Warranties
A good way for a trader to show they have faith in their product or service is to offer a guarantee or warranty. Guarantees and warranties can be powerful marketing tools in attracting customers.
Also, remember that even if a trader doesn’t offer a warranty or guarantee, the product may have a statutory warranty (also known as implied warranty) under the law. The law says that all products supplied to a consumer must be fit for the purpose for which they were supplied.
Whether a product is made or sold with a warranty or a service is offered with a guarantee:
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the product must be fit for the purpose for which it is supplied; and
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the service must be carried out with due care and skill and any materials supplied will be reasonably fit for the purpose for which they are supplied.
A manufacturer must stand by its warranty and make reasonable efforts to ensure spare parts are available, unless it took reasonable action to notify that spare parts would not be available. If a supplier provides a service, then the materials supplied must also be fit for any particular purpose made known to the supplier or the result desired to be achieved and must be of a quality that will reasonably achieve that result.
There are generally two types of warranties:
- voluntary (or express or manufacturer's) warranties
- statutory (or implied) warranties.
The Fair Trading Act 1987 and the Trade Practices Act 1974 imply these in respect of goods and services generally which are supplied to consumers.
There are also specific statutory warranties applying to certain contracts such as the purchase of a motor vehicle or home building work.
Voluntary warranties
Guarantees given in writing are known as voluntary or express warranties or conditions. These are a promise to correct certain problems that may occur after the consumer has bought the product or received the service. For example, a new fridge warranty usually covers parts and labour for a period of 12 to 36 months. Some voluntary warranties are given unconditionally, while others may be subject to limits or conditions such as ‘regular servicing’.
Manufacturers must stand by their warranties or guarantees, whether the product is sold directly or through a retailer. If they do not, then a consumer may seek compensation for any loss suffered as a result.
They must also ensure a reasonable supply of spare parts and repair facilities. However, they do not have to do so if they take reasonable action to advise at the time of sale that parts or facilities will not be available at all after a specified time.
Top of pageStatutory warranties
Statutory conditions and warranties are implied by statutes or common law and require traders and manufacturers to ensure that every product provided is suitable for the purpose for which it is supplied.
Products must do their job properly, bearing in mind their price and the way they are described. This is a legal obligation that applies, whether or not a trader or manufacturer decides to provide a written warranty or guarantee (voluntary warranty).
Consumers may ask for a refund if the goods purchased:
- are not of merchantable quality ie so defective that they should not have been sold, for example they don't work, they break down or they develop a serious fault. If an article becomes defective after sale, one of the considerations for merchantable quality would be the price received by the supplier for the goods (eg. a $2 watch wouldn't be expected to last as long as a $300 quality watch)
- are not suitable for their intended reasonable purpose made known to the supplier, or
- do not match the sample or description provided.
For example, a refrigerator is an expensive item. It is not unreasonable to expect it to last longer than 18 months before it’s ready for the scrap heap. Even if the voluntary warranty on the refrigerator has expired, a consumer may still have a valid complaint under the law if it had a structural fault eg. defective insulation not apparent at the time of purchase, which became obvious after only 18 months.
These statutory warranties cannot be excluded or modified by a manufacturer or trader when the product or service is bought for personal or domestic use, even if the consumer does not return a manufacturer’s guarantee card or notice provided with the goods.
Extended warranties
Extended warranties are occasionally purchased by consumers. These warranties do not replace voluntary or statutory warranties. They may provide additional cover for example upon a voluntary warranty expiring.
When purchasing extended warranties, consumers should check all conditions and the extent of cover. Special attention should be given to any conditions regarding servicing and maintenance of the product.
For more information go to the Extended warranties web page.
Merchantable quality, fitness for purpose and supply by description
Traders are liable for goods supplied which are faulty in design or construction, if they have not pointed out any defects to consumers or consumers should have noticed the defects prior to purchase. This applies to both manufacturers and retailers.
The trader is generally not liable if goods become damaged after leaving its control.
Fitness for a particular purpose means that the goods must be fit for the purpose that the consumer made known to the supplier at the time of purchase. However, that purpose must be reasonable. Consumers should be able to rely on advice from sales staff. Goods supplied must also be as described, or match the sample given to the consumer. For example, a refrigerator must defrost automatically if that is the way it was described.
Good title/ownership
Consumers must also become the owners of goods outright unless any legal restrictions to ownership have been fully and clearly explained before purchase. This only applies to goods sold direct to consumers.
Availability of spare parts
For more information on supply of parts, visit the Australian Competition and Consumer Commission website.
Restrictions on warranty claims
To obtain redress, consumers must ensure that the goods:
- are not damaged by being used in an abnormal way
- are not disposed of, lost or destroyed
- are not made unmerchantable for example - substantially reduced in value by delaying return.
Consumers must also return the goods or give details of the problem within a reasonable time, after they have had a chance to inspect them.
Goods purchased overseas
Unlike goods purchased in Australia where a consumer can return to the place of purchase, customers are unable to do this with goods purchased overseas.
When purchasing goods overseas, the prudent consumer should always check whether the manufacturer is represented in Australia and/or has service arrangements.
Consumers should contact the manufacturer, who will advise them where the goods should be sent, or details of a local agent. Some manufacturers offer a world-wide warranty.
Who is responsible - the trader or manufacturer?
If a consumer returns a faulty item, liability can be shared between the supplier and the manufacturer. However, it is ultimately the supplier's responsibility to resolve the complaint. A supplier or manufacturer cannot limit liability by excluding, modifying or restricting the rights and remedies available to consumers under the law in any way for the goods that are normally acquired for personal or household use. Any attempt to do so is unlawful, and there is the risk of being prosecuted for making statements that are false or may mislead consumers about their rights.
If a consumer suffers a breach of statutory warranty they can rescind the contract with the supplier and/or seek damages for loss from the supplier or manufacturer.
How much can a trader limit their liability?
In most circumstances, warranties are managed without any difficulty. However, if a trader does experience problems sorting out warranties where another party (for example, the manufacturer or wholesaler) is at fault, the trader can usually take action through the Consumer, Trader and Tenancy Tribunal (CTTT) or the courts.
Second-hand goods
A good way for a trader to show they have faith in their product or service is to offer a guarantee or warranty. Guarantees and warranties can be powerful marketing tools in attracting customers.
Also, remember that even if a trader doesn’t offer a warranty or guarantee, the product or service may have a statutory warranty under the law. The law says that all products must be fit for the purpose for which they were sold.
Whether a product is made or sold with a warranty or a service is offered with a guarantee, the product must be suitable for the purpose for which it is sold.
A manufacturer must stand by its warranty and make reasonable efforts to ensure spare parts are available, unless it took reasonable action to notify that spare parts would not be available. If a supplier provides a service, then the materials supplied must also be fit for the particular purpose made known to the supplier and must be of a quality that will reasonably achieve the result the customer wants.
There are generally two types of warranties:
- voluntary (or express) warranties
- statutory (or implied) warranties.
The Fair Trading Act 1987 and the Trade Practices Act 1974 imply these in respect of goods and services generally.
There are also specific statutory warranties applying to certain contracts such as the purchase of a motor vehicle or home building work.
Case study: buying a used car and warranties - read about Glen and how he bought a car that needed repairs that the dealer didn't want to fix...