There seem to be a lot of myths out there and confusion about what you must do as a business when you sell goods and services. All goods and services require guarantees.
In a recent case, a number of Harvey Norman franchisees were fined $234,000 for false and misleading statements made by sales staff to their customers.
Here are the top four myths about guarantees for goods:
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Myth: You don’t have to replace or repair a faulty good if it was more than three months old.
Fact: You have an obligation to repair or replace a faulty good for a ‘reasonable period’ after point of sale. What is reasonable depends on the goods sold but, for example, offering a repair or replacement guarantee on a washing machine or any large appliance for a period of only three months would not be seen to be reasonable.
Myth: Businesses do not have to provide a remedy for consumers including replacing or permitting a return of goods, if they are still under manufacturer’s warranty.
Fact: If you sell it, you have to provide a remedy for any faulty or unsuitable good, even if it is still under manufacturer’s warranty. You are responsible to provide a remedy as a seller, even if you did not manufacture it and then go back to the manufacturer. If a consumer purchased through your business, they have a right to come back to you for refunds, faults and other manufacturer issues.
Myth: It’s up to the customer to pay postage and handling to send the damaged goods back and to pay to have any replaced or repaired goods sent to them.
Fact: If there is a substantial fault or a breach of obligation in any way relating to the goods, the seller must replace the goods and refund the price paid and costs at the option of the consumer. If it is a minor repair, the seller has the option to refund the price or pay the cost of the repair. In both instances, the consumer cannot be required to pay the cost of the goods to be returned to them after sending it for repair.
Myth: I only sell the goods through my business so don’t need to worry about availability of repairs or spare parts.
Fact: As a seller of goods, you need to ensure 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 are available or there are no spare parts available for a reasonable time after sale, the goods should not be for sale.
What do I need to guarantee?
Under Australian Consumer Law, anything purchased after 1 January 2011 has a number of minimum guarantees attached to it. If you have a business, 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 all sellers (you don’t have to be the manufacturer) selling goods under $40,000, as well as goods that are purchased for personal, domestic, or household use or consumption regardless of price and even on motor vehicles and trailers irrespective of price.
So if you have a business selling goods to Australian consumers, you need to either ensure your manufacturer’s policies match Australian consumer guarantee requirements or you will have to be prepared to make up the difference.
Check your terms of sale now to see if you comply.
This article first appeared on StartupSmart.