Service suppliers are subject to the Consumer Guarantees Act “CGA” when supplying services to customers for personal or household use.

Breaching the CGA can prove costly.   It can result not only in losing out on payment for the services provided, but also in liability to pay for damages and losses that occurred as a result of any breaches.

A supplier of services is subject to four guarantees.  These guarantees are:

  • Work being carried out with reasonable skill and care
  • Work being fit for a particular purpose that the supplier has been made aware of by the customer
  • Work being completed in a reasonable time frame (subject to an agreed completion date)
  • Work being charged at a reasonable price (subject to an agreed price)

The guarantees as to skill and care, time frame and price, are all measured by a standard of reasonableness, which relates to the relevant profession and standards within that profession.  What would be regarded as unreasonable by the supplier’s contemporaries?

The guarantee that work must be fit for a particular purpose relates to a particular purpose the customer has informed the supplier of. If a supplier is unsure whether they will be able to achieve the intended purpose or result as requested by the customer, they must advise them of this in advance.  It would be wise to do this in writing to avoid later disputes.

Often customers will take the cheaper option, which can compromise quality.  In these situations the supplier should get the customer’s agreement in writing that they have chosen the cheaper option and set out the risks associated with their choice.  The work will remain subject to the guarantee, but, the standard will be to the level advised to the client that could be achieved.

What happens when there is a problem with the work and all or one of the guarantees has not been met?  The customer will have certain rights and remedies against the supplier.  The outcome will depend on whether the problems can be fixed or not and what damage and loss has been caused by the problem. If the problem with the work can be fixed, the customer must give an opportunity to fix the problem within a reasonable time frame.  The supplier must not charge the customer for rectifying the problem. If there is a failure to fix the problem, the customer may employ someone else to rectify the problem and claim the cost incurred from the supplier, or alternatively, cancel the contract and refuse to pay for the work or pay less than the agreed price.

Where there is a problem with the work that is serious or cannot be fixed, the customer can cancel the contract and refuse to pay or pay less than the price that was agreed in advance.  Alternatively the customer can claim compensation due to the work not being worth the amount paid or agreed to be paid. Where a problem with the work has caused the customer to suffer a loss or has damaged their property, the supplier will be liable to pay for that damage and any loss incurred that is foreseeable.

Where services are supplied to a business that is of a personal or household nature, the supplier can avoid liability under the CGA by contracting out, by a written agreement, outlining how the work will not be subject to the CGA.

Alan Knowsley