Damages and compensation

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When a consumer suffers loss or damage due to a defect with goods or services, they can make a claim to recover damages or compensation.

This is particularly the case where the defect means the trader or manufacturer failed to comply with a consumer guarantee.

A consumer can apply to the trader or manufacturer directly for damages or compensation. If the trader or manufacturer refuses to pay or to reach an agreement to settle a dispute, the consumer can make a formal complaint or take legal action.

What losses or damage can be claimed from a trader or manufacturer?

If a consumer makes a claim to recover loss or damage, the trader or manufacturer may have to pay for losses which could have been expected to result from a failure to comply with a consumer guarantee.

For example:

  • A consumer’s washing machine breaks down due to a fault. As a result, there is water damage to carpet in part of the house. The trader would be responsible for the cost of replacing the carpet damaged by flooding from the faulty washing machine, because this loss could have been expected to result from the breach of a consumer guarantee.
  • A consumer recently bought a car, which leaked oil on her driveway. A neighbour’s dog ran through the oil and into her house, dirtying the carpet. The car dealer would not have to pay for carpet cleaning, as the dealer could not predict a dog would run through the oil and into the house – the cost could not have been expected to result from the breach of a consumer guarantee.

Putting a value on loss or damage

It can be hard to put a dollar figure on loss or damage.

Compensation should put the consumer in the position they would have been in if the goods or services had met the consumer guarantees.

For example:

  • Amanda used a liquid cleaner according to instructions on the pack to remove a stain on her new curtains. The product badly damaged a curtain in the living room. As the curtain was new, the trader would probably have to meet the cost of replacement. Compensation would be less for curtains in poorer condition.

Gyms and other recreational service providers

Suppliers of recreational services can exclude, limit or modify liability when they do not meet the consumer guarantees to provide services. Legal advice is required to establish whether you can limit your liability.

Liability can only be limited for death or personal injury, including illness (mental or physical), but not for property loss.

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