When you hear a business refer to a 'warranty' it could be one of a number of different types of protections you have (or can purchase) as a consumer.
A 'warranty' may refer to:
- your consumer guarantee rights
- an express warranty
- a manufacturer's warranty or warranty against defects
- an extended warranty.
The following clip, which is part of our film on the Australian Consumer Law (ACL), explains the different types of warranties.
As a consumer, you have a set of legal rights called 'consumer guarantees'. These rights were previously known as a 'statutory warranty'.
There are nine different consumer guarantees for goods and three for services. In basic terms, they state that goods must be of acceptable quality, match their description and be fit for their normal purpose. Services must be performed with due care and skill and must also be fit for their normal purpose.
If a product or service you purchase fails to meet one of the consumer guarantees, the business must remedy the problem - usually by providing you with a refund, repair, exchange or repeat service.
A business can not deny you your consumer guarantee rights.
Suppliers and manufacturers often make extra promises about the quality, state, condition, performance or characteristics of goods. These are called 'express warranties'. One of the consumer guarantees that you have as a consumer states that all express warranties will be honoured. If it's not, you will be entitled to a remedy.
An express warranty can be any extra promise, either verbally or in writing.
For example, if a salesperson tells you that the bed you are about to buy will last 10 years, they are making a promise about the performance of the goods. If the bed only lasts six years, the express warranty has not been honoured (that is, the consumer guarantee has not been met) and you will be entitled to a remedy.
Warranty against defects or manufacturer's warranty
Businesses or manufacturers may provide a warranty that spells out what will be done to fix a problem with goods, if there is a problem with them.
These types of warranties are called a 'warranty against defects', or a 'manufacturer's warranty'.
For example, you buy 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.
Sometimes a warranty against defects may contain an express warranty, but they are not quite the same. Where an express warranty actually promises something about the goods (for example, that they will work properly for two years), the warranty against defects makes no such promise - it just states what the business or manufacturer will do if a problem occurs with the goods. Both types of warranties will usually have a time limit attached to them.
A warranty against defects must be in writing and:
- be expressed in plain language, legible and presented clearly
- contain the warrantor´s name, business address, phone number and email address
- set out relevant claim periods or procedures (for example, relating to authorised repairers and transporting goods)
- include a statement that rights under the warranty sit alongside the consumer guarantees, which cannot be excluded.
When you purchase a product, you may be offered the opportunity to also purchase an 'extended warranty'. This type of warranty is an extension of time on a warranty against defects and/or an express warranty. It is an additional warranty that some retailers offer which provides repair and maintenance for a specified period.
An extended warranty is offered in addition to your consumer guarantee rights.
Extended warranties are optional - you don't have to buy one as under the ACL, you are guaranteed consumer rights when buying goods and services Suppliers risk breaching the law if they:
- put undue pressure on you or use unfair tactics to get you to buy an extended warranty
- mislead you into paying for the rights that you already have under consumer guarantees.
For example, if you bought a new LCD television for $2000 with a one year manufacturer´s warranty, the retailer may offer you a further three year extended warranty for $300.
However, your consumer guarantee rights mean that you are protected for a length of time that it is reasonable to expect the goods to last for. Under the ACL goods and services must be of an acceptable quality, free from defects and fit for purpose. You may still be entitled to a repair, refund or replacement, even when the extended warranty has ended.
So, in this example, if the TV broke after 18 months, you would still be able to ask the business to fix the TV for free or give you a refund, regardless of whether you purchased the extended warranty or not. This is because it would be reasonable to expect a $2000 TV to last longer than 18 months and the consumer guarantee for acceptable quality has not been met.
If you are considering purchasing an extended warranty, make sure you carefully consider whether the additional cost is worth the expected benefit. Make sure you are not paying for something that is already your legal right.
To be satisfied that the extended warranty is worth the asking price (that is, it offers you something beyond your legal rights), make sure you thoroughly read the terms and conditions on the warranty document or brochure and know the answers to the following questions before you make a decision.
- Who is providing the warranty?
- a manufacturer
- an insurance company
- a retailer
- When does the extended warranty start and finish?
- from the date of purchase
- after the manufacturer´s warranty ends.
- What does the extended warranty cover?
- special requirements you need to follow for it to be valid such as regular service or maintenance?
- exclusions or restrictions?
- does annual depreciation apply to the product? This means that the product you get as a replacement or refund may be inferior to the one you originally purchased or you may be refunded less money than you originally paid.
- What is involved in making a claim?
- are there claim limits?
- are there excess fees for each claim?
- where and how do you lodge a claim?
- are you restricted to a particular repairer?
- What are you purchasing?
- is it expensive?
- how long do you expect it to last for?
- is it likely to break during the extended warranty?
- Does the extended warranty cost more than the product?
- Will you be able to take the product to the locations listed for servicing?
It is important that you meet the conditions outlined in the warranty otherwise you may not be able to claim or it may be cancelled.
Always keep your receipts, invoices and warranties in a safe place. These documents will provide proof of purchase if the goods or services you buy do not meet your consumer guarantees.
Last reviewed 06/05/2013