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Extended warranties

Overview

Fair Trading Act 1986, ss 36T-36W

You have some special protections when you pay more to buy an extended warranty for goods or services. In particular, you have the right to cancel the extended warranty within five working days and get your money back.

What is an “extended warranty”?

Fair Trading Act 1986, s 36T

An extended warranty is where a seller, or someone else such as a manufacturer, provides you with specific warranties, guarantees or undertakings for goods or services that you’re buying, in return for you paying a price that is separate from or additional to the price of the goods or services.

Requirements for the content and form of an extended warranty agreement

Fair Trading Act 1986, s 36U

The person or company providing the extended warranty (the “warrantor”) must make sure that the agreement is in writing and that it’s clear, able to be read, and in plain language. You must be given a copy of it at the time that you buy the warranty.

The agreement must state the total price you’ll have to pay for the extended warranty and all the terms and conditions of the warranty. This includes each side’s rights and obligations, and the warranty’s duration and expiry date (including whether or not it expires when you make a claim under it). The agreement must also be dated.

The following information must be on the front page of the warranty document:

  • a summarised comparison of the automatic guarantees you’re already entitled to, under the Consumer Guarantees Act, with the protections provided under the extended warranty
  • a summary of your rights and remedies under the Consumer Guarantees Act
  • a summary of your right to cancel the warranty (see below, “Your right to cancel the warranty”)
  • the warrantor’s name, street address, phone number and email address.

Before the agreement is entered into, the warrantor must also tell you in spoken words about your right to cancel the warranty and how you go about cancelling. But this requirement applies only if it’s reasonably practicable to do this – for example, if you buy the warranty when you’re in the store buying the goods or service, or if you buy the warranty over the phone.

If a warrantor breaches these requirements, the Commerce Commission can issue them with infringement notice requiring them to pay an infringement fee (a fine), as an alternative to bringing criminal charges.

Your right to cancel the warranty

Fair Trading Act 1986, s 36V

You have the right to cancel an extended warranty by giving notice to the warrantor within five working days after the day on which you were given a copy of the warranty. The warrantor must then repay you everything you’ve paid for the warranty, in full and without any deductions.

If the warrantor didn’t comply with the requirements for the content and form of the agreement (see above), you can cancel at any time, not just within the first five working days. But if their failure to comply was only minor, the five-working-day limit still applies – for example, if they were late in giving you a copy of the warranty agreement but this didn’t disadvantage you.

To cancel, you don’t have to follow a particular process or use a particular form or a particular set of words. You can do it in any way that shows you intend to cancel or withdraw from the agreement. This could be in writing or by talking to the seller.

When you cancel, you must contact the warrantor using the contact details given on the warranty or in any other way agreed between you.

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