From ploughshares to swords: misleading and deceptive conduct for warranties and spare parts

The Australian Competition and Consumer Commission has commenced proceedings before the Federal Court of Australia against AA Machinery Pty Ltd (trading as Agrison), alleging breaches of the Australian Consumer Law (ACL) for making false or misleading representations to their customers. Agrison supplies a range of farming equipment to Australian customers, including branded tractors and wheel loaders, which sell for between $18,000.00 and $60,000.00.

 

What are consumer guarantees?

Consumer guarantees are a set of rules which apply to all goods and services purchased by consumers under the ACL. They apply automatically, regardless of any voluntary or extended warranty provided by a seller or a manufacturer of goods or services. They cannot be contracted out of.  If a product is sold which fails to meet a guarantee, the customer is entitled to a remedy.

For businesses, it is guaranteed that the goods they sell:


  • are of acceptable quality;
  • are fit for purpose;
  • have been accurately described;
  • match any sample or demonstration model;
  • satisfy any express warranty;
  • have a clear title (unless advised otherwise), have a right to possession and have no hidden security interest against them;
  • have spare parts and repair facilities reasonably available for a reasonable period of time (unless advised otherwise).
For manufacturers and importers, it is guaranteed that their goods:

  • are of acceptable quality;
  • have been accurately described;
  • satisfy any manufacturer's express warranty; and
  • have spare parts and repair facilities reasonably available (unless advised otherwise).

Guarantees by Agrison

The ACCC investigated Agrison's conduct after receiving a number of complaints from customers that their machinery had serious defects which they were unable to get repaired. Since August 2017 Agrison has made numerous warranties on their website, in print and on social media about their after-sales service network, accessibility to spare parts and the availability of timely after sales services where Tractors need repairs. The ACCC has alleged that all of these warranties were false and misleading.

The representations made by Agrison include:

  1. Tractors come with a five-year nationwide warranty.  In the event that a tractor is defective, it would be repaired at no cost to the customer, regardless of their location in Australia.
  2. Agrison has a national service network which is available to customers requiring after-sales service or repair staff throughout all of Australia.
  3. Agrison offers timely after-sales service to customers in the event of a defect or problem with a tractor.
  4. Customers can obtain all necessary tractor spare parts within a reasonable period of time (Parts).

What are the alleged breaches?

The ACCC alleges that by making the representations listed above, Agrison engaged in conduct that was either misleading or deceptive, or false or misleading for the following reasons:
  1. In relation to the five year warranty, this was limited to the replacement of parts only and did not include all parts.
  2. The national service network was not available to provide after-sales service or repairs throughout Australia.
  3. Agrison had no national service network available to provide after sales service or repairs throughout Australia and had no training, policy, guidance or instructions in place for employees relating to requests for after-sales support, nor did they keep track of records or notified defects. Some customers were unable to obtain service for their tractors within a reasonable time frame or at all.
  4. Agrison did not record the number of units of each spare part in stock at any given time and certain customers were unable to obtain the requested spare parts in a reasonable time frame or at all.
As a result of the above, the ACCC is seeking orders including declarations, injunctions, pecuniary penalties and costs.

Reap what you sow: what can you learn from the ACCC's allegations?

The matter is yet to be heard by the Court and we will provide an update once the matter is resolved.

In order to avoid the risk that the ACCC will pursue your business for a breach of a guarantee, it is important to remember that:

  1. Any misleading claims about the availability of spare parts or the effect of any warranty will be a breach of the ACL.
  2. Failure to meet consumer guarantees will entitle consumers to a remedy, whether this be in the form of repair, replacement, refund or compensation for any consequential loss.
McCabe Curwood's Litigation and Dispute Resolution group has experience in advising our clients in relation to their obligations under the Australian Consumer Law, including statutory guarantees, to ensure that you minimize the risk of being pursued by the ACCC. Get in contact with us today.

Contributors

Luke Dominish Associate
Emma Connolly Law Graduate