Even the best businesses are sometimes faced with a customer who isn't satisfied with the goods they've bought or who simply wants their money back. We explain the customers’ rights and the differences between warranties and guarantees.
Your customers' rights
When customers purchase goods from you they're legally entitled to expect certain things. Under the Sale of Goods Act goods must be "fit for purpose" and of "satisfactory quality".
If goods don't meet these criteria, purchasers can claim a refund if they haven't already "accepted" them.
Though customers can't claim a refund after accepting goods, they can claim compensation – usually, money, a repair or replacement of the goods.
All customers have up to six years to claim compensation (in Scotland, five years from discovery of the problem). The exact amount of time depends on the product, though it's for your customer to prove it was faulty when sold. But if your customer is a consumer and asks for a repair or replacement during the first six months after sale, it's up to you to prove the goods weren't faulty.
Goods should also correspond with their description. If they don't, your customer can take similar remedies to those described above. It's also an offence under the Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008 to describe goods misleadingly to consumers and other businesses, respectively.
What is a warranty?
Warranties are similar to guarantees, in that they provide a legally-binding assurance that any problems caused by manufacturing defects during a set period will be remedied.
However, unlike guarantees, the customer normally pays for this extra protection. For example, electrical retailers often offer to sell a warranty on their products which covers accidental damage, the cost of repairs and replacement parts.
Warranties - also known as "extended warranties" - have a similar effect to insurance policies - indeed some are issued and underwritten by insurance companies. They are sold on the basis that they will provide the customer with "peace of mind" over the first few years of ownership.
Any warranty you offer is in addition to your statutory responsibilities under the Sale of Goods Act. A supplier cannot, for instance, refuse to deal with a customer's complaint about a faulty product simply on the grounds that the warranty on the product has expired.
Extended warranties for domestic electrical goods
Since 6 April 2005, retailers must supply extended warranties on domestic electrical goods in certain ways.
You must make sure that you:
Display the price of the extended warranty next to electrical goods. This can be done in a number of ways - in store, in catalogues, on websites and in print adverts;
Provide consumers with information about their statutory and cancellation rights as well as certain details about the extended warranty itself. These include what happens if the provider of the warranty goes out of business and whether the warranty expires when a claim is made;
Offer consumers a 45-day period in which they can cancel their extended warranty. You must also write to them to remind them of this right. If they choose to cancel, they have the right to receive a pro rata refund;
Give consumers the right to buy the extended warranty on the same terms for up to 30 days after it first being offered in stores. Any discounts offered with the extended warranty must also be available for the same period.
What is a guarantee?
Generally speaking, guarantees are offered by manufacturers of products. They are free of charge but legally binding under the Sale and Supply of Goods to Consumers Regulations 2002;
In law, a guarantee is considered to be "an agreement to provide some benefit for a set period of time in the event of the goods or services being defective". For example, a vacuum-cleaner manufacturer will usually offer a guarantee with their products that, for a year or more, they will carry out free repairs for problems caused by a manufacturing defect;
It's important to remember that manufacturers' guarantees are in addition to your statutory responsibilities as a supplier under the Sale of Goods Act. A supplier cannot, for instance, refuse to deal with a customer's complaint about a faulty product simply on the grounds that the product is outside its guarantee period;
In law, suppliers are still liable for any breach of contract - for example, if the goods are not fit for their purpose, or of satisfactory quality - for a period of up to six years (five years from the date the problem arises, in Scotland).For more information see our guide to the Sale of Goods Act.
Returns
When a customer approaches you as a supplier and asks for either a refund or some other solution to their concerns, not only is it important to know where you stand as far as the law is concerned - it's also worth considering how you should respond with a view to retaining their custom.
Recent legislation - in the form of the Sale and Supply of Goods to Consumers Regulations 2002 - gives all consumers (but not other traders) a right to a repair or replacement where goods turn out to be faulty.
First, you should establish your position and your customer's rights. If the goods are faulty, the customer is a consumer (rather than another trader) and has complained within six months of purchase, it's up to you to prove there was no fault at the time of sale. If you can't do that, you'll have to offer a refund or replacement. Even after six months, the consumer may still be entitled to ask for a repair or replacement.
If your customer is another business, you may still want to offer a refund, repair or replacement. Otherwise you may face a claim for compensation.
Check if the goods come with a guarantee or are covered by a warranty meaning that a repair can be carried out free of charge.
If by chance you find some error of law or fact in any Net Lawman information page, do please tell us. We should also welcome your suggestions for new subjects for information pages. These notes:
Do not provide a complete or authoritative statement of the law;
Do not constitute legal advice by Net Lawman;
Do not create a contractual relationship;
Do not form part of any other advice, whether paid or free.
