As we've reported before, you could cop an expensive fine if you do the wrong thing when it comes to the warranties for the products you sell or supply.
To see why, look at what's happened to HP, which has agreed to a $3 million penalty over an issue relating to warranties.
One of the ways HP went wrong was telling retailers it was not liable for refunds or replacements unless the transaction received prior authorisation.
The Federal Court found that HP made false or misleading representations to consumers by trying to limit remedies according to HP's discretion. In the event of a major failure of a product, the customer is entitled to return the goods for replacement or a refund, and HP only offered replacement after repeated repairs.
They also ran into trouble for making representations that "remedies" for consumers were limited
to the express warranty period, and for requiring consumers to pay for repairs outside that period. There was also a problem over the representation that products purchased online could only be returned to HP at the company's discretion.
What are the rules you need to follow?
Whether you sell products or services to consumers or other businesses, you need to be aware of Australian Consumer Law provisions as - with some exceptions - goods or services costing up to $40,000 are deemed to be consumer transactions.
In a nutshell suppliers cannot limit, restrict or exclude consumer guarantees; avoid their obligations by getting the consumer to agree that the law of another country applies to the contract or to any dispute; or tell a consumer that they are required to pay for any rights equivalent to a consumer guarantee (eg, an extended warranty).
If the goods or services do not live up to the consumer guarantee with regard to acceptable quality or express warranty, the customer can seek redress from the manufacturer and the supplier. Minor faults can be addressed by repairs at the supplier's discretion providing that is done within a reasonable time, otherwise the customer can opt for a refund.
You can see more information about this in this guide for businesses and legal practitioners.
Apart from meeting your own responsibilities, you also need to be able to tell when your suppliers aren't meeting theirs, or worse, trying to influence you into taking actions that may contravene Australian Consumer Law (for example, telling aggrieved customers "you'll have to send it back to the manufacturer").
We also recommend reading this article, which links to a checklist produced by NSW Fair Trading to help small businesses check their understanding of Australian Consumer Law, which makes a good starting point.
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