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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 film 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

A supplier or manufacturer may choose to offer a warranty against defects, in addition to consumer guarantees. This warranty is a representation to a customer that if goods or services provided (or part of them) are defective, you will provide a remedy. This type of warranty usually comes with a time limit.

A warranty against defects provided in writing must include mandatory information and text .

Example

A shed builder constructs a shed on a consumer’s property. The contract states that if there is any problem with the shed within 5 years—for example, it starts to leak—the builder will make repairs free of charge. This is a warranty against defects, so the builder must ensure the contract includes the required information and mandatory text.

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 $3,000 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 $3,000 fridge should last for more than 18 months.