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Does the Consumer Guarantees Act apply to building projects?

By Geoff Hardy - 7 Sep 2018

What the Consumer Guarantees Act (the CGA) does is insert some basic guarantees into every contract for the supply of consumer goods or services, and those guarantees override anything that the written contract might say to the contrary. However, the CGA only applies if you are supplying goods or services to "consumers". And consumers are individuals, companies, Councils, clubs or other legal entities who acquire goods or services "of a kind that are ordinarily acquired for personal, domestic, or household use or consumption".

Consequently, the CGA can equally apply to business-to-business sales as long as the product or service is one of those described above. However the business seller and buyer are allowed to contract out of the CGA, as long as they do so in writing, and it is "fair and reasonable" to do so.

Notwithstanding the CGAs' broad coverage, there are some transactions that are never going to be covered by it. They are sales of goods or services to customers who acquire them for the purpose of re-supplying them in trade, or consuming them in the course of production or manufacture, or (in the case of goods) carrying on a business of repairing or treating other goods or fixtures on land. Those customers are excluded from the definition of "consumer".

In the CGA there are guarantees relating to goods and guarantees relating to services. The goods guarantees relate to fitness for purpose, acceptable quality, prompt delivery, compliance with description or sample, and availability of repairs and spare parts. The services guarantees relate to care and skill, fitness for purpose, and completion time.

The definition of "goods" excludes a whole building, or part of a whole building. However it is generally accepted that "part of a whole building" means something like an apartment in an apartment block. So it is questionable whether it includes a building component such as a deck, a conservatory, a hot water cylinder, or a spa bath.

In any event, builders are bound by the services guarantees because building is a service. So one way or another, every building contract contains CGA guarantees, unless the customer isn't a consumer, or the customer is a business and the building contract excludes the CGA guarantees.

In addition to enforcing the CGA implied guarantees against the builder, the client can also enforce the CGA guarantees as to acceptable quality, compliance with description, and availability of repairs and spare parts against the manufacturer of the building materials that the builder uses on the project. And anyone who buys those building materials (assuming the materials come within the definition of "goods") from a consumer inherits the same rights against the manufacturer, as long as they are an end-user of the materials.

Of course if the building materials come with product warranties, the client can also enforce those directly against the manufacturer. Interestingly, the term "manufacturer" includes not only the maker of the building materials but also the importer and distributor of overseas-sourced goods, and anyone whose brand or mark is on the materials.

If the goods or services supplied to a consumer fail to comply with a CGA guarantee, then the CGA states what remedies the consumer has. Those remedies depend upon whether (a) the failure can be remedied, or (b) the failure cannot be remedied or is "substantial". For a full explanation of those remedies, contact Geoff Hardy or any member of our construction law team.


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