If you are in the business of providing services you are under a legal obligation to meet certain standards. These standards are known as consumer guarantees. As a business providing services you are legally obligated to:

  • Provide them with care and skill
  • Make sure the services fit their purpose
  • Provide the services within a reasonable time-frame

This in turn means that you must:

  • Provide those services with a certain level of technical knowledge or skill
  • Take care to make sure there is no damage or loss when providing services

What can the customer do if there is ‘major failure’ with the performance of a service?

If there is a major failure in the performance of the services the customer has two choices under consumer law, they can:

  • Cancel the services and obtain a refund; or
  • Apply for compensation from the service provider.

However, a consumer is not entitled to a refund or compensation if the problems with the service were essentially beyond human control. Also, you are under no obligation to refund somebody just because they have changed their mind and no longer want the service.

What is a ‘major failure’ of a service?

Australian consumer law defines ‘major failure’ of a service in a number of ways:

  • When the consumer would not have paid for the services if they knew that a problem had existed
  • The service does not meet its intended purpose and this cannot be rectified in a short period of time
  • When the consumer was very specific about what they wanted from the service, but the service did not meet those stated expectations
  • The services create safety problems

What is consequential loss?

You may also be liable for a form of damages called “consequential loss”. Consequential loss is loss or damage which flows ‘naturally’ from the failure to met you consumer standards.  For instance, if you are a personal trainer and you show a client how to do an exercise incorrectly and that person then injures themselves, you could be liable for any costs associated with that injury.

When do I not have to give a refund to a customer?

If the problem is relatively minor then the customer does not have the right to obtain a refund or ask for compensation.  What is a minor problem with a service?  It really depends on the situation, though if it can be fixed or repaired at little cost then the problem may well be considered minor. If this happens, the service provider will be obligated to fix the problem without charge and within a reasonable time.

What is proof of purchase in Australian consumer law?

The law is not particularly strict when it comes to proof of purchase.  There are number of forms of acceptance evidence, including:

  • A copy of a lay-by agreement
  • A receipt
  • Warranty card showing the supplies detailed
  • Evidence of an internet transaction related to the service
  • A credit card bank statement

What if a customer takes legal action against me for a service I provided?

In this case you really need to talk to a business lawyer, a contract lawyer or consider getting online legal advice.

Lachlan McKnight
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