Businesses that offer services to consumers must make sure they provide those services in an acceptable manner and are not sub-standard. The Consumer Guarantees Act (CGA) sets out guarantees that service providers owe to consumers. The CGA also outlines how you should remedy any issues if your services fail to meet these standards. As a service provider, you must be aware of your obligations under the CGA to avoid potential claims and disputes. This article will explain:

  • what the consumer guarantees are;
  • when they apply; and
  • your obligations for fixing any issues with the services you provide.

What Are the Consumer Guarantees for Services?

Consumers are provided a series of guarantees automatically under the CGA when they make a purchase from you. As a service provider, your services must be:

Performed with reasonable care and skill

The services you provide must be at least as good as the work of a competent person with average skills and experience for the type of services you are providing. For example, if you are engaged to paint someone’s house, the paint should not be patchy or spilt all over the carpet.

Fit for the particular purpose you supplied the services for

If a consumer tells you that they would like the services to achieve a particular purpose and you accept the job, then the services you provide should achieve that purpose. For example, if you are engaged to install lights in a house, the lights should turn on when flicking the switch. 

Completed within a reasonable time period, if a timeframe was not set beforehand

If you have not agreed on a time when you will finish a particular job, then you must do so within a reasonable period of time. This is based on the time it would take for a competent person that performs the same type of services to complete the job. For example, if you are engaged to paint a garage, the consumer would not expect you to finish the job six months after you started.

Cost a reasonable price, if no price or pricing formula was set beforehand

If you do not agree on what the price will be for your services before you start a particular job, then you can only charge a reasonable price. This can be determined by finding out what other service providers providing similar services in your area are charging.

Supplying Gas and Electricity Services

If you are providing gas or electrical services, there is an additional guarantee of acceptable quality to consumers. This includes supplying gas and electricity safely and reliably and in an expected way.

When Do the Consumer Guarantees Apply?

The CGA applies to businesses that provide services in New Zealand to consumers. A consumer is anyone that purchases products or services for personal or household use. This could include a business. 

The CGA will apply to any business providing a service to consumers. Examples include:

  • plumbing services;
  • hairdressing services;
  • entering into a contract with consumers to provide insurance; and
  • supplying electricity, telecommunications, gas and water or removal of wastewater.

The consumer guarantees apply even if:

  • you provide your services free of charge; or
  • if you do not have a contract with your customer. 

Exceptions to the Consumer Guarantees Act

There are situations where the consumer guarantees will not apply. Some key exceptions include:

  • private transactions – where a consumer buys from someone who is not in trade;
  • commercial services – that are normally for business use or work usually carried out for a business;
  • employment arrangements; and
  • business to business transactions where the parties agree by contract to opt-out of the CGA.

Contracting out of the CGA

You must not tell consumers that the CGA does not apply or try to get a consumer to sign an agreement saying that the CGA does not apply. The only exception to this is if you are contracting with another business and you both agree in writing that the CGA does not apply. This must be in a situation where it is fair and reasonable to do so.

What Happens if I Fail to Meet the Guarantees?

If a consumer makes a complaint to you about your services, you should deal with it in a reasonable period of time. If there is an issue with the services, it can fall into one of two buckets:

1. Minor Problems

If there is a minor problem with the services, for example, a window will not open after a house is painted, then you must fix the problem or do extra work at no extra cost, and you must do this within a reasonable period of time after you have received the complaint. If you refuse to fix the problem or there is a delay in your response, the consumer may either:

  • engage someone else to rectify the problem and claim the cost from you; or
  • cancel their contract with you and refuse to pay; or 
  • pay less than the agreed price. 

If they have already paid, they can claim all or some of their money back.

2. Major Problem

If there is a serious problem with the services you provided, for example, if the consumer would not have purchased services from you had they known you would not have completed the job correctly, then the consumer has two choices. They can:

  • claim compensation because the work was not worth the price they paid for it; or 
  • cancel their contract with you 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.

Key Takeaways

If you are a service provider, you must ensure that you comply with the consumer guarantees as they provide consumers with broad rights, protections and remedies. In most circumstances where you are supplying services for personal or household use, and not for a business purpose, you cannot contract out of the guarantees by claiming the CGA does not apply. You should be aware of circumstances where remedies are available to consumers so that you can rectify any issues or complaints that arise in a smooth and timely manner.  If you have any questions about the consumer guarantees or providing services, get in touch with LegalVision’s New Zealand contract lawyers on 0800 005 570 or fill out the form on this page.

FAQs

What are the consumer guarantees for services?

They are automatic guarantees that are given to consumers under the Consumer Guarantees Act (CGA) when they make a purchase from you. They state that services must be performed with reasonable care and skill, fit for the particular purpose you supplied the services for, completed within a reasonable period of time, and cost a reasonable price.

When do the consumer guarantees apply?

The CGA will apply to any business in New Zealand that provides a service to consumers, even if they provide them for free. A contract with your customer is not required.

What are exceptions to the consumer guarantees?

The consumer guarantees will not apply in some circumstances. These include private transactions, commercial services, employment arrangements, and business to business transactions where the parties agree by contract to opt-out of the CGA.

Can you contract out of the Consumer Guarantees Act (CGA)?

No, you cannot contract out of the CGA by telling consumers that the CGA does not apply or trying to get them to sign an agreement saying that the CGA does not apply. The only exception is when another business you are contracting with agrees in writing that the CGA does not apply.

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