New & Used Car Warranty

Consumer Guarantees On Motor Vehicles (Source ACCC Motor Vehicle Sales & Repairs Guide)

Under the Australian Consumer Law (ACL), there are nine consumer guarantees that apply to new and used motor vehicles sold to a consumer:
1. Suppliers and manufacturers guarantee that motor vehicles are of acceptable quality
2. A supplier guarantees that motor vehicles will be reasonably fit for any purpose the consumer or supplier has specified
3. Suppliers and manufacturers guarantee that their description of motor vehicles (for example, in a catalogue or television commercial) is accurate
4. A supplier guarantees that motor vehicles will match any sample or demonstration model
5. Suppliers and manufacturers guarantee that motor vehicles will satisfy any extra promises – or ‘express warranties’ – made about them
6. A supplier guarantees they have the right to sell the motor vehicle (clear title), unless they alerted the consumer before the sale that they had ‘limited title’. Note that licensing laws in some states or territories may require motor car traders to guarantee clear title
7. A supplier guarantees ‘undisturbed possession’ or that no one will try to repossess or take back motor vehicles, or prevent the consumer using them, except in certain circumstances
8. A supplier guarantees that motor vehicles are free of any hidden securities or charges and will remain so, except in certain circumstances
9. Manufacturers or importers guarantee they will take reasonable steps to make spare parts and repair facilities available for a reasonable time after purchase.
Note that Consumer guarantees cannot be excluded, even by agreement.

Vehicles bought from private sellers
Vehicles bought from one-off sales by private sellers are only covered by the guarantees as to title, undisturbed possession and undisclosed securities. However, the implied warranties under state and territory sale of goods legislation apply to private sales, unless excluded by the contract.

Vehicles bought at auction
Vehicles bought at auctions are only covered by the guarantees as to title, undisturbed possession and undisclosed securities. However, the implied warranties under state and territory sale of goods legislation apply to auction sale contracts, unless excluded by the contract.

Other exclusions
Other types of vehicles not covered by consumer guarantees include those:
> bought before 1 January 2011. These are covered by statutory implied conditions and warranties under the Trade Practices Act 1974 and state and territory legislation in force before 1 January 2011
> bought to on-sell or resupply. These sales are covered by the implied fitness for purpose warranties under state and territory sale of goods legislation, unless excluded by the contract.

Warranties  (Source ACCC Motor Vehicle Sales & Repairs Guide)

Warranties against defects or ‘manufacturer’s warranty’
You, or the vehicle manufacturer, may provide a warranty that promises consumers that:
> products (such as vehicles) or services will be free from defects for a certain period of time
> defects will entitle the consumer to repair, replacement, refund or other compensation.
This is called a ‘warranty against defects’, also commonly called a ‘manufacturer’s warranty’.

Example:
A consumer buys a car that comes with a manufacturer’s warranty. The warranty says the manufacturer will repair the vehicle at no cost if it has a mechanical failure within three years of the
purchase date.

A warranty against defects document must meet a number of requirements, including that it:
> contains the mandatory text:
‘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
> is expressed in a transparent way – in plain language, legible and presented clearly,
> prominently states the warrantor’s name, business address, phone number and email address (if any), and
> sets out relevant claim periods or procedures.

Warranties against defects may set out requirements that consumers must comply with. For example, a warranty against defects on a motor vehicle may require the consumer to ensure any servicing is carried out:

> by qualified staff
> according to the manufacturer’s specification
> using appropriate quality parts where required.

Express warranties

An express warranty is different from a warranty against defects or ‘manufacturer’s warranty’. As one of the consumer guarantees, vehicles must satisfy any extra promises – ‘express warranties’ – you or a manufacturer has made about them. An express warranty focuses on a promise or promises, for example, about what the vehicle will look like, will do (or is capable of doing) and for how long. Sometimes a warranty against defects may contain an express warranty.

Example: When a consumer buys a utility vehicle, the written warranty (the warranty against defects) states that the tray can hold up to 1000 kilograms. This is an express warranty about what the vehicle can do. If the tray breaks after a load weighing 500 kilograms is placed on it, the consumer can insist that the express warranty contained in the warranty against defects be honoured. If not, they will be entitled to a remedy.

Extended warranties

An extended warranty offered at the point of sale or at the end of a manufacturer’s warranty extends the coverage provided in the original manufacturer’s warranty, usually at an additional cost.

The consumer guarantees provide rights to consumers that exist despite anything the supplier or manufacturer may say or do. Extended warranties are optional. They are in addition to, and do not replace, the consumer guarantees.

If you are selling extended warranties, you need to ensure that you are offering something of value to the consumer – something that does not simply mirror consumers’ rights under the law as this may be misleading.

Statutory warranties on used cars

State and territory motor car trader licensing laws require you to provide a statutory warranty on used vehicles that meet particular criteria. These warranties are in addition to the consumer guarantees. After a statutory warranty has expired, the consumer may still have rights to a remedy under the ACL if there is a problem with the car; however, the level of protection will depend on things such as the vehicle’s age and condition. Even if a used car sold by a licensed trader is not covered by a statutory warranty, it will still be covered by the consumer guarantees.

For more information on statutory warranties that apply to your business, check with your state or territory consumer protection agency or licensing authority.

Choice of Repairer Under the Consumer Guarantees  (Source ACCC Motor Vehicle Sales & Repairs Guide)

Consumers are sometimes confused about the differences between the consumer guarantees, warranties against defects and extended warranties. This is especially the case when dealers and
manufacturers make broad statements that consumers will ‘void their warranties’ or similar if they go to an independent repairer (for example, a repairer who is not affiliated with the manufacturer or part of the manufacturer’s network).

Any suggestion by car manufacturers or dealers that motor vehicles need to be serviced at a licensed dealer to maintain the owner’s consumer guarantee rights is not correct.

For more information see above ‘Warranties’.