If you supply or manufacture consumer products, you only have
until 30 September to ensure they comply with the mandatory
obligation under the Australian Consumer Law to provide information
about warranties against defects, as the current transitional
arrangements are about to expire.
Warranties against defects?
Under the ACL, warranties against defects are the optional
promises or warranties a business (a supplier or manufacturer)
makes to consumers about what it will do if something goes wrong
with a good or service. Those promises are often referred to as
voluntary warranties, and should not be confused with
consumers' statutory rights to various guarantees in the
Because of widespread business concern at the need to change
product packaging to comply with these new laws, ACL regulators
have recognised that practical difficulties may arise during the
transitional period in the application of the new provisions.
Accordingly, for products in the supply chain manufactured and
packaged prior to 1 November 2011, ACL regulators were unlikely to
commence enforcement action against a business where:
traders encounter serious practical difficulties in updating
warranty documents; and
reasonable steps have been taken to otherwise convey the
However that transitional relaxation of enforcement of the new
law is coming to an end on 30 September 2012.
What do you need to do now?
Ensure that any products carrying warranties you provide to
consumers comply with the disclosure requirements of the ACL by 30
September 2012. This means not only that any new warranties must
comply, but any old ones that might still be provided to the
consumer after 30 September must too.
If you do not meet the requirements outlined in the ACL,
businesses face penalties of up to $50,000, individuals face fines
of up to $10,000. Any associated misleading representations may
incur a maximum penalty of $1.1 million for corporations and
$220,000 for individuals.
ACL regulators will consider non-compliance with these
provisions on a case-by-case basis. If they instigate proceedings,
any action taken will be proportionate to the consumer detriment
associated with the non-compliance.
We are aware of and have been involved in various
representations to Government that these requirements are overly
onerous and impose excessive costs on the supply of consumer goods
in Australia, which greatly outweigh the benefits of educating
consumers. There may be better and less costly ways to inform
consumers of their warranty and guarantee rights than requiring
every product to carry the mandatory text.
However it remains to be seen if the Federal and State consumers
affairs regulators will be prepared to consider longer-term changes
to ameliorate the prescriptive requirements of these laws.
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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