What is consequential loss?
You can claim compensation from a supplier or manufacturer for consequential loss when goods or services fail to meet a consumer guarantee.
Consequential losses are your costs in time and money because something went wrong with the goods or services.
What can I get compensated for?
A supplier may have to pay for losses that:
- could have been expected to result from a failure to meet a consumer guarantee, and
- were reasonably foreseeable.
In other words, you can get compensation for losses that would probably result from the supplier’s failure to meet the guarantee.
They would not have to pay for:
- problems unrelated to their conduct or the goods they supplied
- losses caused by something completely independent of their business, after the goods left their control.
For example, a consumer recently bought a car, which leaked oil on her driveway. A neighbour’s dog ran through the oil and into her house, dirtying the carpet. The car dealer would not have to pay for carpet cleaning, as the dealer could not predict that a dog would run through the oil and into the house – the cost was not reasonably foreseeable.
A consumer’s washing machine breaks down due to a fault. As a result, there is water damage to carpet in part of the house. The supplier will be responsible for the cost of replacing the carpet damaged by flooding from the faulty washing machine.
How much can I claim?
It can be hard to put a dollar figure on consequential loss.
Compensation should put you in the position you would have been in if the goods or services had met the consumer guarantees.
For example, a consumer used a liquid cleaner according to instructions on the pack to remove a stain on his new curtains. The product badly damaged a curtain in the living room. As the curtain was new, the supplier would probably have to meet the cost of replacement. Compensation would be less for curtains in poorer condition.
What if my contract says I cannot claim?
A supplier cannot write a term into a sales contract that says they will not be responsible for any such loss, unless:
- the goods or services were sold to you for use in your business, and
- the term was brought to your attention at the time of sale.
If they attempt to do so, they may be misleading you about your legal right to compensation. Misleading conduct is unlawful under the Australian Consumer Law. Penalties apply to such conduct.
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