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
- can choose to buy.
The following clip from our Australian Consumer Law film explains the different types of warranties.
Consumer guarantees are your customer’s rights whenever you sell goods and services. These rights used to be known as a ‘statutory warranty’. You can not 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 as 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.
You must honour any promise you make about your goods or services. These might be spoken or written claims.
- 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.
Warranties against defects
Also known as ‘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.
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.
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.
A consumer buys a $3,000 TV. The TV comes with a 1-year warranty against defects, but she decides not to buy a 3-year extended warranty. 18 months later, the TV stops working. The consumer is entitled to a remedy even though she did not buy the extended warranty. This is because a $3,000 TV should last for more than 18 months.