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Warranty: What It Is, How It Works, Types

A warranty is a significant aspect of consumer rights and product assurance in Australia. Whether you’re a business owner offering warranties or a consumer relying on them, understanding what warranties are, how they work, and the provisions under Australian Consumer Law (ACL) is important.

Let’s take a deeper dive into the main definition of a warranty and its functioning, possible dispute resolutions, and situations where warranty terms may be denied. We’ll also explore different types of warranties and explain why warranties are often better than guarantees per the ACL.

What is a Warranty?

A warranty is a legally binding promise or assurance provided by a seller, manufacturer, or service provider to the consumer. It guarantees the quality, performance, and reliability of a product or service for a specified period. In Australia, warranties are an integral part of the consumer protection framework, and they exist to protect the rights of consumers and ensure they receive products or services that meet their reasonable expectations.

How Warranties Function

As previously mentioned, warranties constitute assurances offered by manufacturers or retailers regarding their products and services. These assurances, either explicit or implied, vouch for the condition of purchased goods and services, assuring that they match their advertised state. Often, warranties remain valid for a specified duration, after which the issuer is no longer bound to repair or replace the previously covered product.

Warranties commonly contain exceptions that limit the situations in which a manufacturer is obliged to address a problem. For instance, many warranties for household items usually extend coverage for up to a year from the purchase date. Generally, they cover issues arising from defective parts or craftsmanship.

What is an Example of a Warranty?

Picture buying a brand-new television. Inside the packaging, along with the user manual, you discover a document outlining the actions the manufacturer will take if you encounter particular problems within a designated period.

Types of Warranties

Express Warranty

An express warranty, as the name implies, is a direct assurance from a seller or manufacturer to a buyer regarding the product’s performance based on specific standards. In the case of defects, the seller commits to repairing or replacing the faulty item. This warranty can be conveyed in written form, verbally through advertisements, on the product itself, or through various other means.

However, not all explicit assurances qualify as warranties. For instance, if a retailer claims their mattresses will provide the “best night’s sleep ever,” it’s not a guarantee of that outcome. Such statements fall under puffery, involving exaggerated language to market a product and attract customers. It’s reasonable to assume that this claim relies solely on the opinion of the person making the statement to promote the product.

Implied Warranty

On the other hand, an implied warranty, also known as an implied warranty of merchantability, assures that the purchased product functions as intended, even if not explicitly stated. This warranty is inherent unless explicitly disclaimed, as often seen in “as is” sales.

Implied warranties also come into play when sellers present and sell a product suitable for a particular purpose. Buyers depend on the seller’s expertise when purchasing such items, and any statements made by the seller about the product can be considered assurances.

Warranty Subtypes

Numerous warranty variations exist, yet among the most prevalent are extended warranties and special warranty deeds.

  • Extended warranties. Extended warranties, often offered for high-value items like cars, electronics, and appliances, are sold by retailers but administered by manufacturers on behalf of the customer.
  • Special warranty deeds. In contrast, special warranty deeds facilitate the transfer of property ownership while assuring the buyer that, at the point of sale, the title is clear of encumbrances, liens, or claims. This deed legally conveys ownership to the grantee, ensuring an explicit warranty regarding the title.

Denied Warranty Claims

Manufacturers and retailers sometimes fail to uphold their warranties, and here are a few scenarios where these promises might not be honoured.

Altered Products

Warranties often ensure products and services in their original purchased state. This means they usually apply solely to unaltered items or those that haven’t undergone modifications post-purchase.

For instance, car enthusiasts often tweak engines or make other enhancements to improve performance. Many modifications can void the warranty on affected components since they might impact the vehicle’s reliability in ways not the responsibility of the dealer or manufacturer.

Owner Actions

Companies each have their unique warranty procedures. Even if a product falls within the designated warranty timeframe, the company might demand various proofs to demonstrate a failure during normal use.

If the product fails due to actions taken by the owner rather than a flaw in design or manufacturing, the warranty is unlikely to be honoured. For example, placing a product in an excessively hot or cold environment beyond its intended use might invalidate the warranty coverage.      

What is a Guarantee?

Guarantees, under Australian Consumer Law, are assurances that an item or items sold to a customer are safeguarded according to various factors. For the seller, they can guarantee the buyer that the items are, say, as described and shown in a catalogue or store display, all warranties will be valid and honoured within their effectiveness period, and possession will be undisturbed. By being put up for sale, the manufacturer guarantee includes for example, that the product is of top condition and any warranty will be honoured in terms of parts support.    

Warranty vs. Guarantee

The terms “warranty” and “guarantee” are often switched, but still have some subtle differences. Both entail commitments by sellers to fulfil certain assurances made to consumers about their products. However, the contrast lies in the level of confidence expressed by the manufacturer regarding the product’s quality and performance.

A warranty represents a seller’s commitment that if their product fails to meet defined specifications, a solution is available. It delineates the seller’s liability and exclusions. While the buyer doesn’t pay a separate fee for the warranty, its cost is encompassed within the product’s price.

Conversely, a guarantee stands as a promise or assurance from the manufacturer or seller that the product will perform as described or adhere to specific quality standards. If it fails to do so, the manufacturer will repair or replace it. Guarantees entail no additional cost for the buyer and can be extended for both products and services.

Resolving Warranty Disputes

Warranty disputes can arise when consumers believe their rights under the warranty have been violated. In Australia, the resolution of warranty disputes can often follow these steps:

  • Warranty check. Review the warranty and instructions thoroughly. Most warranties won’t cover damages resulting from using an item in ways it wasn’t intended for. Additionally, specific issues may not fall under warranty coverage.
  • Negotiation. The first step in resolving a warranty dispute is to contact the seller or manufacturer and attempt to negotiate a resolution. This may involve requesting a repair, replacement, or refund.
  • Alternative Dispute Resolution (ADR). If negotiation with the seller or manufacturer is unsuccessful, consumers can consider alternative dispute resolution methods, such as mediation or arbitration. These methods aim to reach a mutually agreed-upon resolution.
  • Consumer complaints. Consumers can also lodge complaints with relevant authorities, such as the Australian Competition and Consumer Commission (ACCC) or the Office of Fair Trading in their state or territory. These agencies can investigate and prepare compliance/enforcement action given sufficient evidence, but are not in charge of reviewing warranties before they are ever issued, and cannot resolve warranty disputes 
  • Legal action. In some cases, if other methods fail, consumers may consider taking legal action through the court system. However, legal action should be a last resort due to the associated costs and time.

Warranty Tips

As a consumer, several measures can help reduce warranty complications:

  • Review the warranty before making a purchase, and consider acquiring extra coverage from the seller if available. It’s also beneficial to retain the receipt alongside the warranty when addressing warranty-related matters.
  • Maintain a copy of the warranty for future reference in case issues emerge.
  • Opt to purchase from reputable companies known for honouring their warranties and delivering reliable customer service.
  • Follow the instructions for using items as intended, and adhere to any specified maintenance schedules by conducting and documenting periodic maintenance.

Conclusion

No matter the product or service you pay for, warranties off consumers peace of mind by providing legally binding assurances regarding their quality and performance. By understanding how warranties work, the resolution of warranty disputes, the reasons for denial, and the different types of warranties, consumers and businesses can navigate the warranty landscape effectively. Read and follow the terms and conditions of your warranty, and everything will be fine.

DISCLAIMER: This article is for informational purposes only and is not meant to replace official legal advice on consumer product/service. BARTERCARD is not connected with any government agency. Please consult a solicitor for further understanding of the ACL and relevant regulations.

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