Warranties – Who’s Responsible?


I read with interest in the media recently that one of the most common complaints to the Office of Fair Trading Queensland was retailers refusing to honour warranties on faulty electronics. OFT principal compliance officer Bob Melling said some retailers had wrongly told buyers the manufacturer was responsible for the warranty and if the purchaser was regional, or the manufacturer overseas, chances of a resolution were slim.

So what are your rights as a purchaser, and what are your obligations as a retailer?

As a consumer you have a set of legal rights called consumer guarantees (previously known as a statutory warranty). There are nine different types of consumer guarantees applying to goods and a further three to services.

Basically they say the goods must be of acceptable quality, match their description and be fit for their normal purpose. Full details of all nine can be found at the Fair Trading website but they are:

1.    That goods are of acceptable quality.
2.    That goods will be fit for their intended purpose.
3.    That any description of the goods (for example in a catalogue or television commercial) is accurate.
4.    That the goods will match any sample or demonstration model and any description provided.
5.    That the goods will satisfy any extra promises made about them. These are called ´express warranties´.
6.    The business guarantees they have the right to sell the goods (clear title), unless they alerted you before the sale that they only had ´limited title´.
7.    That no one will try to repossess or take back the goods, or prevent you from using the goods.
8.    That goods are free of any hidden securities or charges and will remain so.
9.    That manufacturers and importers will take reasonable steps to provide spare parts and repair facilities for a reasonable time after purchase.

Services must be performed with due care and skill, are fit for purpose, and are completed within a reasonable time.

Consumer guarantees apply to:

•    any type of goods or services costing up to $40 000;
•    goods or services costing more than $40 000, which are normally used for personal, domestic or household purposes;
•    vehicles and trailers.

They also apply to services that:

•    cost up to $40 000 regardless of purpose or use;
•    cost more than $40 000 and are normally acquired for personal, domestic or household purposes.

Consumer guarantees do not apply to goods that:

•    were bought before 1 January 2011 (these are covered under previous laws);
•    were bought from one-off sales by private sellers, such as garage sales and school fetes;
•    were bought at auctions where the auctioneer acts as agent for the owner;
•    cost more than $40 000 and are normally for business use;
•    a person buys to on-sell or resupply;
•    a person wants to use, as part of a business, to manufacture, produce or repair something else.

They do not apply to services that:

•    were bought before 1 January 2011 (these are covered under previous laws);
•    cost more than $40 000 and are normally for business use;
•    are for the transportation or storage of goods for a business, trade, profession or occupation;
•    are insurance contracts.

As a consumer, if you have a problem with a good or service the type of remedy will depend on whether the problem is classed as minor or major.

Definitions of major problems are listed on the Fair Trading Website.

The point to note is if the problem is ‘major’ the consumer has the right to choose the option to take to remedy the situation, NOT the business.

In the case of goods with major problems, the consumer can either ask for a refund, ask for an identical replacement or one of similar value if available, or keep the goods and seek compensation for the drop in value caused by the problem. For minor problems the business can either refund, replace or repair.

It’s worth noting that if the business changes hands, the new owner is not liable to provide a refund if they were not responsible for the original sale.

Retailers have certain obligations under the consumer guarantee rules.

The trader you bought the goods from must help you resolve the problem either by arranging an exchange, refund or other deal with the manufacturer on your behalf. They can’t tell you just to go to the manufacturer yourself.

It is illegal in Queensland for retailers to display ‘No Refund’ signage. Similarly they should not make statements such as “no refund on sale items”; “no refunds after seven days”; “exchange, repair or credit only”; and “no returns on swimwear”.

Examples of correct signage are available at the Fair Trading site.

Suppliers and manufacturers can also make extra promises about goods and these are known as ‘express warranties’. They are over and above the legal rights consumers have under consumer guarantees and do not replace them. The express warranty can be verbal or in writing.

A manufacturer’s warranty is a warranty against defects in the manufacturing of a good. These warranties simply state what the manufacturer will do in the event of a defect within a certain time period. These warranties must be in writing. Again these types of warranties sit alongside consumer guarantees and cannot exclude them.

What about ‘extended warranties’? These are warranties offered by the retailer for a fee extending the manufacturer’s warranty beyond the standard term. If you are considering purchasing an extended warranty the OFT recommends ensuring the additional cost is worth the expected benefit – your legal rights under the consumer guarantee laws may protect you, for example, against a $2000 flat screen TV failing within 18 months because it failed to meet the acceptable quality condition and your extended warranty purchase would not even factor in. Make sure you’re not paying for something that is already your legal right.

© Lyn Prowse-Bishop – www.execstress.com

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