What Guarantees Apply to the Sale of Services?

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Table of Contents

• Consumer Guarantees
• Due Care and Skill 
• Fit For Purpose 
• Reasonable Time
• Remedies 
• Key Takeaways
• Frequently Asked Questions 

As a business owner, you must understand these service guarantees. Under the Australian Consumer Law (ACL), consumer guarantees apply to goods and services you purchase as a consumer. The goods and services suppliers make these guarantees, giving assurances to you regarding the quality. This article discusses how consumer guarantees apply specifically to services. 

Consumer Guarantees

Three guarantees apply to services, including that the goods or services will:  

• be provided with due care and skill or technical knowledge and that suppliers will take all necessary steps to avoid loss and damage;
• be fit for the purpose that you agreed to purchase the service for;
• be provided or delivered within a reasonable time if there has not been an agreed date.

Due Care and Skill 

This guarantee ensures that all services you receive meet an acceptable level of skill or technical knowledge. The provider must take all necessary steps to avoid damage or loss.

The standard of due care and skill is that which a competent person with average skills and experience in this service could provide.

Fit For Purpose 

To be fit for purpose, the service must satisfy a range of criteria which include:

• that the service must achieve the purpose that you specify to the service provider; and
• that the services are of a standard that is expected to achieve the results that you specified to the supplier.

Reasonable Time

Suppose the service contract does not state when you must provide or complete the service. In that case, the party may expect services within a reasonable period of time.

What is a reasonable time will vary depending on the type of service that has been purchased. If you are unsure of which guarantees apply to the sale of services, seek legal advice from a small business lawyer.

Remedies 

If the services do not meet consumer guarantees in relation to services, the remedies include: 

• cancelling a service; and 
• in some cases, compensation for damages and loss. 

Minor Failure 

The consumer cannot immediately cancel and demand a refund for a minor service problem. Here, the supplier has the right to fix the problem (at no cost to the consumer) in a reasonable amount of time.

If the supplier refuses to rectify the problem or takes too long to do so, a customer has the right to:

• engage someone else to fix the problem and invoice the supplier the reasonable costs of doing so; or
• cancel the contract, and if they have paid, receive a refund.

Major Failure 

However, where there is a major failure with the service, the remedies include: 

• cancelling the contract and paying a reasonable amount for the work or seeking a refund for money already paid; or
• keeping the contract and negotiating a price reduction for the drop in the value of the services. 

Suppose you choose to cancel the contract.

Furthermore, you may only do so if it is a major failure. 

A major failure occurs in the following scenarios: 

• where you would not have engaged the service if you knew the nature and extent of the problem; 
• where the service does not meet the reasonable expectations for the type of service, and the provider cannot rectify the problem within a reasonable time; or 
• where the supply of the service has created an unsafe situation. 

Notably, the above is not an exhaustive list.

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Key Takeaways

The ACL protects consumers buying most types of goods and services. Additionally, the ACL stipulates a set of consumer guarantees that consumers are entitled to when purchasing services. 

If you need advice regarding consumer guarantees, please get in touch with LegalVision’s business lawyers. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us on 1800 534 315 or visit our membership page. 

Frequently Asked Questions