COVID-19 Updates: Read our blog for useful informaton about commercial, employment and family law issues.

COVID-19 Blog

Cancellations due to COVID-19: What does my business need to know when dealing with consumers?

Posted by Rebecca Hegarty, Richelle Massey on 20 May 2020

The COVID-19 pandemic has led to government restrictions on public gatherings. These restrictions have impacted many events and as a result both businesses and consumers have been faced with cancellations and have had difficulty in understanding what their rights and obligations are in relation to such cancellations.

Cancellation of Events

Under the Australian Consumer Law (ACL) which is a schedule to the Competition and Consumer Act 2010 (Cth), businesses must provide certain guarantees when they provide services to consumers. These Consumer Guarantees include that services will be:

• provided with due care and skill;

• fit for any specified purpose; and,

• supplied within a reasonable period of time, when no time has been set.  

Normally when a supplier fails to meet these consumer guarantees then the consumer can make a claim against a business and receive a remedy. The type of remedy a consumer can expect will depend upon whether the problem is minor or major. For example, for minor failures a business can choose to fix the problem within a reasonable period of time or offer a refund.

There are however some circumstances where a consumer is not entitled to make a claim for a breach of the consumer guarantees. These include, where the failure to comply with a guarantee occurred because of:

  1. an act default or omission of, or a representation made by, any person other than the supplier, or an agent or employee of the supplier; or,
  2. a cause independent of human control that occurred after the services were supplied.

This exception does not apply where the supplier business has failed to provide services with due care and skill.

Government Restrictions due to COVID-19

If an event has been cancelled due to government restrictions as a result of the COVID-19 pandemic, then it is likely to fall within the first exception set out in the ACL e.g. that the failure to comply was a result of an act default or omission of someone other than the supplier. This would impact on a consumer’s rights to make a claim for a breach of a consumer guarantee. In these circumstances a business would need to look at their terms and conditions associated with the event and the remedies set out in those terms in relation to cancellation. The terms that the business relies on, must be those terms that were applicable at the time the consumer made the purchase. The business must also consider whether those terms are fair, what representations have been made to the consumer and must ensure that it does not engage in any unconscionable conduct.

If the event has been cancelled by the business for some other reason, then the consumer may have rights to make a claim for a breach of the consumer guarantees.

In each instance, the reason for cancellation of the event will be important to determine the remedies available.   

Businesses will need to ensure that they act fairly when an event has been cancelled, for example by offering a refund or credit voucher. If a voucher is provided, it must be long enough to allow the consumer to use it.

The ACCC has indicated that it is monitoring instances of unfair or unconscionable conduct by business when dealing with consumers during this pandemic.

If an event has not been cancelled, but a consumer does not want to attend due to concerns about COVID-19, then this could be regarded as a change of mind and the remedies available would be dependent upon the terms and conditions associated with the event.

All parties should be patient when navigating these difficult times.

If you have any queries regarding your dealings with customers or your terms and conditions, feel free to get in touch with a lawyer in Coleman Greig’s Commercial Advice Team, who would be more than happy to assist you today.