Consumer Guarantees provide Australian consumers with legal protection when purchasing goods and services. People are often aware of how consumer guarantees apply to goods, but it may not be as obvious for services. Businesses must provide these guarantees regardless of any other warranties they provide. If you are a business and you are unsure what rights your consumers have, this article explains how consumer guarantees apply to services.
What Are Consumer Guarantees?
Consumer guarantees are warranties that all consumers can rely on when making a purchase. They are found in the Australian Consumer Law (ACL) and apply both to goods and services. However, the guarantees for goods differ from those for services. The guarantees enable consumers to know when they are entitled to a remedy from a business in cases of problematic purchases of goods or services. In addition, the ACL prescribes which remedy is appropriate in a given situation.
What is a Service?
In the ACL, services include:
- duties;
- work;
- facilities;
- rights; or
- benefits
provided in the course of business. It includes recreational, professional, commercial and educational services.
Continue reading this article below the formWhat Are the Guarantees for Services?
The ACL provides that suppliers of services must provide their services:
- with acceptable care and skill or technical knowledge and taking all necessary steps to avoid loss and damage;
- which are fit for any specified purpose; and
- within a reasonable time if time is unspecified.
Due Care and Skill
This guarantee means all service providers must use an acceptable level of skill or technical knowledge when providing their services. They must also take all necessary care to avoid loss or damage when providing the service.
Fit for Any Specified Purpose
This guarantee means that all service providers warrant that the service is reasonably fit for any purpose specified by the consumer and will give the results that the consumer and the business had agreed to. Further, any product that results from the work must also be fit for that purpose.
Reasonable Time
In most cases, your service contract should specify periods and relevant dates for the completion of work. However, this guarantee assures all consumers that the supplier will act in a reasonable time even if time has not been specified. ‘Reasonable’ is contextual and depends mainly on the nature of the service.
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Remedies
Legal rights usually come with legal remedies. The consumer guarantees concerning services are no different. If services fail to meet the guarantees, a consumer has rights against the supplier of those services. The remedy depends on whether the failure is minor or major.
When a consumer problem with a service is considered minor, the consumer must allow the service provider the opportunity to fix it. The consumer cannot immediately cancel the contract and request a refund. The supplier has the right to fix the problem (at their expense) in a reasonable amount of time.
Minor Fault
If a fault is considered a ‘minor’ fault, the service supplier can choose to either:
- fix the problem (free of charge and within a reasonable time); or
- offer a refund.
The consumer cannot cancel the contract and request a refund without offering the supplier the above two options. If a supplier refuses to fix the problem or does not fix it in a reasonable timeframe, the consumer has the right to employ someone else to repair the problem. The consumer can then invoice the service provider for the reasonable costs of fixing it. If the service is ongoing, the customer can rightfully cancel the service and receive a refund.
Major Failure
Suppose a fault is considered major. In that case, the consumer has the right to cancel the service contract and receive a refund for all unconsumed parts of the contract. They can also take action against the service supplier to recover damages for reasonably foreseeable losses incurred.
No Remedy
However, there are some occasions when a consumer has no recourse against a supplier.
A consumer has no remedy under the ACL if a supplier does not meet the consumer guarantees because:
- of something someone else did or said (excluding their agents or employees);
- a consumer requested a service to be done in a certain way against the supplier’s advice;
- the consumer failed to explain their needs to the supplier clearly; or
- an event beyond the control of the supplier that occurred after supply.
Further, a supplier need not provide any refund because a purchaser changed their mind about the service. However, if they have a company policy in such instances, they must honour it.
Key Takeaways
As a business, it is important to understand your obligations under the ACL. If you fail to meet your consumer guarantee obligations, you may need to remedy the problem, either by repairing or refunding the service. Consumers may also have a right to claim for consequential losses or damages associated with the service you provided. This can be very costly for your business. If you need further general information on a breach of consumer guarantees, remedies, minor problems, major failures or anything else concerning consumer law, contact LegalVision’s consumer lawyers on 1300 544 755 or fill in the form below.
Frequently Asked Questions
You can find the consumer guarantees in the Australian Consumer Law.
The consumer is entitled to a remedy. Depending on whether the fault is minor or major, they may either have the service fixed, request a refund or recover damages for losses.
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