Businesses should check that their products'
warranty documentation meets the new requirements of the Australian
Does your business tell its customers that it will repair,
replace or provide compensation if the goods (or part of them) are
This is called a warranty against defects. And since 1 January
2012, new requirements in the Australian Consumer Law have been in
force regarding the information that you must provide to your
customers about how your business will respond if the goods or
services you provide are found to be defective.
The ACCC has indicated that, until September 2012, it is
prepared to consider exercising a degree of leniency in enforcing
examples of non-compliance – for some, but not all,
products. The penalties for failure to comply with the new
requirements are high: $50,000 for body corporates and $10,000 for
With a new financial year underway and September looming,
businesses are well advised to check their products' warranty
documentation to ensure it meets the new requirements.
What is required?
There are eight new requirements for warranties against defects,
a statement of 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 to warranty;
a concise statement of what the person who gives the warranty
must do so that the warranty may be honoured;
the mandatory inclusion of the following 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."; and
a statement 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.
Guidance from the ACCC
The ACCC has prepared guidance materials for business in
relation to the new requirements. The ACCC has also indicated that
it recognises the practical transitional difficulties associated
with applying the new provisions, especially when products are
manufactured and packaged many months in advance.
It has indicated that, until September 2012, when considering
the appropriate enforcement response to any contravention applying
to stock in the supply chain manufactured and packaged prior to 1
November 2011, it will have regard to:
whether there are serious practical difficulties in updating
warranty documents; and
whether the supplier has taken all reasonable steps to
otherwise convey the mandatory text and information required by the
ACL to consumers (for example, by placing a compliant sticker on
the outside packaging, or by erecting prominent, clear,
point-of-sale signs at all cash registers in a prominent
What should you do?
The most prudent response is to ensure that your products are
fully compliant. However, if this is not possible in the short
term, ensure that you take some steps now to demonstrate a
willingness to comply. This may not protect you from facing
enforcement action from the ACCC, but it may affect the ACCC's
response to your conduct.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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