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Jewellery retailers and manufacturers are being urged to prepare for stricter warranties as part of the new Australian Consumer Law
Jewellery retailers and manufacturers are being urged to prepare for stricter warranties as part of the new Australian Consumer Law
 










New warranty law could trip up jewellers

The jewellery industry is being urged to prepare for stricter statutory requirements for warranties as part of the new Australian Consumer Law, as there will be hefty fines for those who fail to comply.
The new law will affect all jewellery retailers and suppliers, including importers that sell goods or services that are purchased by consumers. It will also have a major impact on businesses that conduct consumer and trade repairs and servicing of jewellery and watches.

Businesses have been given a year to make the necessary changes to their warranty content before the new law comes into effect on January 1, 2012.

According to commercial law expert Simon Jay, partner in Melbourne-based firm Riordans Lawyers, the new statutory requirements for warranties against defects include:
* The warranty has to be in plain language and must set out precisely who is giving the warranty
* The warranty must clearly state what the business giving the warranty is promising to do if the goods or services are defective and what the consumer must do in order to claim on the warranty (and the time frame in which they must do it).

Additionally all warranties against defects must include: “Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to 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.”

“It is important to note that the new warranty laws covered by the Australian Consumer Law are not limited to formal written warranties and also cover informal as well as verbal agreements,” Jay warned.

“The penalties for breaching these provisions include fines of up to $50,000 for companies and up to $10,000 for individuals. Businesses breaching these provisions can also be sued for damages and face other legal action,” he explained.

The new federal law will cover all states and territories as part of a uniform national consumer protection regime.

Although the change was announced on January 1, 2011, it has received scant attention from the jewellery industry.

Jay warned, “Given that this is a completely new law, your present warranty against defects will almost certainly not comply. The time for businesses to review their warranties – whether contained in a standalone document or in their general terms of trade – is now.”

The 12 month implementation date (January 1, 2012) to comply is to provide sufficient time for retailers and suppliers to adapt to the changes, given that there is often a time lag between warranties being packaged with goods and those goods being bought by consumers at retail outlets.

What do retailers need to do?
Jewellery retailers will need to contact their suppliers to ensure that any warranty against defects given with goods or services comply with the new law by January 1 next year.

“A worrying aspect for retailers is that they will be in a difficult position if they are simply passing on the manufacturer’s warranty to consumers, which is often what occurs,” Jay said.

“If the manufacturer’s warranty does not comply with the new statutory requirements, not only will the manufacturer be liable to penalties, but so may the retailer, because they are giving the warranty document to the consumer,” he added.

Retailers will also have to be wary of the manufacturer’s warranty document that often lies inside the manufacturer’s packaging.

What do suppliers need to do?
Jewellery manufacturers, suppliers and importers need to review their warranties – whether contained in a standalone document or in their general terms of trade – now, so that the correct warranty against defects is in their packaged products, in their terms of trade and/or on any relevant advertising material before January 1 next year.

What do watch and jewellery repairers need to do?

One of the new legal requirements is that a warranty against defects must contain a paragraph of specific wording (above), yet this wording only refers to ‘goods’ and does not include anything about ‘repair’ warranties. Jay believes the phrasing of this wording is clearly a “flaw in the statutory scheme”.

Jay explained, “The required wording refers only to ‘goods’ even though the regime governing warranties against defects quite clearly covers ‘repair’ and/or ‘service’ warranties also. Unless and until the regulations are rectified to overcome this potential confusion, it would appear that the only safe course for service providers is to include the mandatory wording, despite it making little sense in the circumstances.”

In what might cause further complication, Jay said the Australian Consumer Law is also set to introduce new rules governing repairers that supply refurbished goods as an alternative to repairing the consumer’s goods or who use refurbished parts in the repair.

The new law will come into force on July 1 and will apply to retailers who work as repairers as well as jewellers who repair goods they originally sold.

Where a business has the practice of providing refurbished goods as an alternative to a repair or uses refurbished goods in the repair, Jay observes that, “It will be necessary to provide the consumer with a notice setting out certain information mandated by the regulations. Penalties of up to $50,000 for companies and up to $10,000 for individuals apply to businesses who fail to provide the required notices.”

For more information about the new provisions in the Australian Consumer Law, visit www.consumerlaw.gov.au.

More reading:
Jewellers urged to note consumer laws shake-up
New consumer laws to aid jewellers









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