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As your business grows and you sell your products more widely, you will have to deal with customer product returns and requests for refunds. You should develop your own business policies for handling refunds and returns, but the law also implies certain conditions for these remedies. If there is an issue with a product caused by something on your end, you usually have to provide a remedy for that product. However, what happens when a customer damages or breaks the product themselves? For some guidance, this article will explain:

  • handling refunds at your business;
  • dealing with faulty products; and
  • what happens if a customer breaks a product.

Refunds at Your Business

If your business sells products or goods to your customers, it is your responsibility to know when you have to give them a remedy if something goes wrong with those products or goods. It can be helpful to set this out in a returns or refund policy.

If you sell products to consumers that will use for personal or domestic use, the law implies certain situations relating to those products where you must give a customer a remedy. Under the Consumer Guarantees Act, these situations are when the product is not:

  • fit for purpose;
  • of acceptable quality;
  • delivered on time or in good condition;
  • the same as the description you gave;
  • priced reasonably where there is no already agreed upon value; and
  • sold legally.

If you fail to meet these consumer guarantees, you must give a customer a remedy in the form of a:

  • replacement;
  • repair; or
  • refund.

In your refund policy, be clear with your customers about these instances and when they apply. If you mislead customers about their consumer rights to these guarantees, you could face significant legal penalties.

It is a good idea to ask customers to bring proof of purchase, such as a receipt or bank statement.

You usually do not have to give a customer a refund or other remedy outside of these situations. For example, if a customer changes their mind or orders the wrong size t-shirt, then you do not have to give them a remedy.

Dealing With Faulty Products

In line with your consumer law obligations, you need to give a customer a remedy if you sell them a faulty product. Whether a product is faulty will depend on the following factors. 

Nature of your business

What kind of business are you? Do you operate as a part of an established franchise, or do you operate from a small stall at a weekly flea market?

Type of Products

How old is the product? Did you sell it second-hand? Second-hand products will likely have already been used, with some wear and tear making them less durable.

Price

Higher-quality goods tend to be more expensive, and consumers will expect more durability from more expensive goods.

Statements You Make

If you made promises or guarantees about product quality, you have to back up those promises.

Depending on these factors and the context of the sale, goods will be faulty if they are not of acceptable quality. This can vary, but it generally means that your products are:

  • fit for their intended purpose;
  • safe;
  • durable;
  • free from small defects; and
  • satisfactory in overall appearance and finish.

If a customer comes to you complaining of a minor fault in your product that is easily fixable, then you can choose the remedy you give, such as repairing the product. However, if there is a major problem with the product, such as it being unsafe, the customer gets to choose what kind of remedy they get.

In keeping with your consumer law obligations, you should have the ability to repair the products you sell. You can do this by having:

  • the necessary experience to do so yourself; or
  • a repair contract with the manufacturer or other trusted repairer.

If you do not have repair facilities available, you need to let the customer know before completing the sale.

What If a Customer Breaks a Product?

If a customer has caused damage to the product, you do not have to give them a refund or other remedy. The law does not require it in this situation.

However, you are still obliged to investigate customer complaints as they arise. You cannot delay this investigation or outright refuse to deal with it. If a customer is being difficult or refusing to give you all of the information about a faulty product, you need to remain polite and professional but assertive. 

Be sure to get information from the customer about how they used the product and how the damage occurred. If they damaged it through misuse, then you do not have to give them a remedy. However, if you were negligent in your information about proper product use, then the fault may be on your end.

You are not responsible for fixing faults due to normal wear and tear. That is the customer’s responsibility.

Key Takeaways

If a customer damaged a product they bought from you, you do not have to give them a remedy under consumer law. However, if negligence on your end caused the fault, then you may be liable. If you would like more information or help with refunds at your business, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

When is a product faulty?

A product is faulty if it is not suitable for its intended purpose or it does not meet the expected quality standard. This can vary depending on the nature of the product. If the product is broken or similarly damaged it is also faulty. 

What is a remedy?

A remedy is what you need to provide if you break one of your consumer guarantees. This is usually done with a replacement, repair, or refund.

When do I need to refund a customer?

You need to refund a customer if you broke one of your consumer guarantees with a significant fault, such as an unsafe product. Then the customer gets to choose their remedy, and if they choose a refund you must oblige.

Do I need to refund a customer if they break a product they bought?

If a customer breaks a product they bought, you do not need to refund them. The law does not protect them in this instance. However, if your negligence caused the damage, you should provide a remedy.

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