Did you know...

You can cancel the contract for the service and refuse to pay for the work done. You can also pay less than the agreed price or seek compensation for the value of the service that is less than the charge you have paid for the service.

When you have asked for a service and it is poorly done, taking far too long, or isn't working how you had expected you may be covered by the Consumer Guarantees Act (CGA).

You may be covered by the Consumer Guarantees Act

Faulty or unsatisfactory services are those that have problems, are unsafe or don’t do what they should.

When a business supplies you with consumer services and there is a problem, you can ask them to fix the problem under the Consumer Guarantees Act (CGA). This applies to auctions, online sales, or an agent or broker who sells on behalf of someone as well. An online trader has to make it clear if they are in trade. 

Common problems covered by the CGA include:

  • work done by tradespeople or contractors for residential properties has not been done with reasonable care and skill, poor quality materials supplied or extra damage caused when doing the work
  • tradespeople and service providers taking too long to finish work, complete projects, or to start a job once a deposit has been paid
  • overcharging for work either for materials supplied or for time spent where only an initial estimate has been given, no price was agreed beforehand, or no breakdown given for the costs of materials or labour
  • services aren't reasonably fit for a particular purpose you told the tradesperson or service provider. This includes unsuitable materials supplied by them but sourced from a third party.

Services not covered by the CGA include:

 

Know your rights

Services bought for personal or household use

Services normally bought for personal or household use are covered by the CGA if supplied by a business. You don't need to have a contract with the supplier. This also includes services where you have contracted a trader to sell an item on your behalf, eg a boat dealer, a car dealer or a recycled clothing trader.

Services covered include work done by;

  • tradespeople and subcontractors who are contracted by the main contractor
  • professionals, eg lawyers, accountants, doctors
  • services relating to (but not for) the supply of gas and electricity, eg meter reading, disconnection
  • services relating to and for the supply of telecommunications, water and wastewater removal 
  • other service providers, eg  banks, repairers, insurance companies and much more.

Services for business use

The only time the CGA guarantees can be excluded (also called contracting out) is if you are acquiring consumer services for business use. The clause must be written and specifically state that the CGA is excluded.

It also has to be fair and reasonable to do so, which depends on:

  • type of services
  • their value
  • the ability of the parties to negotiate, or if it is a ‘take it or leave it’ standard form contract
  • legal advice received.

It’s an offence to contract out of the Act in any other circumstances under the Fair
Trading Act. See the Commerce Commission's factsheet on Misleading consumers about their rights(external link).

Read more about Buying products and services for commercial use.


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Deciding if a service is faulty

Reasonable care and skill

A service is faulty if the supplier did not use reasonable care and skill. What is reasonable can be measured against the care and skill used by other competent people doing the same work. Many suppliers are actually regulated by law with set standards of skill, eg electricians and the Electricity Regulations.

The Consumer Guarantees Act also provides guarantees that the services will be:

  • fit for any particular purposes that you told them about
  • completed within a reasonable timeframe if no timeframe provided
  • provided at a reasonable price if no price is set.

If you get work done by a business or trader, that doesn’t meet any of these guarantees, you can seek a remedy from them. These guarantees apply automatically whether or not you have a contract with the business who provided the service to you.

Problems that can be fixed and are not serious

If the problem is minor, the business can choose to repair or refund your money.

If there are minor problems with the services, you can ask the service provider who did the job to fix it for free. If they refuse or take longer than a reasonable time to fix it or don't fix the problem, you can either:

  • get someone else to fix it and claim the cost from the service provider
  • cancel the contract for service and refuse to pay for the work done or get a partial refund if some of the work or materials are suitable.

A reasonable time depends on the nature of the problem. Sometimes a reasonable time will be a few hours, or it may be a few days.

Problems that can't be fixed or are serious

You can cancel the contract for the service and refuse to pay for the work done. You can also pay less than the agreed price or seek compensation for the value of the service that is less than the charge you have paid for the service.

Services are different to products in that you can’t return the service. So there are additional remedies that you can seek from a Disputes Tribunal or Disctrict Court.

Read Consumer Guarantees for services to find out more about these extra remedies.

A problem with services is serious if:

  • a reasonable consumer would not have bought the service if they were fully aware of the problem
  • the service output is substantially unfit for its usual purpose, and can’t be easily fixed within a reasonable time
  • the service output is unfit for a particular purpose that you told the service provider you wanted to use it for, and can’t easily be fixed within a reasonable time, eg you ask to have your tree trimmed to let in more light and the arborist trims it to improve the shape
  • the service output can’t be expected to achieve a particular result that you told the service provider you wanted, and can’t be easily fixed within a reasonable period of time
  • the service output is unsafe.

But it is not always easy to decide if a fault is minor or serious. It is up to the business to assess the problem. They have to provide enough information for you to make an informed choice about your remedies, if the problem can’t be easily fixed.

If the business disagrees with your claim, you may have to get a technical opinion from someone who knows about that type of service to support your view that the fault is serious.

Compensation for extra losses (consequential loss)

If a faulty service has caused damage to your property, you can also claim compensation. But there’s a limit to what you can claim. The loss must be ‘reasonably foreseeable’ and you must minimise or avoid any extra loss if possible. Sometimes it is hard to put an amount on the loss you have suffered because the damage has affected other property. You may need to seek legal advice on this.

A retailer or manufacturer can’t opt out of consequential loss so they are not liable, unless the services are being bought for a business purpose.

Where you have a contract for work and materials

You can still claim under both sets of guarantees for products and services depending on the issue. The tradesperson or service provider is responsible for fixing any issues with materials they have supplied as part of the services. Read Faulty products to find out more about your rights. 


Overcharging or incomplete work

You have rights when a tradesperson or other service provider does not finish the job or you are overcharged, even if the CGA doesn't apply. Usually you will have agreed some terms such as price, work to be done, and the materials to be used.  

If you have a contract or quote with a tradesperson or other service provider and they don’t complete the work, this is a breach of the contract. Similarly, if you have agreed a price for the work, then this is the price that you pay. Find out more about overcharging or incomplete work in our contracts section. 


When you can’t claim under the CGA

You can’t claim if:

  • any service failure is due to events outside the control of a service provider
  • you do not rely on a service provider’s skill or expertise, or this would be unreasonable to do so
  • you rely on any act or statement made by someone other than the service provider or their agent.

 

 

If things go wrong

Contact the service provider

Go back to the  service provider as soon as you discover the problem.

Explain what the problem is and how you would like it to be resolved. Bring proof of purchase such as a receipt, bank statement or the contract for services.

Your rights and remedies under the Consumer Guarantees Act can be divided into three categories:

  • the problem can be fixed and is not serious (minor)
  • the problem is serious or cannot be fixed (serious)
  • the problem has caused damage or extra loss (consequential loss).

See 'Remedies for faulty consumer services' on the What is it tab for more information. 

If the services are not covered by the Consumer Guarantees Act, your rights and remedies exist either in the terms of the contract or the common law rules for contracts, ie rules made by judges.  

See also:


Next steps

If you are unable to resolve your issue directly with the retailer, manufacturer or service provider, our Resolve It tool has information to help you take the next steps. These may include going to the Disputes Tribunal or District Court.

Resolve it: Faulty products and services


Need more help?

Contact us for more guidance.

 

Common situations

Business use not covered by the Consumer Guarantees Act

Mandy employs a cleaning company to clean her business premises. Mandy is not happy with the standard of cleaning after a month. Mandy is not covered by the Consumer Guarantees Act as the service contract specifically excludes the Consumer Guarantees Act since this is for commercial premises. Mandy will have to rely on the terms and conditions of the contract in the first instance to decide if there is a breach of contract. She should contact the cleaning company and make a complaint.

Not fit for a particular purpose

Jane wants insurance for her rental property to cover loss of rental if the tenants damage the property and she has to get repairs done and have the premises empty. The insurance adviser wrongly sells her house and contents insurance but not landlord insurance. The rental property is damaged by tenants who leave it in a bad state. Jane finds out she has the wrong type of insurance to cover the loss or rent while repairs are being completed. She  will have to make a complaint to the insurance company for them to sort out the issue as the insurance adviser did not provide fit for purpose advice under the CGA.

Work done incompetently

Rob has his work suit drycleaned. When he collects it, the trousers have shrunk and the colour is patchy. This is a serious problem. Rob can ask for a refund of the drycleaning fees plus compensation for the extra damage caused to his suit, under the CGA guarantee of services being carried out with reasonable skill and care.