,000 but are of a kind ordinarily acquired for domestic, household or personal use or consumption; or
  • a vehicle or trailer primarily used to transport goods on public roads.

The new requirements apply to manufacturers’ warranties, terms and conditions of trade and any warranties provided on the packaging of goods to which the Act applies.  It is now prohibited to represent to a consumer that a warranty against defects applies to goods or services unless that warranty complies with regulation 90 of the Act.

What is a Warranty Against Defects?

A warranty against defects is representation communicated by a supplier to a consumer in connection with the supply of goods or services, at or about the time of supply, to the effect that a person will:

  • repair or replace the goods or part of them; or
  • provide again or rectify the services or part of them; or
  • wholly or partly reimburse the consumer;

if the goods or services or part of them are defective, and includes any document by which any such representation is contained. 

New Warranty Requirements

Despite there being no legal requirement for suppliers to provide a warranty against defects, if a warranty is supplied, it must comply with regulation 90 of the Act.

Regulation 90 sets out eight new mandatory requirements, including but not limited to prescribed language that must now be included in all warranties, the provision of specific information about the person giving the warranty and how a consumer can make a claim under the warranty.

Transitional Period for Compliance 

The ACL regulators have indicated they are unlikely to take enforcement action until September 2012 against retailers, manufacturers or suppliers for any stock in the supply chain manufactured and packaged prior to 1 November 2011.

It is important for suppliers of goods to ensure that they have taken all reasonable steps to convey the mandatory text and new information required by the regulations to consumers despite the transitional period as whether or not action is taken against offending suppliers or transitional relief is granted will be discretionary.  

Immediate Action Required

Identify all documents pertaining to the goods supplied to consumers that provide any warranty statements. This includes all warranty certificates or cards, brochures, manuals, point of sale materials such as terms and conditions of trade and warranties displayed on any goods or their packaging.

Review and update all warranty statements, terms and conditions of sale and any warranties given on packaging so that they comply with the new requirements and ensure that consumers are only issued with the complying warranty statements as soon as possible.

Penalties

All businesses issuing any documents that include warranties against defects that do not comply with regulation 90 must act now to ensure that they don't continue to sell goods to consumers containing any non-compliant warranties. A failure to comply with the new requirements is an offence under the Act and could result in penalties up to $50,000 per offence for corporations and $10,000 per offence for individuals.

If you have any queries, please contact Fotini Kypraios of our office for advice on how these regulations affect your business.  Fotini can also provide tailored training sessions for your staff in relation to how the new Australian Consumer Law may affect your business.