There are four types of warranties:

Voluntary warranties – these are given by manufacturers, resellers or service providers who choose to stand behind their goods or services. If a manufacturer, retailer or service provider chooses to give a voluntary warranty or guarantee, then the law requires that person or business to honour it.

Extended warranties – these give a purchaser similar benefits to a manufacturer’s warranty, but for a longer period. They may apply only after the manufacturer's warranty has expired.

Specified warranties – these are imposed by State or Territory laws for particular products, such as used cars.

Implied warranties – these are imposed by the Competition and Consumer Act (formerly the Trade Practices Act) and some State fair trading laws. With some exceptions relating to purchases by businesses, they cannot be excluded or modified by manufacturers, resellers or service providers. Importantly, they apply in addition to any voluntary or extended warranty.

The Competition and Consumer Act provides more information on warranties.

Visit the ACCC website for more information.

Personal guarantees

Small business operators may be asked to enter into a personal guarantee.

A company is a separate legal entity and the directors of a company have only limited personal liability for debts or other obligations. Company directors are often asked to provide personal guarantees. A personal guarantee makes directors personally liable for the obligations of the company.

Business owners should seek legal advice before giving a personal guarantee.