Types of warranties to offer your customers
A warranty will protect a consumer from problems with the goods or services they buy.
Depending on what type of warranty it is, it could be a protection that:
- a consumer is legally entitled to access
- a consumer can choose to buy
- a business offers in addition to a consumer’s automatic legal protections.
This clip from our Australian Consumer Law video explains the different types of warranties.
Consumer guarantees
Consumer guarantees are your customers’ rights whenever you sell goods and services. These rights used to be known as a 'statutory warranty'. You cannot deny a customer their consumer guarantee rights.
If goods or services fail to meet a consumer guarantee, you must fix the problem. We call this a 'remedy'. This will usually be a refund, repair, exchange or repeat service.
Consumer guarantees apply for the reasonable life of the product, even if other forms of warranty have run out.
Find out more about consumer guarantees that apply to:
Express warranties
You must honour any promise you make about your goods or services. These might be spoken or written claims.
These include:
- whether your goods or services are high quality
- what state they are in, and how long this will last
- whether they are in good condition, and how long they will stay like that
- whether they do their job properly, and for how long
- what specific characteristics they have, and how long these will last.
Example
A customer asks a staff member at an electronics store whether a smart TV will be able to run a particular app. The staff member says the TV will be able to run the app, so the customer buys it. When she gets it home, it turns out the TV will not run the app. The store must provide a remedy because the staff member’s representation was an express warranty.
Warranties against defects or manufacturer’s warranties
You might offer a warranty against defects (also called a manufacturer’s warranty) when a customer buys your goods. A warranty against defects doesn’t promise anything about the product itself. It simply makes a promise to fix faults or problems—for example, you might give the customer a replacement.
This type of warranty usually comes with a time limit.
You must give the customer the warranty in writing. It will need to:
- state the terms clearly and legibly in plain language
- provide the warrantor’s name, business address, phone number and email
- outline any time limits
- explain details and procedures (such as authorised repairers or transportation)
- tell your customers that the warranty won’t affect their consumer guarantees.
If you provide a warranty against defects you must comply with the details in that warranty.
A warranty against defects is provided in addition to consumer guarantees and does not limit or replace them.
Example
A consumer buys a deck chair. The chair comes with a written warranty, which states that the manufacturer will replace the chair if it breaks within 2 years. The chair falls apart after 18 months. The consumer is entitled to the remedy of having the chair replaced.
Extended warranties
You might offer your customer an extended warranty. This extends the customer’s time to make a claim on an express warranty or a warranty against defects. Consumer guarantees may entitle your customer to a repair, refund or replacement even if a warranty period is over.
A consumer does not need to purchase an extended warranty if it only covers a length of time that it would be reasonable to expect the goods to last for anyway. If you sell extended warranties, you must ensure you are offering something of value to the customer and not something that is already their legal right.
A business must be fair and honest about this type of warranty. You are not allowed to:
- put undue pressure on the customer to buy it
- use unfair tactics to sell it
- mislead anyone about their legal rights.
Example
A consumer buys a $3000 fridge. The fridge comes with a 1-year warranty against defects, but she decides not to buy a 3-year extended warranty. After 18 months, the fridge stops working. The consumer is entitled to a remedy even though she did not buy the extended warranty. This is because a $3000 fridge should last for more than 18 months.