Warranties and Refunds – what a business needs to know

View All Articles

In Australia a consumer is protected when they purchase any goods and services by the Trade Practices Act 1974 (Act).

A consumer is a person or corporation who acquires:

  • goods or services normally meant for personal or household purposes
  • any other type of goods or services costing less than $40,000
  • a commercial road vehicle or trailer used mainly to transport goods on public roads

A person or business that acquires goods in order to on-sell them or to make a profit is not a consumer.

The Australian Competition and Consumer Commission (ACCC) enforces the Act and can:

  • Investigate complaints and take action against business who have sold the good or provided the services
  • Educate consumers and businesses about their rights under the Act
  • Suggest solutions to consumers and businesses to resolve disputes

Supply of Goods

All contracts for goods protect consumers by including a number of statutory conditions and statutory warranties.

The statutory conditions require that:

  1. Goods must be of merchantable quality
  2. Goods must be fit for their intended purpose
  3. The goods must match the description given to the consumer
  4. The consumer must receive clear title to the goods

The statutory warranties require that:

  1. The consumer will enjoy quiet possession of the goods
  2. The goods are free from any charge or encumbrance that has not been disclosed

Supply of Services

All contracts for services contain a number of statutory warranties that require that:

  1. Any service must be carried out with due care and skill
  2. Any materials supplied in connection with the service must be reasonably fit for purpose for they are supplied
  3. The service, and any materials supplied in connection with the service, should be reasonably for any particular purpose they consumer made known to the seller

What are the remedies open to a consumer?

If goods do not meet a statutory condition or warranty and the contract is breached a consumer can be entitled to:

  • A refund
  • Have the goods replaced
  • Have the goods repaired

It should be noted that remedies are not limited to a set time and can be available to a consumer even after a manufacturers voluntary extended warranty expires.

The Act also give the consumer the right to pursue the manufacturer and importer of the goods.

Where the dispute relates to services a consumer can:

  • Have the services supplied again
  • Receive payment for the costs of having the services supplied again
  • Compensation for any loss

It is against the law for a seller to do anything that leads consumers to believe their rights are limited, or do not apply – for example, by claiming that no refunds will be given under any circumstances.

Any misleading claims a business makes about a consumer’s statutory rights are invalid and do not affect a consumer’s right to obtain a remedy for a breach of a statutory condition or warranty.

The ACCC has the ability to take court action against sellers for misleading consumer and impose fines of $1.1 million for businesses and $220,000 for individuals.

Get Advice on Warranties and Refunds

At FC Lawyers we have advised consumers, businesses large and small relating to their obligations.

If you need an obligation free quote to discuss any issues with Warranties and Refunds, please don’t hesitate to contact us.