Jan 052011
The law applies online to social media and other web services

From the beginning of 2011 a new consolidated set of national consumer laws took effect across Australia. These change a number of definitions and rules on business matters like sales, refunds and contractual arrangements that businesses need to be aware of.

While most of the regulations are revisions of existing Federal and state laws ­– the main changes seemingly aimed at tying down definitions of things like unconscionable conduct – there are few gotchas which even the most well intentioned business owner or manager needs to be aware of.

For most businesses the most difficult aspect will be the ACCC’s definition of “unsolicited supplies”. It appears the main thrust of the changes is to tighten up on invoice scams and dodgy door-to-door sales people, but the Commission’s interpretation of what is unwanted work may be a bit too restrictive in the real business world.

“If the client didn’t ask for it, they don’t have to pay” is the ACCC’s interpretation of the new laws. On the face of it, this black-and-white view seems fair enough but often what the client and supplier agreed isn’t so easily determined.

In fields where quoted work is the norm, the “unsolicited supplies” definition means the ACCC will now advise your clients not to pay any part of a bill they believe wasn’t authorised.

Most scrupulous service providers already check with customers before going ahead with additional work. The example in the ACCC’s handbook of a car repairer is a good case, as most mechanics already call up customers should they find unforeseen problems which will add to the bill.

One interesting aspect of the ACCC’s interpretations is how they will fit in with the duty of care that mechanic, just to choose one example, has to the customer should they find the car unroadworthy; do they repair the dangerous items and risk wearing the bill or do they let the customer drive off should they be unable to agree on the cost of making the vehicle legal and safe?

A more common example is the tradesman who finds midway through the quoted job that there’s a serious problem that prevents them completing the agreed work.

Does this mean the plumber who finds a tree root blocking a pipe, a carpenter who uncovers an extensive termite infestations or a computer technician who discovers a dying hard drive simply down tools until an agreement on the cost of the extra works has been agreed?

These are the sort of issues where the ACCC’s black and white interpretation of the law may come unstuck.

Another area where the narrow definition of the ACCC will fall down is where customers say “just fix it” with an ensuing argument over what was fixed. Advising the customer not to pay the bits they believe are excessive puts an unfair burden on the merchant and may not stand up to review by the courts.

It’s safe to predict the ACCC will find their interpretations being challenged in the courts sooner rather than later, though for the moment businesses will have to live with these definitions.

As a consequence businesses have to be precise in defining what work is covered in a quotation and scrupulously note every conversation and instruction from your clients, particularly ensuring you have clear approval for any works that might fall outside your initial agreement.

For businesses operating in areas where it’s difficult to give a fixed quote with a defined scope of works such as emergency plumbing or computer repairs, it’s probably going to be best to accept the uncertainty and just build an extra overhead allowing for these disputes into your cost structure.

Apart from the “unsolicited supplies” aspect most of the guidelines around these rules are general commonsense and there’s little that’s really changed for ethically run businesses.

The full guide to the new regulations is available for download from the ACCC website. You and your staff – particularly your sales team – need to read and understand how these rules affect your business.

  4 Responses to “The customer is always right”

  1. I left my car at a mechanic to fix something and while they had my car they broke my glove box. They fixed it and are now trying to charge me $176. I shouldn’t have to pay for this should I, as they broke it and it was perfectly fine when I left it there??

    A resonse today would be appreciated!


    • Hi Jasmin, this blog isn’t the place to discuss specific legal issues. It’s best to first complain to the mechanic about the damage they did and if they won’t agree to fix it then seek your own legal advice.

  2. Hi Paul, great post, and very timely! It’s a very important issue to point out. The quote (which in some cases can actually be construed as a contract) will come into play in a much more forceful way with the advent of the new consumer laws. One way around this for some businesses is to provide an estimate, although I can appreciate that this won’t be suitable for all.
    Another solution, particularly for SME’s, is a review of your standard contracts and quotations. You may be able to adjust your standard contracts and quotations including an appropriate disclaimer, stating something like (to use one of your examples) “In the event of unforeseen circumstances that are out of our control, we may need to charge additional amounts for any time spent in order to complete the original job” or something similar. It’s probably worthwhile getting some professional advice on this though, as you may inadvertently leave yourself open to actions based on “unfair contract terms” which is another new development in the consumer law. A simple change or insertion of a few words here and there however, could make all the difference.

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