Know your rights
You have two sets of legal rights for work not completed or being overcharged:
The relevant consumer guarantees for services include:
- Any service must be carried out with reasonable care and skill. Arguably if the job is not done fully then it is not meeting this standard. What is reasonable is measured against what other competent people of the same profession or trade or occupation would do in that situation.
- A job must be completed within a reasonable time if no completion time or date was agreed. This is judged on the time it takes a competent person who works in that type of job to complete the task.
- Services must be fit for a particular purpose that you made known to the service provider.
- Services must be charged at a reasonable price when the price is not set. You can work out what a reasonable price is by finding out what other providers in your area are charging for similar services.
If you have minor problems with the services or the materials provided, you can ask the supplier to remedy the fault first. If they refuse or fail to do so within a reasonable time, you can:
- go elsewhere and claim the costs of those services from the first supplier, or
- cancel the contract and pay a reduced price for the work already done.
If the failure is serious or substantial, then you may:
- cancel the contract for services and claim all of your money back, or
- claim a partial refund if some of the work is fine or the materials already supplied are suitable.
You also have the right to claim for compensation for reasonably foreseeable extra losses arising from any breaches of the service guarantees.
Read Faulty or unsatisfactory services to find out more.
When the supplier is not liable for work not completed
Events beyond the supplier’s control
Under the CGA, service providers are not liable if they don't comply with two of the guarantees for services (fitness for purpose and time of completion) where the failure is:
- a cause independent of human control
- because of an act or omission by a third party who is not the supplier or their agent.
This means that the supplier is not liable for a failure to complete the work or that it is not fit for a particular purpose if the breach is completely beyond their control. This is similar to a force majeure or ‘act of god’ clause that is common in most contracts. But it doesn’t include strikes.
Failure by third parties such as subcontractors
There is some uncertainty whether subcontractors are liable under the CGA if they don’t complete their work or the products of their service are unfit for a particular purpose.
Their liability depends the actual contract terms and what services the main contractor agreed to supply. If they only agreed to arrange the services of a subcontractor, they have to use reasonable care and skill to choose a subcontractor.
However, if the builder as the main contractor agreed to supply the whole service (for example renovating a bathroom), but uses subcontractors such as plumbers or electricians, then the builder is still liable for the whole service including any plumbing or electrical work.
Ultimately the courts may try to ensure both subcontractors and main contractors are liable for the consumer guarantees, otherwise it would be easy to avoid liability under the Act.
Breach of contract
If the contract sets out a completion date and a fixed price, then it is a breach of contract to not comply with either or both those terms.
You may use the Contract and Commercial Law Act (CCLA) when the CGA doesn’t apply, eg to cancel a contract for breach or misrepresentation involving commercial services or private sales. This is useful when the service provider fails to complete the job or tells you something that is untrue to get the work.
If you’re cancelling for this reason, the completion of the job must be essential to you and the breach must either increase your obligations or decrease the benefits you should have been getting.
If a statement was untrue, you can claim damages based on the position you would have been in if the statement had been true and cancel the contract.
A service provider can also contract out of the CCLA, so that it doesn’t apply by a clause in the contract.
Force majeure and other natural disasters
This clause excludes or limits a business’s responsibility if a service is or will be affected by some external event, eg fire, flood, earthquake, storm or other natural disasters that prevent a party from performing the contract. Usually both parties then don’t have to do anything further under the contract, which ends. You can get a refund if you have paid in advance.
The supplier will have to show that the event has, made it impossible to continue to operate the business. They can’t use extra cost or inconvenience as a reason not to complete work or provide a service.
Lastly, a business may argue that the contract is frustrated under the CCLA. A contract is frustrated when it is impossible to carry out the contract or it becomes significantly different to what you agreed to. Then the business doesn’t have to provide the service, and you don’t have to pay anything or you get a refund if you have paid already.
Some situations where frustration has been used include:
- the subject matter of the contract ceases to exist or is destroyed
- one of the parties dies or becomes incapacitated
- external events delay or prevent performance
- the work is illegal.