Offering warranties and guarantees to customers
Most products and services people buy or hire come with automatic consumer guarantees – that is, goods or services work and do what they claim to do.
A warranty is different. It is a voluntary promise to the consumer from the seller, manufacturer or supplier. Warranties are separate but they don't replace consumer guarantees.
Guarantees and warranties video - Consumer and Business Services (provided in several languages).
Consumer guarantees outline a set of rights and responsibilities for products that consumers buy.
- be of acceptable quality
- match the description, sample or demonstration model
- be fit for their intended purpose
- have clear title, unless stated otherwise
- have no money owed on it
- have the right to be kept without someone taking the product or stopping the buyer from using it.
These rights are valid for a 'reasonable time', depending on the quality and type of goods.
Imagine someone bought a microwave oven for $400, which had 12 months warranty. After 13 months, it stopped working. The consumer has the right of repair or replacement because it's likely they expected it to last longer. If they bought a microwave for $45 and the same thing happened, the same rights might not apply. The price compared to the time the microwave was likely to last is different.
Consumer guarantees also cover larger or more expensive products such as:
- solar power systems
- motor vehicle parts.
Consumer guarantees outline a set of rights and obligations for services that consumers buy. Services must:
- be provided with due care and skill
- be fit for purpose
- be completed within a reasonable time.
These rights for services are valid for a 'reasonable time', depending on the type of service.
Imagine someone bought a 12-month membership at their local gym. Two months into the contract, the gym closed down. They have the right to a refund or compensation for the remaining 10 months. If the gym closed 10 months into the contract, the same rights might not apply because they have used the gym for most of the membership time.
Consumer guarantees also cover services such as:
- building and maintenance
- internet connections.
Service contracts also have to be fair. Contracts can't ignore or reduce your consumer rights and favour the business.
A warranty is a promise from the seller or manufacturer. Once the consumer buys the product or service, the promise becomes a consumer right. Warranties are separate from consumer guarantees. They don't replace them.
A manufacturer's warranty promises that goods or services won't be faulty for a specific amount of time. If a fault occurs, the warranty will cover:
- refund of the purchase amount
- compensation (if appropriate).
Manufacturer's warranties must be in writing and:
- be readable and written in plain language
- contain the warrantor's name, business address, phone number and email address
- set out relevant claim periods or procedures.
The warranty must also include the written paragraph – 'Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage. Your are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure.'
Businesses offer an extended warranty to the consumer to:
- add more time to the manufacturer's basic warranty
- give the consumer extra cover they wouldn't usually get.
Extended warranties are always optional. Businesses should explain exactly what the extended guarantee covers that the consumer guarantee does not – in some cases, the answer is 'nothing'.
Businesses must not:
- pressure people into buying an extended warranty
- tell people that they must pay for a right that is the same as the consumer guarantee.
Suppliers and manufacturers often make extra promises called express warranties. These can be spoken or in writing and usually cover things like the quality, performance or if servicing is available.
Imagine someone buys a bed and they are told it will hold its shape for at least ten years. After six years, the bed is lumpy and sagging. The consumer has the right to have it fixed or replaced because what they were told influenced their decision to buy the bed.
Goods not covered by consumer guarantees
Consumers won't be covered by consumer guarantees for goods that are:
- bought at one-off sales by private sellers - eg garage sales and fêtes
- bought at auctions, where the auctioneer acts as agent for the owner
- normally used for business and more than $40,000 was paid - eg machinery and farming equipment
- bought to re-sell
- used as part of a business to:
- manufacture or produce something else - eg an ingredient
- repair or use on other goods or fixtures.
- Refunds and returns
- Treating customers fairly - Australian Competition and Consumer Commission (ACCC)
- Consumer guarantees - a guide for businesses and legal practitioners (ACCC)
Contact Consumer and Business Services
91 Grenfell Street
GPO Box 1719
Adelaide SA 5001