Whether you have to provide a refund, repair, replacement, or compensation to a consumer for problems with goods or services depends on whether you have met 'consumer guarantees' set under the Australian Consumer Law (ACL). You are responsible for understanding you obligations under the law.
Services that you provide in the course of your business or professional activity including non-profit services that:
Services that are not covered include:
Under the Competition and Consumer Act 2010 (Cwlth) and some state and territory fair trading laws, suppliers of recreational services can exclude, limit or modify liability when they do not meet the consumer guarantees to provide services.
You may only limit your liability for death or personal injury, including mental or physical illness, but not for property loss. You will need to get legal advice to establish whether you can limit your liability.
In the A.C.T. you should also consider the Fitness Industry Code of Practice if you provide fitness services.
As a supplier you guarantee to provide services:
Due care and skill means that you must:
For example - A consumer hires a painter to paint their house. Before starting the job, the painter does not remove all of the old flaking paint. 6 months later the new paint starts to flake. The painter has not met the 'due care and skill' guarantee as they did not use a level of skill that would be expected of a reasonable painter.
Also, while painting the consumer's house the painter knocked over a can of paint on a newly paved driveway. The painter has not met the guarantee and must fix the damage.
You guarantee your services will be reasonably fit for any purpose specified by the consumer and that any products resulting from the services are also fit for that purpose. For example - A consumer asks a carpenter to build a carport to cover his 4WD vehicle, which is 2m wide. If the carpenter builds a 1.8m wide carport that does not cover the vehicle, the carpenter will not have met the 'fit for purpose' guarantee.
As a supplier, you guarantee that services, and any resulting products, are of a standard expected to achieve the results that a consumer told you they wanted. For example - A consumer tells an eye surgeon they want to be able to drive without glasses. The consumer is assessed as suitable for laser surgery and undergoes the operation. If the vision does not meet the standard for driving without glasses, the surgeon has not met the 'fit for purpose' guarantee.
This guarantee will not protect the consumer if they did not rely, or it was unreasonable for them to rely, on your skill or judgement when agreeing to particular services. For example - It may not be reasonable for a consumer to rely on a receptionist in a large company for advice about which service is suitable.
This guarantee does not apply to professional services provided by a qualified architect or engineer, continuing an exemption granted in previous laws, however an architect or engineer who provides a service outside of their area of professional expertise, such as building, must still meet the guarantee. Architects and engineers must provide services with due care and skill.
A contract or agreement for the supply of services usually states when services will be provided and the date they will be completed. If not, you automatically guarantee to supply the service within a reasonable time.
What is 'reasonable' depends on the nature of the services. For example - The time needed to build a house will be longer than the time required to lop a tree.
You do not have to give a refund when a consumer simply changes their mind about the service, but you can have a policy to offer a refund or credit note when this happens. If so, you must abide by this policy.
When goods fail to meet a guarantee, the consumer has a right to a 'remedy' to attempt to put the situation right. As a supplier you must give a remedy when your services are not provided:
Whether you offer a repair, refund or other 'remedy' depends on whether the problem is a:
Consumer guarantees apply to both. When the services fail to meet a consumer guarantee, the consumer can also claim for consequential losses, such as compensation for costs to the consumer in time or money because something went wrong with the goods or services.
A major failure with services is when:
When there is a major failure with a service, the consumer can choose to:
The consumer gets to choose, not you. For example - A consumer has signed a contract that sets out specifications for a new house. When the house is completed the consumer notices windows are not in the right place. Because the builder has not met the standard required by the contract, the consumer is entitled to compensation.
For minor problems that can be fixed, the consumer cannot cancel and demand a refund immediately. They must give you as the supplier an oppirtunity to fix the problem. You must do this:
A reasonable time depends on the circumstances. For example - A reasonable time to fix a problem with a haircut would be much shorter than a reasonable time to fix a problem with a landscaping project.
If you refuse to fix the problem or take too long the consumer can:
A consumer who has not yet paid, or partly paid, can refuse to pay for the defective services at all, or pay less than the agreed price. A reasonable cost would be within normal range charged by suppliers and include:
A contract for services is cancelled when the consumer tells you they intend to cancel the services verbally, in writing or if this is not possible by any other means. A consumer can cancel a contract for services at any time. Cancellation takes effect when the consumer notifies the supplier that they want to cancel the services.
Cancelling a contract for services gives the consumer the right to a refund. The amount will depend on whether some or all of the services provided were unsatisfactory, or provided at all. For example - A hairdresser has cut and permed a consumer's hair. The cut was good but the perm has 'fallen out' after a day. The consumer must pay for the cut but not for the perm, as another hairdresser will not need to cut the hair again to fix the problem.
When a consumer cancels a contract for services that includes goods, they are also rejecting the goods. The consumer is entitled to a refund of any money or other type of payment made for the goods.
To get a refund, the consumer must return the goods to the supplier. If this involves significant cost to the consumer the supplier must collect the goods at their own expense.
A consumer is not entitles to a remedy when you do not meet one of the consumer guarantees due to something:
This exception does not apply when you have not provided the service with due care and skill.
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