Many retailers offer product warranties (also called 'manufacturer's warranties' or 'extended warranties') as a way to build customer confidence.
However, under the Australian Consumer Law (ACL), any warranty you give must comply with strict rules.
Misleading warranty terms can lead to fines, compensation claims, and reputational damage. This guide explains how to write a warranty that is legally compliant, clear, and fair to both your shop and your customers.
Warranties vs. Consumer Guarantees – What Is the Difference?
First, understand that warranties are in addition to, not instead of, consumer guarantees.
Consumer guarantees under the ACL apply automatically and cannot be excluded. A warranty is a voluntary promise you make about repair, replacement, or refund beyond the ACL's minimum requirements.
Critical rule: You cannot state (or imply) that your warranty replaces the consumer guarantees. For example, saying 'This warranty is your sole remedy' is illegal.
Mandatory Requirements Under the ACL (Schedule 2, Part 3-2)
Any warranty document or statement must include the following:
- The full name and address of the warrantor (your business or the manufacturer).
- The period of the warranty (e.g., '12 months from date of purchase').
- What the warranty covers (parts only? parts and labour? on-site repair? shipping costs?).
- What the warranty does NOT cover (exclusions like accidental damage, normal wear and tear, misuse).
- How the customer makes a claim (phone number, email, physical address).
- A statement that the warranty is in addition to consumer guarantees under the ACL – this is mandatory wording.
Prohibited Warranty Statements (What You Cannot Say)
Under the ACL, it is illegal to include these phrases or any equivalent:
- 'This warranty excludes all other warranties, express or implied' – you cannot exclude the ACL.
- 'You must return the product to the original store at your own cost' – unreasonable if the product is large or heavy.
- 'Warranty void if seal is broken' – unless you can prove the seal was required for safety or function.
- 'This warranty is valid only for the original purchaser' – you can limit transferability, but you cannot refuse a gift recipient's claim under consumer guarantees.
- Any disclaimer that attempts to limit liability for personal injury or property damage caused by defective goods.
Example of a Compliant Warranty Clause
Here is a template for a retail product warranty (e.g., electronic device or clothing):
Warranty Terms
Warrantor: [Your Shop Name, ABN, 123 Street, Suburb, State, Postcode]
Warranty Period: 24 months from the original date of purchase.
Coverage: We warrant that this product will be free from defects in materials and workmanship. If a defect arises, we will, at our option: (a) repair the product using new or refurbished parts, (b) replace the product with a new or refurbished product of equivalent value, or (c) refund the purchase price.
Exclusions: This warranty does not cover damage caused by accident, misuse, normal wear and tear, improper installation, or unauthorised repairs.
How to Claim: Contact our customer service at 1300 XXX XXX or email [email protected]. You may need to provide proof of purchase (receipt or bank statement).
Important Notice: The benefits given by this warranty are in addition to other rights and remedies you have under Australian Consumer Law. Our goods come with guarantees that cannot be excluded under the ACL. You are entitled to a replacement or refund for a major failure and compensation for 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.
Extended Warranties – Additional Rules
If you sell extended warranties (paid warranties beyond the manufacturer's standard period), you must comply with the Competition and Consumer (Industry Codes—Extended Warranties) Regulations.
Key rules:
- Provide a clear 'cooling-off' period (minimum 10 business days).
- Disclose that the consumer already has rights under the ACL.
- Do not pressure customers into buying extended warranties at the checkout.
- Ensure the extended warranty provider (usually a third-party insurer) is licensed.
Displaying Warranty Information in Your Shop
For products costing $100 or more, you must make the warranty terms available to customers before purchase (either on the product packaging, on a shelf tag, or on your website).
For online sales, the warranty must be clearly visible on the product page or at checkout.
Penalties for Non-Compliant Warranties
Violations of warranty provisions under the ACL attract penalties:
- For an individual: up to $2.5 million.
- For a body corporate: up to $50 million, or three times the benefit gained, or 30% of turnover during the breach period.
Final tip: Before printing thousands of warranty cards, have your warranty statement reviewed by an Australian legal professional who specialises in consumer law.
In summary, a compliant warranty is transparent, pro-consumer, and explicitly references the ACL.
Use plain English, avoid legalese, and never try to trick customers out of their existing rights.