Automatic guarantees when buying from a business
Buying services – Automatic guarantees
What sorts of services are covered Consumer Guarantees Act?
Consumer Guarantees Act 1993, ss 2, 41
The Consumer Guarantees Act covers services that are usually bought by a consumer for personal, domestic or household use. Services include:
- trade services (for example, plumbers and builders)
- insurance, banking and lending services
- professional services (for example, lawyers)
- accommodation (for example, motels, hostels and boarding houses)
- the supply of telecommunications or water.
What sorts of services are not covered?
Consumer Guarantees Act 1993, ss 2, 41, 56
The Consumer Guarantees Act does not cover:
- services supplied by someone who is not in business (note that tradespeople who work by themselves are still covered)
- services that are normally used for business purposes (for example, business payroll services)
- services that are provided by paying a fee required by law (for example, rates paid to your city council for water, sewage, etc.)
- services provided to you by a charity.
What protections do I have if the Consumer Guarantees Act doesn’t apply?
Even if the services you buy are not covered by the Consumer Guarantees Act, you may have rights under:
- the Fair Trading Act 1986 (see “Protections against misleading or unfair trading” in this chapter)
- your contract (verbal or written) with the service provider or under the Contract and Commercial Law Act 2017 (see “Protections when buying privately” in this chapter).
Automatic guarantees for services under the Consumer Guarantees Act
What automatic guarantees do I have for services?
Consumer Guarantees Act 1993, ss 28–31
The Act guarantees that the service will be:
- carried out with reasonable skill and care
- fit for the purpose that you told the supplier the service needed to be fit for
- completed within a reasonable time (when there is no agreement about time)
- carried out at a reasonable price (when there is no agreement about price). As with goods, if you are charged more than a reasonable price, you do not have a right to cancel the purchase. You can only refuse to pay a price that is unreasonable. If you have already paid more than is reasonable, it is too late and you do not have a right to a refund.
What you can do if there’s a problem with services
Consumer Guarantees Act 1993, ss 32–38
You have the right to have the problem fixed by the service provider if the services fail to meet any of the guarantees required under the Consumer Guarantees Act.
If the problem can be fixed
If the problem can be fixed, you must first give the service provider a chance to fix it. They must fix the problem within a reasonable period of time and at no extra cost to you.
If the problem can be fixed, but the service provider does not fix it
If you give the supplier a reasonable opportunity to fix the problem but they refuse, or do not fix the problem within a reasonable time, you can:
- cancel the contract for the services, and you will be entitled to a refund of money you have already paid for the service, or
- pay to get the failure fixed elsewhere and claim the reasonable costs of doing so from the supplier.
You can also claim compensation for reasonably foreseeable loss caused by the problem with the services.
If the failure is substantial or cannot be fixed
If the failure is substantial or cannot be fixed, you can:
- cancel the contract for the services, and you will be entitled to a refund of money already paid for the services, or
- claim compensation from the supplier for the reduction in the value of the services provided.
In addition, you can claim compensation for reasonably foreseeable loss caused by the problem with the services (for example, the costs of cleaning carpet that has paint spilled on it by a painter who did not put down drop sheets when painting).
When is a failure “substantial”?
A problem with a service will be substantial if:
- a reasonable consumer would not have bought the service if they were fully aware of the problem
- the product of the service is substantially unfit for its usual purpose, and it cannot easily be fixed within a reasonable time
- the product of the service is unfit for a particular purpose that you told the service provider you wanted to use it for, and the problem cannot easily be fixed within a reasonable time
- the product of the service cannot be expected to achieve a particular result that you told the service provider you wanted, and the problem cannot easily be fixed within a reasonable period of time
- the product of the service is unsafe.
