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Standard fact sheet.
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Large print fact sheet.

Guarantees on services when selling 

Consumer guarantees 

Whether you have to provide a refund, repair, replacement or other compensation to a consumer for problems with services depends on whether you have met consumer guarantees set by Australian law.

What you cannot tell a consumer 

You must not tell a consumer that a consumer guarantee:

  • does not exist
  • may be excluded, or
  • may not have a particular effect.

You also must not tell a consumer that they are required to pay for any rights equivalent to a consumer guarantee.

Consumers cannot surrender their rights by agreeing that the consumer guarantees do not apply.

The maximum civil penalty for providing false or misleading information is $1.1 million for a body corporate and $220,000 for an individual. Criminal penalties for the same amounts may also be imposed.

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What services are covered by the consumer guarantees? 

Services sold in the course of your business or professional activity, including not-for-profit activity that:

  • cost up to $40,000 (or any other amount set by the ACL in future), regardless of purpose or use
  • cost more than $40,000, and are normally acquired for personal, domestic or household purposes – for example, car repairs or legal services.

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Which services are not covered? 

Services that are not covered are:

  • services bought before 1 January 2011. These are covered by statutory implied conditions and warranties under the Trade Practices Act 1974 and State and Territory legislation in force before 1 January 2011.
  • services costing more than $40,000, which are for commercial use – for example, installation of farm irrigation systems or factory machinery repairs.
  • transportation or storage of goods for the consumer’s business, trade, profession or occupation.
  • insurance contracts.

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Gyms and other recreational service providers 

A recreational service is one where someone participates in:

  • a sporting activity or a similar leisure pursuit
  • any other activity that involves a significant degree of physical exertion or physical risk, for recreation, enjoyment or leisure.

Examples of recreational services are forms of sport such as fitness training, horse riding, sky diving, bungee jumping and paintball.

Under the Australian Consumer Law and some State and Territory fair trading laws, suppliers of recreational services cannot exclude, limit or modify liability when they do not meet the consumer guarantees to provide services:

  • with due care and skill
  • fit for any particular purpose
  • within a reasonable time (when no time is set).

You may only limit their liability for death or personal injury, including illness (mental or physical), but not for property loss.

You will need legal advice to establish whether you can limit your liability.

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What consumer guarantees apply to services? 

As a supplier, you guarantee to provide services:

  • with due care and skill
  • which are fit for any purpose
  • within a reasonable time, when no time is set.

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Due care and skill 

Due care and skill means you must:

  • use an acceptable level of skill or technical knowledge when providing the services, and
  • take all necessary care to avoid loss or damage when providing the services.

For example, a consumer hires a painter to paint her house. Before starting the job, the painter does not remove all of the old, flaking paint. Six months later, the new paint starts to flake. The painter has not met the ‘due care and skill’ guarantee, as he did not use a level of skill that would be expected of a reasonable painter.

While painting the consumer’s house, the painter knocks over a can of paint, which spills over her newly paved driveway. The painter has not met the guarantee, as he has not taken the care expected of a reasonable painter.

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Fit for a particular purpose 

Services must achieve the consumer’s stated purpose

You guarantee your services will be reasonably fit for any purpose specified by the consumer and that any resulting products are also fit for that purpose.

For example, a consumer asks a carpenter to build a carport to cover his 4WD vehicle, which is 2 metres wide. If the carpenter builds a 1.8m-wide carport that does not cover the car, the carpenter will not have met the ‘fit for purpose’ guarantee.

Services must be of sufficient quality to achieve desired results

Suppliers guarantee that services, and any resulting products, are of a standard expected to achieve the results that the consumer told you they wanted.

For example, a consumer tells her ophthalmic surgeon that she wants to be able to drive without glasses. She is assessed as suitable for laser surgery and undergoes the procedure. If her vision does not meet the standard for driving without glasses, the surgeon will not have met the fit for purpose guarantee.

When the consumer does not rely on you when choosing the services

This guarantee will not protect the consumer if they did not rely, or it was unreasonable for them to rely, on your skill or judgment when agreeing to particular services.

For example, it may not be reasonable for a consumer to rely on a receptionist in a large service company for advice about which service is suitable.

Are there any industries where this guarantee does not apply?

This guarantee does not apply to professional services provided by a qualified architect or engineer.

However, an architect or engineer who provides a service outside their area of professional expertise – for example, building services – must still meet the guarantee.

Architects or engineers must provide services with due care and skill.

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Reasonable time, if no time set 

A contract or agreement for the supply of services usually states when the 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 will depend 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.

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