New and Used Car Sales

Warranties and guarantees - A promise is a promise

“I warrantee you that this vehicle will last for five years!” is not an expression that a motor vehicle dealer would use when making assurances about the quality of a motor vehicle, whether it be brand new or second-hand. Instead, they would say: “I guarantee you that this vehicle will last for five years!”

And yet, when a dealer guarantees something, they usually give a warranty, not a guarantee. Then there are express warranties, warranties against defects, and statutory warranties for used cars. Confusing semantics?

Let’s break it down.

Consumer guarantees are embedded in the Australian Consumer Law. They are a set of statutory rights, which are the same everywhere in Australia. They state that goods must be fit for purpose and last for a reasonable amount of time. There is no set time limit when these consumer guarantees expire. They can exceed dealer or manufacturer warranties, taking into account circumstances such as the price that was paid for the vehicle. A car that sold for $500 cannot be expected to be as durable and reliable as a car that sold for $50,000.

There are further statutory warranties which apply only to used cars. While they are called warranties, they are also a set of statutory rights. They vary between the Australian States and Territories, but are effective for a set time period. Statutory warranties mandate a dealer’s obligation to repair certain defects that appear during that period. Some defects mainly associated with wear and tear can be expected in used cars. They are not covered under statutory warranties.

Warranties against defects are voluntary promises made by the dealer or manufacturer, stating that the vehicle will operate free from faults for a certain period. For example, it comes with a 5-yearwarranty which can be subject to Terms and Conditions that require regular servicing and prohibit misuse. These warranties are not extended beyond their validity period, even if parts are exchanged under this warranty. It is merely a promise that the customer will have a working vehicle for the duration of the warranty period, regardless of how often it needs to be repaired or exchanged.

Dealers or manufacturers can make additional promises about the condition, quality or other characteristics and standards, as well as the availability of spare parts and servicing. These extra promises are called express warranties.

If a dealer gives a warranty, there is a consumer guarantee that the dealer will comply with the warranty they have given.

Therefore, if the vehicle does not meet either the consumer guarantees or warranties made by the dealer, consumers are entitled to remedies of either a repair, replacement, or refund. In summing up, consumer guarantees and statutory warranties are mandated by law and must not be evaded. Additional protections such as warranties can be created through voluntary promises made by the dealer or manufacturer, who can promise whatever they like.

But remember: A promise is a promise.

NT Consumer Affairs 1800 019 319 | consumer@nt.gov.au

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