Summary
From 1 January 2012, the Australian Consumer Law (ACL) has imposed new requirements on the form and content of documents which 'evidence' express warranties (such as the 'manufacturers warranties' commonly offered by manufacturers or suppliers of goods).
Manufacturers and suppliers of goods will need to amend their warranty cards, warranty statements, warranty terms and related documents to ensure they are compliant with these new requirements.
As the ACCC has taken a very broad view as to what amounts to a document which 'evidences' a warranty, these provisions potentially also apply to statements or representations regarding warranties on product packaging. As a result, consideration will also need to be given to whether product packaging complies with the new requirements
Retailers will also need to ensure that their suppliers are compliant with the new regime or face potential liability.
Details
Under the ACL, regulations can be prescribed regarding the required form and content of a 'warranty against defects'. A 'warranty against defects' is essentially any representation that defective goods or services will be repaired, replaced or resupplied or that compensation will be paid.
If regulations are prescribed, it will be a contravention of the ACL to supply to a consumer a document that 'evidences a warranty against defects' which does not comply with the prescribed requirements. Pecuniary penalties of up to $50,000 per offence can be imposed for such contraventions.
Regulations have now been prescribed and have been in effect since 1 January 2012. The regulations require that documents which evidence a warranty against defects include the following details:
what the person giving the warranty must do if goods are faulty or defective;
what the consumer must do to claim under the warranty;
the entity name and contact details of the person giving the warranty;
the warranty period (ie how long the warranty lasts for);
what a consumer must do to make a claim under the warranty;
whether the person giving the warranty or the consumer will be responsible for expenses associated with a warranty claim and how expenses can be claimed; and
that the benefits provided to the consumer by the warranty are in addition to other rights and remedies available to the consumer under the law.
All documents evidencing a warranty against defects must also include the following mandatory 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 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'
Documents which are likely to be regarded as evidencing a warranty against defects include warranty cards or warranty statements included in product packaging and warranty terms information included in product manuals, on websites and the like.
However, in its published guidance on these provisions, the ACCC has indicated that where packaging for a product refers to an express warranty, the packaging itself may be a document which 'evidences a warranty against defects'. As a result, the ACCC's view is that all of the required details and mandatory text set out above must be included either on the packaging or on a document included in the packaging.
The ACCC's view is that referring consumers to a website where full terms of the warranty can be obtained will not be sufficient to comply with these provisions.
This has the potential to cause significant practical difficulties for many suppliers, such as suppliers of small items which don't have space to include such warranty details on or within the packaging.
ACCC guidance
Manufacturers and suppliers should have their warranty documents and product packaging reviewed to ensure compliance with the above provisions. As retailers who supply products which contain non-compliant documents or packaging can also be liable for contravening these provisions, retailers may want to ensure that their suppliers will be compliant with these provisions.
In its published guidance, the ACCC has indicated that, for stock manufactured and packaged prior to 1 November 2011, it may exercise leniency in taking enforcement action until September 2012, particularly where there are logistical or practical reasons why warranty documents which comply with the above cannot be supplied.
Hall & Wilcox has significant experience advising clients on compliance with these provisions and drafting compliant warranty documents.