What the ÌÇÐÄÔ­´´ does

  • We educate businesses about their rights and responsibilities around consumer guarantees and supplier reimbursement.
  • We accept reports where people consider a business is doing something they shouldn’t do. We use those reports to inform our education, compliance and enforcement work.
  • If a business misleads other businesses about their rights, we can investigate. We may take some form of compliance or enforcement action. 

What the ÌÇÐÄÔ­´´ can't do

  • We don’t resolve individual disputes or give legal advice about a business’s responsibility to provide a repair, replacement or refund for a product.
  • We don't resolve individual disputes about a supplier’s right to be reimbursed by a manufacturer.
  • We don't give legal advice on whether a supplier is entitled to be reimbursed by a manufacturer.

On this page

Suppliers’ right to reimbursement

Business responsibilities when selling products

Businesses must remember their responsibility under the Australian Consumer Law to provide consumers with a remedy when a product they sell does not meet the consumer guarantees.

Some problems with products may be the fault of the manufacturer, rather than the fault of the supplier, that is, the business who sells the product to the consumer. For example, if the problem with the product is caused by a manufacturing defect.

When suppliers have the right to reimbursement for remedy costs

A supplier is entitled to reimbursement from a manufacturer under the Australian Consumer Law when all of the following occur.

  • The product fails to meet a consumer guarantee because:
    • it’s not of acceptable quality
    • it doesn’t match the description given by the manufacturer
    • it’s unfit for a purpose made known to the manufacturer.
  • The product’s failure to meet any of these consumer guarantees is the manufacturer’s fault.
  • The supplier has incurred costs providing a consumer with a repair, replacement, refund or other compensation.

In these cases, the manufacturer must reimburse the supplier for the costs of providing a consumer with a repair, replacement, refund or other compensation. This includes the costs of parts and labour that may be involved in providing a solution.

Manufacturers have the right to assess the product before reimbursing the supplier.

In some cases, a manufacturer can limit the amount they need to reimburse the supplier.

Manufacturers must not mislead suppliers about their right to have these costs repaid or act unfairly towards suppliers that request repayment of these costs.

Manufacturers also cannot use their contracts with suppliers to take away a supplier’s right to be reimbursed.

Example of a supplier entitled to reimbursement from the manufacturer

A consumer buys a new mobile phone from an electronics retailer (the supplier). When the consumer turns on the mobile phone for the first time, they notice the screen is flickering because of a fault that occurred during manufacturing.

The consumer raises the problem with the supplier, claiming that the mobile phone does not meet the guarantee of acceptable quality. The supplier assesses the product and offers to repair the mobile phone. The consumer accepts this remedy.

The supplier can seek reimbursement from the manufacturer for the costs it incurred in providing the consumer with a repair.

Limits to being reimbursed

The consumer guarantees apply to all purchases that meet certain criteria.

If a supplier provides a remedy for a product not normally used for personal, domestic or household purposes, the manufacturer can limit the amount they need to repay the supplier. In these cases, the manufacturer can limit reimbursement to the lowest cost of:

  • replacing the product
  • obtaining an equivalent product
  • repairing the product.

This limitation does not apply if it would be unfair or unreasonable for the manufacturer to do so.

Timeframe for seeking reimbursement

A supplier has 3 years to ask the manufacturer for reimbursement.

The timeframe starts from the earlier of:

  • the day the supplier fixed any problem/s with the consumer’s product
  • the day the consumer took any legal action against the supplier for the problem.

Disputes

If a supplier has a dispute with a manufacturer about repaying these costs, it can take legal action.

The supplier may wish to seek legal advice first.

See our guidance for resolving an issue with another business.

Next steps for business

If you believe you’re entitled to reimbursement from a manufacturer

You should first contact the manufacturer to try and resolve the issue directly.

If the manufacturer doesn’t resolve the issue, there are more steps you can take.

Steps to resolve an issue with another business

Report a business issue to the ÌÇÐÄÔ­´´

Businesses can report issues to the ÌÇÐÄÔ­´´. This includes false or misleading claims by other businesses and anti-competitive behaviour. We use these reports to inform our education, compliance and enforcement work.

Report an issue

See also 

Consumer rights and guarantees

Repair, replace, refund, cancel

A guide to consumer guarantees for businesses and legal practitioners

Product safety responsibilities