New, strict warranty requirements for manufacturers and retailers of consumer products apply from 1 January 2012. Are you ready?
Manufacturers, distributors and sellers of consumer products need to be aware of strict laws that will come into effect on 1 January 2012 regarding the form and content of written warranties against defects.
The laws impose liability not only on manufacturers, but also others in the supply chain, including retailers. They apply to any consumer products sold in Australia with written warranties, regardless of their country of manufacture or where they have been packaged. There are significant penalties for breach, including penalties of up to $50,000, as well as a prohibition on selling non-compliant items.
What are the changes?
Amendments to the Australian Consumer Law (formerly the Trade Practices Act) mean that (with some minor exceptions described below) from 1 January it will be unlawful to sell consumer products that are sold with written warranties against defects if the wording of those warranties does not comply with the new Regulations.
In practice, this means that where a product is supplied with a warranty card or a similar document, the document must include a prescribed verbatim statement advising the consumer that the supplier’s warranty is additional to and does not override or limit the availability of other warranties and remedies under the Australian Consumer Law. (These include statutory warranties of fitness for purpose and reasonable durability).
If the required statement is not included on the warranty document, it will be illegal to sell the product. The warranty card or document will need to be removed and replaced with a compliant document before the product can be sold.
If a product has warranty information on its packaging that does not comply with the new wording requirements, then the product cannot be sold after 1 January unless it is repackaged with the required wording.
Similarly, if in-store brochures refer to warranties, after 1 January 2012, they may have to be removed or the content amended if the new language about warranties is not used.
Other requirements for warranty documents
If provided, a warranty document or statement must also:
- be expressed in reasonably plain language, is legible and presented clearly;
- state the period of the warranty, the procedure for claiming, and detail who bears the cost of claiming the warranty; and
- prominently state the name, business address, telephone number and email address (if any) of the entity giving the warranty.
A period of grace?
A number of businesses have approached the ACCC with concerns 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, as at 1 January 2012, include documents or statements that do not comply.
In light of these concerns, the ACCC has advised that until September 2012, when considering the appropriate enforcement response to any contravention of requirements that apply to stock in the supply chain the ACCC will have regard to, and may show lenience where certain extenuating circumstance apply, provided that stock was manufactured and packaged prior to 1 November 2011. Examples of such circumstances include serious practical difficulties in updating warranty documents, for example because the warranty is contained in a tamper-proof package.
More information
For more information, please contact Daniel Kovacs on (03) 8600 8859 or dkovacs@kcllaw.com.au.
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