New laws for business - warranties against defects

Businesses that provide written warranties need to be aware of an important change to the law.ACCC Chairman Rod Sims said the warranties against defects change will come into effect on 1 January 2012 as part of the Australian Consumer Law (ACL).“From that date, when suppliers or manufacturers provide a written warranty to consumers about what they will do if something goes wrong with a good or service, they must comply with the ‘warranties against defects’ provisions under the ACL,” Mr Sims said.“A warranty against defects is a commitment that a business will repair or replace defective goods, resupply the item, fix a problem with services, or provide compensation to the consumer if the goods or services are defective.“It must include clear and simple information on things such as the repairer’s and the consumer’s obligations, the warranty period, how the consumer can make a claim and who is responsible for expenses associated with a claim.“It must also include mandatory text to ensure the consumer is aware that the warranty against defects operates in addition to their rights under the ACL. Specific wording is on the ACCC website.”State and territory consumer affairs agencies will regulate / monitor compliance with the new requirement.A number of businesses have advised those regulators that due to the long lead times associated with many consumer products, and the nature of the packaging of those products, there will be some goods in the supply chain that will not meet the 1 January 2012 warranty requirement.Regulators recognise that transitional difficulties may arise in the application of the new provisions. Accordingly, they will consider extending the warranty requirement to September 2012 where suppliers can show:

• there are serious practical difficulties in updating warranty documents (for example, the warranty is in a tamper-proof package); and
• the supplier has taken all reasonable steps to otherwise convey the mandatory text and information required by the ACL to consumers (such as placing a compliant sticker on the outside packaging).

Note that this will apply to stock packaged before 1 November 2011.In these circumstances the ACL regulators are unlikely to take enforcement action.Mr Sims said it is critical that businesses are aware of the change regarding warranties against defects so they avoid possible financial penalties.For further information on these changes and the broader obligations under the ACL, visit www.accc.gov.au.Article provided by the ACCC.