Consumer Guarantees vs Manufacturer Warranties

There has been long standing confusion and debate regarding how ‘traditional’ manufacturer warranties coexist with consumer guarantees (or ‘statutory warranties’) granted under the Australian Consumer Law (ACL) and previously under the Trade Practices Act. The confusion has been exacerbated by the added requirement imposed by the ACL on manufacturers to include a specific statement in their ‘traditional’ manufacturer’s warranties about the ACL guarantees.

This article focuses on explaining the difference between the two kinds of warranties and removing any confusion which persists.

Consumer guarantees imposed by the ACL are unavoidable obligations on, among others, all suppliers of motor vehicles and vehicle components to guarantee the performance of those goods.

Consumer guarantees are completely separate and distinct from the ‘traditional’ manufacturer’s warranty. The ‘traditional’ warranty is a voluntary, private contract between the manufacturer, the Dealer and the consumer. It is usually a promise made to the consumer that a Dealer will fix or replace a part for free for a limited period of time or a certain number of kilometres and it is conditional on the consumer obeying the specific conditions of the contract.

This distinction between consumer guarantees and manufacturer warranties is very important for both suppliers and consumers.

Whether a consumer has breached the terms of a manufacturer’s warranty depends on the terms of that voluntary, private contract. For example, it is a common term of a manufacturer’s warranty to require that a vehicle be serviced by an authorised Dealer. In that case, having the vehicle serviced by an independent repairer may well breach the manufacturer’s warranty.

However, a breach of a manufacturer’s warranty does not invalidate a consumer guarantee or statutory warranty granted under the ACL. For the purposes of the consumer guarantee granted under the ACL, it also does not matter that a vehicle or part is outside the period of time covered by a manufacturer’s warranty. This means that consumers may be protected against repair costs by the ACL even if they are outside the period of time covered by a manufacturer’s warranty, or if they have breached the terms of their manufacturer’s warranty. This is consistent with the industry guide to the Australian Consumer Law published by the ACCC, which states, among other things:

‘Warranties against defects may set out requirements that consumers must comply with. For example, a warranty against defects on a motor vehicle may require the consumer to ensure any servicing is carried out:
•    by qualified staff
•   according to the manufacturer’s specification
•   using appropriate quality parts where required.

A warranty does not change your responsibilities under the ACL. The consumer guarantees apply in the same way regardless of whether a vehicle is covered by a manufacturer’s warranty, an express warranty or an extended warranty, or whether those warranties have expired.’

The ACCC industry guide can be accessed on the ACCC’s website.

Dealers may be liable under the ACL to repair, replace or refund money paid for a vehicle or a part under the ACL even where there is no manufacturer’s warranty, or the manufacturer’s warranty has expired. Dealers must also ensure that they do not make any representation about ‘warranties’ generally (for example, in promotional material’) that is capable of being construed as a misleading representation about consumer’s rights under the ACL. Consumer guarantees are a current enforcement priority area for the ACCC, especially in the context of the sale of extended manufacturer warranties by motor vehicles manufacturers and Dealers.

If you have any questions or require further information, consult your professional advisors.

 

Evan Stents
Lead Partner, Automotive Industry Group | HWL Ebsworth Lawyers

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