Your product range is ready to ship and the packaging proofs are back from the printer. There is a blank panel on the design where the warranty card is meant to go, and your retail buyers have started asking what your warranty terms are. Somewhere in the next few days you need to answer a question that sounds simpler than it is: whether to offer a warranty against defects.
The options on the table
The first option is to publish a formal warranty against defects, a written promise about what you will do if the goods or services you sell turn out to be defective. The second is to say nothing and rely on the consumer guarantees that the Australian Consumer Law (the ACL) gives every customer automatically. The ACL sits in Schedule 2 of the Competition and Consumer Act 2010 (Cth), and its guarantees are the floor: they apply to every sale whether or not you mention them, and s 64 of the ACL voids any term of a contract that tries to exclude, restrict or modify them. You cannot buy your way out of the guarantees by offering a warranty, and you cannot escape them by refusing to offer one.
So the real decision is not whether your customers get protection. They already do. The real decision is whether you will make a voluntary extra promise on top of that statutory baseline, and take on the obligations that attach to any promise of that kind. There is also a third thing worth noticing before you choose: you may already be offering a warranty against defects without printing a card. The ACCC explains that words on packaging or labels and terms in contracts can count as warranties against defects, and the promise can even be made verbally. If a salesperson tells a customer that anything that goes wrong in the first year will be fixed for free, that is a promise the law treats seriously. The practical question is often not whether to make a promise, but whether to formalise and document the promise you are already making.
The factors that should drive the decision
Your customers already have the consumer guarantees
The consumer guarantees apply automatically to every supply to a consumer in trade or commerce. For goods, s 54 of the ACL guarantees that the goods are of acceptable quality: fit for all the purposes for which goods of that kind are commonly supplied, acceptable in appearance and finish, free from defects, safe and durable, judged against what a reasonable consumer would expect having regard to the nature of the goods, the price and any representations made about them. There are related guarantees that goods match their description or sample, are fit for a purpose you were told about, and that spare parts and repair facilities remain reasonably available. Separate guarantees cover services, including that they will be provided with due care and skill.
If a product fails a guarantee, the remedies depend on how serious the failure is:
- Major failure: The customer can choose a refund or a replacement for goods, or cancel a services contract and get a refund of the unused portion. s 260 of the ACL defines a major failure for goods, and s 268 does the same for services. The test generally comes back to whether a reasonable consumer would have bought the goods at all knowing about the failure, or whether the goods are substantially unfit for their common purpose and cannot easily be remedied.
- Minor failure: You get the chance to repair the goods or rectify the service within a reasonable time before the customer can move to a refund or other remedy.
- The guarantee of acceptable quality lasts for a reasonable time having regard to the type of product, not for a fixed period, and it is not switched off when a warranty expires. The ACCC gives the example of a warranty that requires annual servicing: a customer who misses the service may lose the warranty claim, but the consumer guarantee rights remain.
None of this changes whether you offer a warranty against defects. The guarantees are the baseline, which means a warranty is never the source of your core liability for faulty goods. It changes only what you promise on top.
What a warranty against defects actually adds
A warranty against defects is defined in s 102 of the ACL as a representation communicated to a consumer at or about the time of supply that a person will, unconditionally or on specified conditions, repair or replace the goods, provide the services again or rectify them, or wholly or partly recompense the consumer, if the goods or services are defective. It includes any document that evidences the representation. The ACCC describes warranties as voluntary promises that sit in addition to the consumer guarantees and cannot replace, change or take away a customer's basic rights.
The commercial trade-off looks like this:
- Option A — Documented warranty: You get a concrete answer for customers and retail buyers who ask, a point of difference against competitors who say nothing, and a chance to define the claims process on your own terms. You also take on the obligation to honour it and to document it to a regulatory standard, which is the subject of the next factors.
- Option B — Rely on the guarantees alone: You avoid the warranty-specific paperwork and keep the promises you make informal. The catch is that customers often do not know their statutory rights, buyers may read the absence of a named warranty as a signal, and your informal promises bind you anyway the moment they are made.
Most businesses end up somewhere in between: they make the promise that fits their product honestly, and they document it properly so it works as a marketing asset rather than a liability.
A promise made is a promise the law will enforce
The moment a customer buys on the strength of a warranty, the warranty becomes a legal right and the business must comply with it. That is how the ACCC puts it, and the ACL backs it up: s 59 of the ACL includes a guarantee that a supplier will comply with any express warranty given in relation to the goods. This matters because a warranty against defects can be given on conditions. If you want a condition, for example that the customer registers the product online or has it serviced annually, it needs to be stated in the warranty document itself, because the customer needs to know what they must do to keep the promise alive.
The trap sits in the conditions that try to shrink rights. A clause that says the warranty is void if the customer does something, or that the warranty is the customer's only remedy, does not stop the consumer guarantees applying. s 64 voids terms that exclude, restrict or modify the guarantees, and the ACCC warns that businesses must not mislead consumers into thinking their rights are limited to the remedies or timeframe set out in a warranty against defects. A condition drafted to cut off the guarantees is not just ineffective, it is the kind of clause that turns a warranty into a compliance problem.
The compliance checklist for the warranty document
If you offer a warranty against defects, the document that evidences it must meet the requirements prescribed under s 102 of the ACL by reg 90 of the Competition and Consumer Regulations 2010 (Cth). The document must:
- be transparent, written in language that is easy to read and understand;
- concisely state what you will do so the warranty can be honoured, and what the customer must do to claim it;
- include the mandatory text about the consumer guarantees, with different versions for goods, for services, and for a supply of both;
- prominently state your name, business address, telephone number and email address, if you have one;
- state the period or periods within which a defect must appear for the warranty to apply;
- set out the claim procedure, including the address to which a claim may be sent;
- state who bears the expense of claiming the warranty, and how the customer claims those expenses back if you bear them; and
- state that the benefits of the warranty are in addition to the customer's other rights and remedies under the law.
The mandatory text for goods is fixed. For goods only, the warranty document must 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." The regulations prescribe separate versions for services and for combined supplies, and the text cannot be diluted: the ACCC says extra information is allowed, but it must not limit or negate the mandatory text.
Two practical points catch businesses out. First, the mandatory information must be available with the actual product. The ACCC is explicit that it is not enough to refer customers to a website or to in-store information. Second, if you print warranty terms on the packaging and also slip a card into the box, both documents evidence the warranty and both need to comply, so they need to be consistent with each other.
What non-compliance costs you
Giving a customer a document that evidences a warranty against defects but does not comply with the prescribed requirements is an offence under s 192 of the ACL. The maximum penalty is $50,000 for a body corporate and $10,000 for an individual, and it is a strict liability offence, so the ACCC does not need to prove you intended to break the rules. The same offence covers representing directly to a consumer that goods or services are covered by a warranty against defects when the document does not comply. Contravening s 102 itself can also attract a court-imposed pecuniary penalty.
On top of the document rules sits the misleading conduct layer. s 18 of the ACL prohibits misleading or deceptive conduct in trade or commerce, and s 29 prohibits false or misleading representations about goods or services. Marketing that implies the warranty is the customer's only protection, or that rights end when the warranty period ends, can breach those provisions even where the warranty document itself is compliant. The enforcement exposure therefore attaches to the document and the marketing, not to the bare decision to offer a warranty. A compliant warranty against defects is a low-risk document; a sloppy one is where the penalty exposure lives.
How an Artificer Legal lawyer can help you decide
The decision is a commercial one, but the materials around it are legal, and that is where an Artificer Legal practitioner adds value. We would start by auditing what you already say to customers: packaging, labels, in-box cards, website copy, sales scripts and contract terms, to identify the statements that already count as warranties against defects. Then we would stress-test the commercial decision with you, working through the period you can honestly stand behind, the conditions that will survive contact with the consumer guarantees, a claims process your team can actually run, and what the downside looks like if a wave of claims comes in. Finally we would draft or review the warranty document against s 102 and reg 90, insert the correct mandatory text for goods, services or both, and check the surrounding marketing against s 18 and s 29 so nothing reads as capping the consumer guarantees. These are documents where small wording choices decide whether you have a marketing asset or a penalty exposure, and the point of the exercise is to know which one you are printing before you send it to the printer.
Decide the promise first, the paperwork second
The part of this decision that takes the most effort is not the document. It is deciding, honestly, what you will actually do when a product fails: how long the promise runs, what conditions are reasonable, who pays the freight on a return, and how a customer goes about claiming. The law holds you to exactly what you promise, the document records that promise, and the consumer guarantees sit underneath the whole arrangement and cannot be removed. Before you tick the box on the packaging proof, write down what you would actually do for a customer with a defective product, then get the warranty terms that match it, and treat any marketing that suggests the warranty caps your obligations as the real risk to manage.
In short, the consumer guarantees already give your customers automatic rights to repair, replacement, refund and cancellation, and you cannot contract out of them. A warranty against defects is a voluntary promise made on top of that baseline, usually at the time of supply, which you must honour and document in a prescribed form that includes the mandatory text, your contact details, the claim procedure and who pays for it, with an offence of up to $50,000 for a company and $10,000 for an individual if the document does not comply. Whether you offer one is a commercial call about differentiation and cost, but the compliance obligations attach the moment the promise is made, whether it appears on a card, a label or in conversation.