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January 3, 2012

New consumer warranty rules commence

From 1 January 2012 suppliers of consumer goods and services must include standard wording in warranties against defects: Schedule 3 of The Trade Practices (Australian Consumer Law) Amendment Regulations 2010 (No. 1).

The new rules make it clear that supplier warranties are in addition to 12 basic statutory consumer guarantees. Staff should be trained to understand the rights of consumers. A requirement to pay for a contractual right to which a consumer is already entitled by law will be a false and misleading representation.

Warranty terms must be reviewed to ensure they comply.

The Regulations were made pursuant to Section 102 of the Australian Consumer Law which is contained in Schedule 1 of Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010.

A warranty against defects is defined in Section 102 as a representation communicated 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 (unconditionally or on specified conditions):

(a) repair or replace the goods or part of them; or

(b) provide again or rectify the services or part of them; or

(c) wholly or partly recompense the consumer;

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

Warranty requirements
The following requirements are prescribed:

(a) a warranty against defects must be in a document that is transparent;

(b) a warranty against defects must concisely state:

(i) what the person who gives the warranty must do so that the warranty may be honoured; and

(ii) what the consumer must do to entitle the consumer to claim the warranty;

(c) a warranty against defects must include the text '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 for compensation for any other reasonably foreseeable loss or damage. You 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';

(d) a warranty against defects must prominently state the following information about the person who gives the warranty;

(i) the person's name;

(ii) the person's business address;

(iii) the person's telephone number;

(iv) the person's email address (if any);

(e) a warranty against defects must state the period or periods within which a defect in the goods or services to which the warranty relates must appear if the consumer is to be entitled to claim the warranty;

(f) a warranty against defects must set out the procedure for the consumer to claim the warranty including the address to which a claim may be sent;

(g) a warranty against defects must state who will bear the expense of claiming the warranty and if the expense is to be borne by the person who gives the warranty -- how the consumer can claim expenses incurred in making the claim;

(h) a warranty against defects must state that the benefits to the consumer given by the warranty are in addition to other rights and remedies of the consumer under a law in relation to the goods or services to which the warranty relates.

Statutory consumer guarantees
The 12 new consumer guarantees are:
Guarantee as to title
Guarantee as to undisturbed possession
Guarantee as to undisclosed securities
Guarantee as to acceptable quality
Guarantee as to fitness for any disclosed purpose
Guarantee relating to the supply of goods by description
Guarantees relating to the supply of goods by sample or demonstration model
Guarantee as to repairs and availability of spare parts
Guarantee as to express warranties
Guarantees relating to the supply of services
Guarantee as to due care and skill
Guarantees as to fitness for a particular purpose
Guarantee as to reasonable time for supply

For consumer guarantees, a consumer is anyone who buys:

  • goods or services up to $40,000;
  • goods or services over $40,000 if for personal, domestic or household purposes
  • a vehicle or trailer used mainly to transport goods

A person or business will not be a consumer if they purchase goods to on-sell or use in manufacture or transform them into something else for sale.

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Posted 3rd January 2012 by David Jacobson in Consumer Law, Trade Practices