You have just launched a product, or a supplier has asked you to include warranty language in your sales terms, or a customer is pushing back on the absence of one. The question sitting in front of you is deceptively simple: does your business need to offer a warranty against defects, and if you choose to offer one, what does that actually commit you to?
What the decision really involves
The ACL question and the commercial question pull in different directions, and conflating them is the most common mistake. Under the Competition and Consumer Act 2010 (Cth) — which contains the Australian Consumer Law (ACL) as Schedule 2 — businesses are not required to offer a warranty against defects. You can sell goods and services without one.
What you cannot do is avoid the ACL's consumer guarantees. Those apply automatically by operation of law whenever you supply goods or services to a consumer. They cannot be excluded, modified, or limited by contract — not by a warranty, not by a "no refunds" sign, not by anything in your terms. A warranty against defects is a voluntary promise you layer on top of those guarantees. Deciding whether to offer one is therefore a commercial and risk-management question, not a compliance obligation.
The narrower real decision is this: given your product, your customers, and your capacity to honour claims, does offering a written warranty against defects improve your business position more than it exposes you?
Factors to weigh before offering a warranty
What consumer guarantees already cover
Before weighing the commercial case for a warranty, you need to understand what your customers already have without one. The ACL consumer guarantees include, among others, guarantees that goods will be of acceptable quality, fit for any disclosed purpose, and match their description. These guarantees apply for whatever period is "reasonable" given the type of good — which for a durable product can extend well beyond any warranty period you might specify.
This means your liability floor is set by law regardless of what your documents say. A warranty against defects does not reduce that floor. What it can do is:
- Give consumers a clear, simple claim process rather than requiring them to invoke their statutory rights
- Set expectations about your remediation process (repair, replacement, or refund) and timeframe
- Create a marketing asset that differentiates you from competitors who offer nothing in writing
If your product has a high defect rate, a warranty against defects will cost you money. But so will consumer guarantee claims — the warranty just makes them tidier to manage.
How complex or expensive your product or service is
Low-cost, high-volume goods (consumables, simple accessories, commodity items) carry a low per-unit claim cost but potentially high claim volume. A warranty may generate more administrative overhead than commercial benefit unless your defect rate is very low.
High-cost or complex goods and services (machinery, custom-built products, professional services bundled with deliverables) sit differently. Here:
- A warranty can be a genuine trust signal that closes sales
- The cost of a single poorly-managed claim is significant enough to justify a clear written process
- Customers in B2B-adjacent markets often expect a warranty as a baseline
Services supplied to consumers are also capable of attracting warranty against defects obligations if you make a representation that the service will be free from defects for a period. Keep that in mind if your sales process includes verbal promises about service outcomes.
Whether your customers are consumers under the ACL
Consumer guarantees — and the warranty against defects framework — apply specifically to sales to "consumers" as defined under the ACL. A person or business that acquires goods or services costing up to a threshold amount, or goods or services of a kind ordinarily acquired for personal, domestic, or household use, will generally be a consumer.
If your business sells exclusively to other businesses in commercial quantities for commercial purposes, the ACL consumer framework may not apply to those transactions at all, and a warranty against defects in the ACL sense is irrelevant. You may still choose to offer contractual warranty terms, but they operate under general contract law rather than the ACL regime.
This distinction matters when deciding whether to invest in an ACL-compliant warranty document.
The compliance cost if you do offer one
If you offer a warranty against defects — whether in a document, on a label, in your terms, or even in a verbal representation that a customer records — you must comply with reg 90 of the Competition and Consumer Regulations 2010 (Cth). Failure to comply with those requirements when you have given a warranty is an offence under s 102(2) of the ACL, carrying criminal and civil penalties.
The regulation requires that any warranty against defects document must:
- Be in a transparent form — plain language, legible, and clearly presented
- State your business name, address, phone number, and email address
- Tell the consumer exactly what they must do to make a claim
- State what you will do after receiving a claim (repair, replace, refund, or some combination)
- Specify how long the warranty lasts
- State who bears the costs of making a claim and how costs can be recovered
- Include a statement that the warranty benefits are in addition to other rights and remedies available under the law
For goods supplied to consumers, reg 90 also requires the following prescribed text to appear in the warranty document:
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.
A warranty for services has equivalent mandatory text referencing services. The ACCC has confirmed that it is not sufficient to refer consumers to this information on a website — the mandatory content must accompany the actual product or be provided at the time of supply.
The compliance investment is not trivial. Your existing sales terms and product labelling both need to be reviewed, because any written promise about defects — including words on packaging — can constitute a warranty against defects and attract the mandatory requirements.
Whether a warranty is worth offering
| Business profile | Warranty against defects: likely worth it? |
|---|---|
| High-value goods sold to consumers, durable product, brand reputation at stake | Yes — manage claims proactively and build trust |
| Complex services to consumers with long delivery periods | Consider it — but draft narrowly and specify remedies carefully |
| Low-cost consumables, high defect variability | Cautious — run the numbers on claim volume vs. marketing value |
| Goods sold to businesses for business purposes only | Probably not required under ACL — use contractual warranties instead |
| Business where any written promise is already on labels/terms | Audit first — you may already be giving one |
The businesses that most frequently end up in difficulty are those that unintentionally give a warranty — through marketing language, a label, or a standard form term — without having designed it to comply with the regulation. Once any representation of freedom from defects is made in writing at or around the time of supply, the mandatory requirements apply.
Where Artificer Legal can help
The decision to offer a warranty is straightforward to state but requires careful modelling when your product or service is anything other than simple. An Artificer Legal practitioner can help you:
- Map your existing exposure: audit your current terms, labels, and marketing collateral to determine whether you are already giving a warranty against defects (intentionally or not) and whether it is ACL-compliant
- Stress-test the commercial case: model the realistic claim cost against the likely sales and retention benefit, so the decision is made on numbers rather than intuition
- Draft a compliant warranty document: structure the warranty to satisfy reg 90 of the Competition and Consumer Regulations 2010 (Cth), including the mandatory prescribed text and the claim procedure that works for your operational capacity
- Integrate the warranty into your broader terms: a standalone warranty that contradicts your general terms and conditions creates more risk than no warranty at all — the documents need to work as a system
- Advise on B2B warranty terms: if your customers are businesses rather than consumers, different legal frameworks apply and the drafting approach changes substantially
You may already be offering one
The factor that usually decides this question is not whether you want to offer a warranty — it is whether you are already offering one without knowing it. If any written material connected to your product or service makes a promise about freedom from defects, you are likely already in the warranty against defects regime. The compliance question then becomes urgent regardless of your commercial preference.
For businesses starting from scratch: if your product is durable, carries meaningful value, and is sold to consumers, a properly drafted warranty against defects is almost always worth the investment. It channels what would otherwise be ad hoc ACL claims into a managed process, creates a documented record of your remediation commitments, and removes the ambiguity that generates disputes. The businesses that regret offering a warranty are usually those that offered one too broadly or without adequate claim infrastructure — not those that offered one at all.
Key points: a warranty against defects is voluntary but regulated; once offered, it must comply with reg 90 of the Competition and Consumer Regulations 2010 (Cth) including mandatory prescribed text; it sits on top of — and does not replace — the ACL consumer guarantees, which apply regardless; and any written promise about defects, including labelling, can trigger the framework whether or not you intended it to.