The work will be carried out with reasonable care and skill
The work will be fit for any particular purpose that the customer has told you about
If the time for completing the work has not been agreed, the work will be carried out within a reasonable time
If the price for the work has not been agreed, the price charged will be a reasonable price for the work done.

From 8 July 2003, the Consumer Guarantees Act covers services relating to the supply of electricity, gas, telecommunications, water, and the removal of wastewater.

This means that from 8 July 2003, when you supply those services to consumers, your services should meet the guarantees under the Act, and consumers can seek a remedy from you where your services fail to meet any of the guarantees.

Guarantee of reasonable skill and care

Reasonable care and skill will be judged by looking at the care and skill used by other competent people doing the same work. Your skills should be such that you can do the job and achieve the purpose the customer wanted. You should take the same care that other competent people take to do the job well and avoid causing any damage.

Examples of a lack of care and skill:

a plumber installs new guttering. The next time it rains part of the guttering falls down
a drycleaner ruins a duvet by using the wrong method
a painter paints over flaking paint and six months later the new paint starts to flake.

Guarantee of fitness for particular purpose

The work you do must achieve any particular result the customer wants and has told you about.

eg, John wants a drainage system that will stop his lawn from flooding every time it rains.

eg, Rita wants the paving stones in her driveway laid in a particular pattern.

You must tell the customer before you start the job if you can't guarantee that the job you do will achieve the purpose or the result they want. Otherwise you will be liable under the Act for not having achieved the desired purpose.

This guarantee applies to particular purposes that the customer has told you about. Normal purposes for the work you are doing will be covered by the guarantee that you will use reasonable care and skill.

Does the customer have to specifically tell me what they want?

If the purpose they want to achieve is a normal purpose then the customer does not have to specifically state it.

eg, if a customer wants a tap replaced it is obvious that they will want the tap to turn on and off and to deliver a reasonable flow of water.

Where the result wanted is less ordinary the customer must let you know exactly what they want.

eg, if Rita wants a particular pattern for her paving stones she must tell you exactly how she wants it done.

Writing down exactly what you have agreed to do in a written quote or contract is a good way of avoiding any debate about what was agreed.

What if I can't be expected to know if it will work?

Sometimes it will be obvious that the customer can't expect to rely on your skill to achieve the desired result.

eg , Julie ask the painter to cut back a tree that will get in the way of the painting. The painter agrees and charges for the time it takes. The tree dies and Julie wants the painter to pay compensation. Julie knew that the painter was not a tree surgeon and that she couldn't rely on the painter having the skill to trim the tree successfully.

Sometimes you may want to tell the customer that you can't guarantee that you have the skills to do the job.

eg, Fran's car has a recurrent problem with the generator. The mechanic at her local garage has looked at it once and told her it is a job for an auto-electrician. Fran asks him to have another look at it anyway as she doesn't want to have to take the car to an auto-electrician in town. In this case the mechanic has told the customer that they may not have the specialist skills needed. Fran will not be able to claim that the work was not fit for the purpose.

If you are in a similar situation you must make it clear to your customers that you may not have the skills required.

What if the customer has chosen the cheapest option?

Sometimes the customer will ask you to use the cheapest option.

eg, Jan asks her painter to put only one topcoat on her house as she plans to sell it.

Bruce is told that his radiator needs a new core. Bruce says he can't afford it and asks the garage to just solder up the leak.

In these cases the result may be less fit for its normal purpose than if the customer had been prepared to pay the extra money for the second coat of paint or the new radiator core. You may want to get the customer's agreement in writing that they have chosen the cheaper option.

eg, we have repaired this radiator by soldering the leak as requested. In our opinion the radiator core needs replacing.

You must still guarantee the quality of the work done but clearly there will be a lower expectation on the work. You should not use wording such as "This work is not guaranteed". This could be interpreted as an attempt to contract out of the Consumer Guarantees Act.

Finishing the job in a reasonable time

This guarantee only applies if there is no agreement between you and the customer about when the job will be finished. If you have discussed when the work will be done or written it into the quote or contract then that is your agreement.

If there is no specific agreement with the customer about when the job will be completed the Act says that the work will be completed within a reasonable time. A reasonable time will be judged on the average time that would be taken by other competent people doing the same job.

eg, Elena contracts a painter to paint her house. They agree that he will start work in January. The painter does the preparation work in January. In February he only does two days work on the house. Elena can ask the painter to get on with the job as he is clearly not trying to finish the work in a reasonable time.

Charging a reasonable price

This guarantee only applies if no agreement has been made about the price. If you have given a quote or estimate, agreed an hourly rate or agreed how the price will be worked out then that is your agreement on the price.

If there is no agreement made about the price the Act says that the price you charge must be a reasonable price. A reasonable price is a price within the range of prices most other competent people would charge for the same work.

If you had no agreement with the customer about the price the customer can refuse to pay more than a reasonable price.

eg ,Gary takes his washing machine to be repaired. The cost of the job is not discussed. The repairer fits a new drum and charges $150 labour costs. Gary thinks this is expensive and rings three other repairers They all say they would charge between $70 and $90. Gary tells the repairer he is only going to pay $80 for the fitting of the drum.

Customer rights and remedies

The customer's rights depend on how serious the problem is. This section explains what the customer can claim for.

The customer can claim for:

problems that can be fixed
serious problems or problems that can't be fixed
damage and loss caused by the problem.

These rights apply when the guarantees for reasonable care and skill, fitness for a purpose or time of completion have not been met.

Problems that can be fixed and are not serious

If the problem can be put right you must put it right. You must act within a reasonable time and do the extra work free of charge.

If you refuse to fix the problem or take more than a reasonable time to put it right the customer has two choices.

Either

Employ someone else to put it right and claim the cost from you.

Cancel the contract and refuse to pay for the work or pay less than the agreed price. If they have already paid, they can claim all or some of their money back.

Repairing the problem

Does the customer have to give me a chance to fix the problem?

The customer must give you the chance to fix the problem unless it is a serious problem. You must fix the problem within a reasonable time.

What is a reasonable time to fix the problem?

This will depend on the nature of the problem. Sometimes a reasonable time will be a few hours.

eg, a new roof is leaking badly.

In other cases a reasonable time may be a few days.

eg, a window won't open after a house is painted.

Do I have to pay if the customer gets someone else to fix the problem?

If the problem is not serious, the customer must give you the chance to fix the problem first. If you have refused to fix it or have taken longer than a reasonable time, the customer can ask someone else to fix the problem. You must then pay the customer the cost of the repair job. The cost must be reasonable. The customer does not have to provide quotes before getting it fixed.

What is a reasonable cost for someone else to fix the job?

A reasonable cost will be a cost that is within the normal range of quotes the customer would get for the work. If you think the cost charged is too high you will have to show that it is unreasonable.

Remember that the customer can only ask you to pay for repairs done by someone else if they first gave you the chance to put it right and you have refused or delayed. You can avoid having to pay for work done by someone else by solving any problems within a reasonable time. If you are too busy to do this you can arrange for someone else to do it.

Serious problems and problems that can't be fixed

If it is a serious problem OR a problem that can't be put right the customer has two choices

Cancel the contract and refuse to pay for the work or pay less than the agreed price. If they have already paid they can claim all or some of their money back.
Claim compensation because the work you have done is not worth the price they have paid for it.

What is a serious problem?

The Act says a problem will be considered serious in these situations.

The customer would not have had the job done if they had known what was going to happen.

eg, Piti gets a jacket drycleaned. When it comes back the dye has run and the jacket is streaked.
The work done is significantly unfit for its normal purpose and can't easily be put right or it can't be put right within a reasonable time.

eg, a carpet cleaning service changes the colour of the carpet in some places.
A customer has told you of a specific purpose or result they wanted. The work you do does not achieve that purpose or result and can't easily or within a reasonable time be made to achieve it.

eg, a large family hire a station wagon for a weekend trip to visit relatives. The station wagon breaks down and needs a major repair which will take two days. The hire company doesn't have another station wagon available.
The work you have done produces an unsafe result

eg, an electrician wires a wall socket incorrectly and the customer gets an electric shock from it.

When can the customer cancel the contract?

The customer has the right to cancel a contract in three situations:

There is a serious problem with the service provided
It is not possible to solve the problem by repairing it
They have asked you to fix a problem and you have not done so within reasonable time.

The customer does not have to give you the chance to put it right in these situations. They can cancel the contract straight away.

What does cancelling the contract mean?

Cancelling the contract gives the customer the right to ask for some or all of their money back or to refuse to pay all or part of the bill. The contract does not need to have been in writing.

Cancelling the contract means the agreement that you will do the work and that the customer will pay is cancelled.

Does the customer have to tell me they are cancelling the contract?

The customer must let you know that they are cancelling the contract. They can do this in writing or by talking to you. If the customer can't contact you easily then they can use any reasonable means to notify you.

eg, a letter posted to your address. The customer must give written notice if you have a contract that requires written notice of cancellation.

What if the job isn't finished when the customer cancels the contract?

You do not have to finish the job.

What about materials I've supplied?

You may have supplied materials as part of the job. When the customer cancels the contract they have the right to keep any materials supplied. Cancelling the contract also means that they can refuse to pay or pay less than the agreed price. This means you will have to come to an agreement with them about payment for the materials.

eg, Kimi gets her roof replaced and the roofer does a really bad job. The roof leaks and the work will obviously have to be redone. Kimi cancels the contract and refuses to pay for the labour.

The roofing material itself is not faulty and Kimi should pay for it. If she refuses the roofer can take a case to the Disputes Tribunal or to Court to claim the cost of the materials. If she has already paid for the roofing job and the roofer refused to refund any money Kimi can go to the Disputes Tribunal or to Court to claim back the labour cost for the job.

Romalpa clause

A Romalpa clause is a clause that you write into your contracts with your customers. It lets you keep ownership of parts or materials until the customer has paid in full for the work done. If they don't pay you can repossess the parts or materials.

Romalpa clauses will be effective in cases where there is no problem with the work done and the customer does not pay. If the customer cancels the contract because the work or service has failed to meet one of the guarantees in the Consumer Guarantees Act you cannot repossess the parts or materials until the dispute over the work done is settled.

Using Romalpa clauses

The Act says that when you use a Romalpa clause you must:

tell the customer that the goods can be repossessed and get them to acknowledge this in writing
tell the customer in such a way that would make it clear to a reasonable person
give the customer a copy of the repossession clause.

What if some of the work done was OK?

Sometimes a customer will cancel a contract when only some of the work done is of poor standard. You will need to reach an agreement with the customer that they will pay for the work that was done properly.

eg, Phil gets a garage to do a wheel balance and alignment and fit a new exhaust to his car. The exhaust works well but Phil is very unhappy with the wheel balance and alignment. The car is veering to the left all the time.

Phil cancels the cheque he paid the garage with. Phil clearly has a case for not paying for the balancing and alignment work. But Phil will be expected to pay for the parts and the labour involved in fitting the exhaust. The garage can take Phil to the Disputes Tribunal if he refuses to pay.

When can a customer ask for compensation?

When the problem is serious or can't be fixed the customer has the choice of claiming compensation or cancelling the contract and paying less for the work done. In some cases the customer may prefer to claim compensation from you.

eg, a builder lines a room with plasterboard but makes a bad job of the joins. The plasterer tells the customer they will have to charge more than their normal price as it will take longer to do because of the bad joins. The customer can claim compensation from the builder to cover the extra cost of the plastering.

Damage and other loss (Consequential loss)

The customer can claim for damage done to their property or other loss (called consequential loss). You are responsible for paying for any damage or other losses that you cause.

eg , paint spilled on a driveway or scratches on tiles caused by moving an appliance.

You will also be responsible for any additional costs the customer faces that are directly related to the problem you have caused.

eg, a builder drops roofing material onto a customer's car parked in the driveway. The customer can ask the builder to pay for the car to be fixed and for transport costs while the car is being fixed.

Your responsibility is limited to damage or loss that is foreseeable.

eg, if a washing machine repairer causes a flood in the laundry whilst working on a machine they will be liable for any damage to the vinyl in the laundry. However if the flood causes water to run outside ruining a Persian rug which has been put outside to air this could be seen as an unforeseeable loss.

Frequently asked questions

What if materials or fittings I supply are faulty?
What if I install parts or items the customer has supplied and they are faulty?
What if I didn't cause the problem?
What if the customer has unrealistic expectations?
Can the customer come back after several years to complain about work done?
How does the Consumer Guarantees Act relate to the Building Code?
I am a non-contracting supplier, how do I exclude the provisions of the Consumer Guarantees Act where my services are acquired for a business purpose?

What if materials or fittings I supply are faulty?

When you supply materials as part of the job and charge the customer for them you will be responsible for any faults in those materials.

eg, a bricklayer paves a courtyard. The bricklayer buys the paving for the job and charges the customer. The paving stones have a high variation in colour and the customer wants them replaced. The customer can ask the bricklayer to put it right. If the bricklayer refuses to repair or replace the paving or doesn't do it within a reasonable time the customer will have the right to claim a refund.

If the problem with the materials you have supplied is a serious problem or one that can't be fixed then the customer will have the choice of a refund, replacement or compensation for the faulty goods.

What if I install parts or items the customer has supplied and they are faulty?

If the customer is not happy with the quality of the goods, they can make a claim to the person they bought the goods from.

eg, you lay a carpet that the customer bought themselves or a mechanic fits a part that the customer bought at a wrecker's yard.

They cannot cancel their contract with you for installing the carpet or the part and must pay you for the work you have done. The customer will be able to claim the installation cost from the supplier of the goods.

What if I didn't cause the problem?

You are not responsible if another person who is not working for you causes the problem.

eg, you have just put the top coat of paint on one side of a house when the neighbour lights a rubbish fire and ash blows over and sticks to the paint.

You are not responsible if the weather, an earthquake or other event that is beyond human control causes the problem.

eg, the day after you finish building a sleepout for a customer gale force winds lift two sheets of iron off the roof. Iron is also blown on the customer's house and other houses on the street.

What if the customer has unrealistic expectations?

Sometimes you may think that the customer has caused the problem or is expecting too much of the work done.

eg, a mechanic tunes Sarah's car and Sarah comes back and complains that it is not accelerating fast enough. The mechanic goes for a drive with Sarah and discovers that she drives at 120kph and expects the car to accelerate to pass other vehicles at 140kph. The car is already over-revving at 120 kph. In this case the tune-up was clearly fit for the normal purpose. The engine is tuned.

Can the customer come back after several years to complain about work done?

The customer has six years from the time the problem appears to make a complaint.

eg, it may take three years for a problem with a timber product used to clad new houses to become noticeable. The customer will be able to claim from the builder that supplied the cladding.

In some cases eg car repairs it may be difficult to decide if a problem that arises after some time is the result of poor service provided earlier or simply a problem that was going to arise through normal wear. If you and the customer cannot agree on the cause you may need to go to the Disputes Tribunal for a decision.

How does the Consumer Guarantees Act relate to the Building Code?

Both the Building Code and the Consumer Guarantees Act offer protection to customers who are not happy with the durability of materials used in a new house. Where both the Consumer Guarantees Act and the Building Code apply the one that offers the customer the most protection will prevail.

I am a non-contracting supplier, how do I exclude the provisions of the Consumer Guarantees Act where my services are acquired for a business purpose?

The Act says that you have the benefit of any liability exclusions contained in the contract of supply between the consumer and the contracting party. If the contract excludes the provisions of the Act where services are acquired for a business purpose, your supply of these services will also be covered by this exclusion.

eg, most Supply contracts between electricity retailers and consumers exclude the CGA where goods or services are acquired for business purposes. If you are an electricity lines company, or an electricity contractor providing services to consumers on behalf of the electricity retailer, this exclusion will apply to the services you provide to business customers.

You may want to check with the contracting supplier that their contracts contain these exclusions.

Disclaimer

Privacy and Copyright Statement

This site uses cookies to track and analyse usage.