> Business advice  > Guarantees, warranties and refunds  > For all businesses  > Warranties and consumer guarantees

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• Key points about warranties and consumer guarantee
• Express warranties
• Warranties against defects
• Can a defect warranty include an express warranty
• Extended warranties

Key points about warranties and consumer guarantee

Consumers have rights under consumer guarantees, regardless of any other warranty provided by the supplier or manufacturer.

You must:

• fix a problem when goods fail to meet a consumer guarantee, even if the consumer does not have a warranty or extended warranty, or the goods are out of warranty
  
• honour any extra promise made to the consumer.

A consumer can insist a supplier meets a consumer guarantee, even if the goods are covered by any additional warranties.

When selling an extended warranty, you should make it very clear exactly what it offers the consumer, over and above the rights they already have under consumer guarantees.

Express warranties

Suppliers and manufacturers often make extra promises (sometimes called ‘express warranties') about such things as the quality, state, condition, performance or characteristics of goods.

An express warranty is not necessarily about the product breaking, it is about it living up to promises.

For example:

• When a consumer buys a deck chair, the supplier says the chair can hold up to 100 kilograms. This is an express warranty about what the goods can do.

If you provide an express warranty, you guarantee the goods will satisfy that warranty.

For example:

• A supplier tells the consumer that a bed will last for 10 years. If the bed only lasts for six years, the consumer will be entitled to a remedy.

Warranties against defects

Warranties against defects or ‘manufacturer's warranty'

Suppliers or manufacturers may provide a warranty that promises consumers that:

• goods or services will be free from defects for a certain period of time
  
• defects will entitle the consumer to repair, replacement, refund or other compensation.
  

This is called a ‘warranty against defects', also commonly called a ‘manufacturer's warranty'.

For example:

• A consumer buys a deck chair that comes with a written warranty. The warranty says the manufacturer will replace the deck chair if it breaks within two years of the purchase date.

From 1 January 2012, a warranty against defects must be in writing and:

• be expressed in a transparent way - in plain language, legible and presented clearly
  
• contain the warrantor's name, business address, phone number and email address (if any)
  
• set out relevant claim periods or procedures, and
• include a statement that rights under the warranty sit alongside the consumer guarantees, which cannot be excluded.
  

Failing to meet these criteria may lead to a maximum civil penalty of $50,000 for a body corporate and $10,000 for an individual.

Criminal penalties for the same amounts also apply.

Can a defect warranty include an express warranty

Under the Australian Consumer Law, suppliers and manufactures guarantee goods will meet any express warranties made.

As outlined above, a warranty against defects differs from an express warranty:

• A warranty against defects deals with what the manufacturer promises to do when something goes wrong with goods.
  
• An ‘express warranty' focuses on a promise or promises - for example, about what the goods will look like, will do (or are capable of doing) and for how long.
  

However, a warranty against defects may contain an express warranty.

For example:

• When a consumer buys a deck chair, the written warranty (the warranty against defects) states that the chair can hold up to 100 kilograms. This is an express warranty about what the goods can do. If the chair breaks after a person weighing 50 kilograms sits on it, the consumer can insist that the express warranty contained in the warranty against defects be honoured. If not, they will be entitled to a remedy.
• An advertisement or a promotional brochure that simply mentions that a car comes with a ‘four-year warranty' does not give enough detail about the nature of the warranty to determine whether it is a warranty against defects or an express warranty.
  

Extended warranties

Some suppliers or manufacturers offer extended warranties to lengthen the coverage of their basic manufacturer's warranty.

Usually, consumers are offered the chance to buy an extended warranty after, or at the time, they buy the goods.

For example:

• when a consumer buys a deck chair the retailer says the consumer can pay an extra $20 for an extended warranty, to make sure the manufacturer's warranty applies for three years instead of two.

Some suppliers or manufacturers also tell the consumer an extended warranty provides extra protection, which the consumer would not have unless they buy it.

This is not necessarily true. The consumer guarantees provide rights that exist despite anything the supplier or manufacturer may say or do. Extended warranties are optional.

You must not:

• pressure consumers to buy an extended warranty
• tell a consumer that they must pay for any rights equivalent to a consumer guarantee.

When selling extended warranties, you should explain to the consumer what an extended warranty would provide, over and above the consumer's rights under the consumer guarantees.

For example:

• A consumer buys a plasma television for $6000. It stops working two years later. The supplier tells the consumer they have no rights to repairs or another remedy as the television was only under the manufacturer's warranty for 12 months. The supplier says the consumer should have bought an extended warranty, which would have given five years' cover.
  
  A reasonable consumer would expect more than two years' use from a $6000 television. Under the consumer guarantees, the consumer
  therefore has a statutory right to a remedy on the basis that the television is not of acceptable quality. The supplier must provide a remedy free of charge.
  
  This may also amount to misleading a consumer about their rights.

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