If you sell products or service, did you know you have to provide a guarantee – even if you did not manufacture or do not provide the service?
There seems to be a lot confusion about what you must do as a business when you sell goods and services. Australian Consumer Law requires all goods and services to be provided with minimum guarantees.
There have been a number of recent cases where the ACCC has been cracking down to ensure businesses are honouring and providing guarantees with Harvey Norman being the most recent to receive a fine of $234,000. A number of their sales staff were caught stating things such as the store did not offer any repairs for goods, they did not offer a remedy when it was still under the manufacturers warranty and other misleading statements to their customers.
The top 4 guarantee myths for selling consumer goods
MYTH 1: Any goods over 3 months old do not have be provided with a repair/replace guarantee.
FACT: You are required to repair or replace a faulty good for a ‘reasonable period’ after point of sale. If you do not have a facility available to repair the goods, you have to replace it. What is ‘reasonable’ depends on the goods themselves but, for example, offering a repair or replacement guarantee on a refrigerator or any large appliance for a period of only 3 months would not be seen to be reasonable.
MYTH 2: There is no requirement for businesses to provide a remedy to customers for goods still under manufacturer’s warranty, including a replacement or a return of goods.
FACT: For any goods you sell, you have an obligation to provide a remedy if the goods are faulty or unsuitable, even if they are still under manufacturer’s warranty. You are responsible as a seller, even if you did not manufacture the goods. You can then go back to the manufacturer yourself. If a customer purchased any goods from your business, they have a right to come back to you for any refunds, faults and other manufacturer issues. They are not required to go to the manufacturer directly.
MYTH 3: Businesses can require the customer to pay postage and handling to send the damaged goods back and to pay to have any replaced or repaired goods sent back to them.
FACT: If there is a substantial fault in the goods, the seller must replace the goods and refund the price paid and any costs at the option of the customer. If it is a minor repair, the option is up to the seller to refund the price or pay the cost of the repair. Either way, the customer cannot be required to pay the cost of the goods to be returned to them after sending it for repair.
MYTH 4: Businesses who only sell the goods don’t need to worry about availability of repairs or spare parts-it’s up to the manufacturer to ensure this.
FACT: As a seller of goods, it is your obligation to ensure that the manufacturer will have spare parts and there is a repair facility available for a reasonable amount of time after the date of sale. If no facilities or spare parts are available for a ‘reasonable time’ after sale, the goods should not be offered for sale.
What guarantees do businesses need to provide?
According to Australian Consumer Law, any goods purchased after 1 January 2011 have a number of minimum guarantees attached. If you have a business that sells any goods, you must ensure your goods:
- Are of an acceptable quality;
- Match the description that they are sold under;
- Are reasonably fit for any disclosed purpose;
- Have spare parts available and a means to repair or a facility available to repair goods for a reasonable time from the date of sale.
This obligation is on every business selling any goods to customers under $40,000, in addition to any goods that are purchased for personal, domestic, or household use or consumption irrespective of price and even on motor vehicles and trailers regardless of the price.
So if you have a business selling goods to Australian consumers, you need to check your terms and conditions as well as your refund policy to ensure you comply with the laws to sell goods.