Enterprise

Law
 

Faulty and Dangerous Products: Refunds and Other

Remedies

Topic 3: Consumer guarantees — Services

Introduction

Consumers who acquire services from businesses, where those services are of a
personal, domestic or household nature, are protected by three separate guarantees
under the Australian Consumer Law (ACL). Under these guarantees the services
must be:

 performed (‘rendered’) with due care and skill,

 reasonably fit for a purpose, or reasonably expected to achieve a specific

result, that the consumer has made known to the supplier, and

 supplied within a reasonable time.

We will examine each guarantee separately but first, attention should be brought to
two types of service to which the service guarantees do not apply. Both exclusions
are provided by s 63 of the ACL.

First, the service guarantees do not apply to contracts for the transport or storage of
business, trade, professional or other occupational types of goods. Although
transport and storage of goods is often a domestic type of service (such as when
moving house), the ACL distinguishes between transport and storage services for
domestic goods (which are covered by the guarantees) and transport and storage
services for business or commercial types of goods (to which the guarantees do not
apply).

Second, the service guarantees do not apply to insurance contracts.

Due care and skill

The guarantee that services will be rendered with due care and skill requires
service providers to have an acceptable level of skill in the relevant area.
Importantly, the ACL does not specify that all service providers must have formal

Module 10: Faulty and Dangerous Products: Refunds and Other Remedies 
Topic 3: Consumer guarantees — Services 
1 
Copyright © Western Sydney University, 2016 
  

qualifications or accreditation, which suggests that there is some flexibility in the

concept. It may be that what constitutes an acceptable level of skill varies between
trades or other service areas, although of course in some industries other legislation
will require formal trade, or other, qualifications — the ACL does not remove any
such requirements.

Examples of services provided with a lack of due care or skill would include the
installation of a burglar alarm that could easily be bypassed by burglars, and loss or
damage to passengers’ personal luggage by airlines or cruise ship operators.

It appears that the guarantee of due care and skill will also protect consumers
against damage done to property in the course of providing the services.

The guarantee as to due care and skill is provided by s 60 of the ACL.

Purpose or desired results

The ACL makes a distinction between the purpose of a service and the result that
the consumer wishes to achieve from the service. In either case, if the consumer has
communicated their wishes to the supplier, the service must comply with the
requirements of the consumer. This is the guarantee as to purpose or desired
results.

To illustrate the difference between purpose and desired result, consider a contract
that a consumer makes with an electrician to install lighting in an attic. The consumer
might tell the electrician that the lights are needed so the room can be used as a
craft room — this states the purpose for the services. The consumer might, instead,
tell the electrician that the lights need to be bright enough to allow the consumer to
do fine needlework in the room — this states the result that the consumer desires.
The statement of desired result is the more specific of the two requests and makes
the consumer’s wishes clearer, while the statement of purpose is open to
interpretation by the electrician.

Where a consumer makes known to the supplier of services any particular purpose
for which the services are being acquired, there is a guarantee that the services (and
any product resulting from them) will be reasonably fit for that purpose. Where a
consumer makes known to the supplier of services the result that he or she wishes
the services to achieve, there is a guarantee that the services (and any product
resulting from them) will be of such a nature, quality, state or condition that the
services might reasonably be expected to achieve that result.

The consumer may make the purpose or the desired result known to the supplier
either expressly or by implication. That is, if it should have been obvious to the
provider of the services what the purpose or desired result of the services was, the
guarantee will apply even if the consumer has not expressed their wishes in clear
terms.

Module 10: Faulty and Dangerous Products: Refunds and Other Remedies 
Topic 3: Consumer guarantees — Services 
2 
Copyright © Western Sydney University, 2016 
  

The guarantee does not apply where the consumer either did not rely on the
supplier’s skill or judgment or where it was not reasonable for the consumer to so
rely. The professional services of qualified architects or engineers are also
specifically exempted from this guarantee.

The guarantee as to fitness for a particular purpose or desired result is provided by s

61 of the ACL.

Reasonable time

Contracts for services usually specify the time within which the services are to be
provided. If the contract is silent on these matters (and there is no agreement
between the consumer and the supplier as to determination of the time) the
guarantee as to reasonable time applies: there is a guarantee that the services will
be supplied within a reasonable time. What constitutes a ‘reasonable time’ will
naturally vary according to the type of services involved.

The safest approach for businesses is always to specify the timeframe within which
services are to be provided — this helps avoid disputes with customers over what
constitutes a reasonable time, as opinions can definitely vary on this point!

The guarantee as to reasonable time for supply is provided by s 62 of the ACL.

Module 10: Faulty and Dangerous Products: Refunds and Other Remedies 
Topic 3: Consumer guarantees — Services 
3 
Copyright © Western Sydney University, 2016