From 1 January 2012 giving to a consumer a document containing a
warranty against defects in connection with the supply of goods or
services will be prohibited if the warranty does not comply with
regulation 90 of the Competition and Consumer Regulations
2010 (Cth). It will also be prohibited to represent to a
consumer that a warranty against defects applies to goods or
services unless that warranty complies with regulation 90.
This means that all businesses issuing any documents that
include warranties against defects must act now to ensure that they
don't sell goods containing any non-complying warranties
from 1 January 2012.
What is a Warranty Against Defects?
A warranty against defects is defined as:
"A 'warranty against defects' is 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:
repair or replace the goods or part of them; or
provide again or rectify the services or part of them; or
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
Essentially, when a supplier or manufacturer gives a warranty as
to the quality or fitness of their goods such as 'Lifetime
warranty' or '1 year warranty', the supplier or
manufacturer usually undertake to repair or replace the goods,
supply defective services again or otherwise recompense the end
purchaser. These warranty statements will need to comply with the
new requirements from 1 January 2012.
These requirements only apply where a warranty against defects
is provided to a consumer. A person or a company will be considered
a 'consumer' if they purchase:
goods or services that cost less than $40,000 (no matter for
what purpose); or
goods or services that cost more than $40,000 but are of a kind
ordinarily acquired for domestic, household or personal use or
a vehicle or trailer primarily used to transport goods on
So what should suppliers and manufacturers providing the
Identify all documents that provide any warranty statements.
This includes all warranty cards, brochures, manuals, point of sale
materials such as terms and conditions and warranties displayed on
Review and update all warranty statements so that they comply
with the new requirements and ensure that consumers are only issued
with the complying warranty statements from 1 January 2012.
Any supplier or manufacturer found to be supplying goods that
have non-complying warranty statements after 1 January 2012 will
have no defence for breaching these requirements.
Failure to comply with the requirements from 1 January 2012 may
result in penalties up to $50,000 per offence for corporations and
$10,000 per offence for individuals.
The ACL regulators have indicated they are unlikely to take
enforcement action until September 2012 against retailers,
manufacturer's, suppliers for any stock in the supply chain
manufactured and packaged prior to 1 November 2011.
In considering whether or not to take any action, the ACL
regulators will have regard to:
whether or not there are serious practical difficulties in
updating warranty documents, eg. Warranty is in a tamper-proof
whether or not the supplier has taken all reasonable steps to
otherwise convey the mandatory text and information required by the
ACL to consumers eg. Placing a compliant sticker on the outside
packaging. This transitional relief will be considered on a case by
If you have questions about the new rules or how them may affect
you, the team at Coleman Greig can assist you.
We can also provide you with detailed advice on how these
regulations affect your business and deliver training sessions for
your relevant staff.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The ACCC report: "Unfair Contract Terms: Industry review outcomes" provides examples of clauses considered to be unfair.
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