On 1 January 2012, a new law will come into effect that will affect all business involved in:

1. manufacturing goods for sale or for use in manufacturing other goods in Australia (“manufacturers”); or
2. the retail sale or wholesale distribution of goods in Australia (“suppliers”).

If you are a manufacturer or supplier of such goods, these new laws will apply to you even if the goods which you manufacture or supply are manufactured overseas.

You must make sure you comply with these laws as there may be severe penalties for failing to do so.

The new laws require suppliers to do the following:

1. ensure that if the goods which they supply to come with a manufacturer’s warranty, then that warranty is in the required form under the Australian Consumer Law; and
2. make sure they do not communicate certain things to customers in relation to a manufacturer’s warranty against faulty goods or services.

If you are a manufacturer, then you must comply with the new law if:

1. you give any warranty, guarantee or assurance as to the quality or standard of the goods you manufacture which goes beyond the warranty that you have to give by law; OR
2. you invite consumers to contact you to make a claim on your warranty (even if it is just the warranty that you have to give by law).

A manufacturer’s warranty will not comply with the new law unless it:

1. is in clear and understandable language;
2. states the period of the warranty;
3. states what the customer has to do to make a claim under the warranty;
4. states who has to pay the cost of making a claim under the warranty;
5. states, if the customer has to pay this cost, how the customer can claim back the cost from you;
6. states that the warranty is in addition to other rights and remedies of the customer under the law;
7. states the name, address, telephone number and email address (if any) of the company or person who gives the warranty.

It must also include these words:

“Our goods come with guarantees that cannot be excluded under the Australian Consumer Law.  You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage.  You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure”.

If you or your company gives a manufacturer’s warranty to consumers or to others who supply goods manufactured by you to consumers, you should provide us with a copy of your warranty by 16 December 2011.  We will then advise you about how to make your warranty compliant with the new law within the next seven days.

If you are a supplier, the things that you must not communicate, either verbally or in writing, to your customers, in relation to a manufacturer’s warranty, are:

1. that you or the manufacturer will repair or replace the goods or part of them in a way, or on conditions, which do not comply with the new law;
2. that you or the manufacturer will provide again, or rectify, faulty services or any part of them in a way, or on conditions, which do not comply with the new law; or
3. that you or the manufacturer will wholly or partly recompense a consumer in a way or on conditions which do not comply with the new law.

If you purchase goods for resupply in Australia on or after 1 January 2012, then you must make sure that those goods come with a manufacturer’s warranty that complies with the new law.  If you are unsure whether the manufacturer’s warranty complies with the new law, you should take our advice before you supply the goods or provide any services in relation to the goods (e.g. installation or repair) to anyone else.

PLEASE NOTE : you may become liable for communicating such information to your customers, contrary to the new law, as a supplier, even if:

1. the manufacturer has given you this information; and
2. you do nothing more than pass on this information to your customers.

Related Havilah Legal service(s): Corporate & Commercial Law