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While consumer guarantees are automatic and cannot be taken away, warranties are additional promises that your business may choose to offer to consumers.
Introduction
The Australian Consumer Law (ACL) sets out statutory consumer guarantees that provide consumers with a comprehensive set of rights in relation to goods and services supplied to them. Businesses cannot contract out of the consumer guarantees; however, they may provide additional warranties that offer further protection against defects in goods and services.
This article aims to clarify why it is important that you and your business understand the difference between consumer guarantees and warranties.
What are consumer guarantees?
Generally speaking, consumer guarantees apply in respect of the supply of:
- goods or services costing less than $100,000, including GST
- goods or services that are used primarily for personal, domestic or household purposes (irrespective of cost)
- a vehicle or trailer used mainly to transport goods on public roads.
What are warranties against defects?
Separate from the obligations under the consumer guarantees, it is common practice for manufacturers to offer additional warranties on their goods and for service providers to offer warranties on their services. Warranties are representations made to consumers at the time that goods or services are supplied. They typically outline the actions a business will take if goods or services are defective or fail to meet the required standard, including any time limits and conditions for making claims.
There is no legal requirement to provide warranties but any warranties that are voluntarily given must comply with the provisions of the ACL. The ACL prescribes certain minimum requirements in relation to the content and form of warranties. Importantly, warranties against defects must include mandatory wording that clearly informs consumers the warranty does not limit or exclude any of their consumer guarantees. Beyond this requirement, the scope of the warranty is a commercial matter determined by the company providing it.
Additionally, express warranties constitute a statutory guarantee under section 59 of the ACL.
What is the difference between them?
Consumer guarantees are automatic and provide broad protection under the ACL, whereas warranties against defects are additional, voluntary promises that offer specific remedies under certain conditions. Both serve to protect consumer rights, but they operate in different ways.
It is important to understand that a business's compliance with its warranties does not necessarily constitute compliance with obligations under the consumer guarantees. For example, if a consumer purchases a television with a six-month warranty against hardware defects, the consumer may still be entitled to claim a repair or replacement from the supplier or manufacturer under the consumer guarantees if a hardware defect occurs after the six-month warranty period.
Conclusion
Warranties against defects are additional to the consumer guarantees and it is critical for businesses to understand the separate obligations attached to both and that the warranties themselves constitute a statutory guarantee.
It is important to note that a statement claiming a consumer has no rights because their warranty claim falls outside the warranty terms may be false or misleading. This is because consumers still have rights under the consumer guarantees provided by the ACL.
Cooper Grace Ward is a leading Australian law firm based in Brisbane.
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.
