What rights and responsibilities does a business have when it comes to cancelling goods or services due to COVID-19? And what are the rights and responsibilities of the consumer?

During these confusing times businesses may find that they are unsure as to how to respond or handle consumer questions relating to ongoing services and/or the delivery and return of goods purchased. In addition, businesses that deal in travel and events are also facing issues with regard to cancellations, refunds and vouchers.

What are the ACCC guidelines?

First, it is important to look to the regulating agencies and the protocol that has been put into place to address many of these business concerns. Initial guidance is available from the Australian Competition and Consumer Commission (ACCC). The most important directives to be handed down for all businesses are the following;

• Do not attempt to enforce any contract by using misleading information that might lead a customer to believe that their rights are not the same as those that are legally defined by the terms of their existing agreement.
• Do not act in a manner that is unconscionable.
• Do not attempt to enforce unfair terms that are contained as a standard part of any existing contract.

These three main guidelines apply to all businesses when dealing with losses and/or cancellations due to COVID-19. For example, if supplies have been delayed due to circumstances related to the virus, businesses should do everything that is reasonable to meet the demands of their contracts as soon as practicable. Furthermore, in situations where supplies are depleted, those supplies or goods that are available should not be subject to price gouging. Lastly, with regard to cancellations and refunds, business must be willing to offer the consumer some form of compensation ie: vouchers for future use or refunds in the instance that the event or service will no longer be available.

What’s in the contract?

Beyond these basic concerns it is imperative that business owners understand that the contracts that are currently in existence and their terms, cannot be altered. Hence, if a business cannot meet the terms of the agreement, they cannot simply change the terms. Instead, there must be some offer that adequately compensates the consumer.

What about events?

In addition, businesses must comply with the restrictions placed upon the general population for health and safety reasons. Therefore, any services or events that go forward must be delivered within the following guidelines;

• In accordance with any directives that are necessary to reduce or slow the spread of the virus, including closing your business for a temporary period.
• Abide by any direction that is given to your business via the Biosecurity Act 2015. It is important to note that non-compliance of a directive could result in a penalty being levied.

There are very particular restrictions that have been placed on events and large gatherings of people. In the instance that your business engages in the planning and/or implementation of events of this nature, it is imperative you follow these guidelines – All non-essential gatherings of over 500 persons in an outdoor venue must be cancelled and all non-essential gatherings of over 100 persons at an indoor venue must be cancelled. 

As an event planner it is important that you review the terms and conditions of your contracts with regard to cancellations and the remedies available to those whom have contracted with you. If the circumstance does not permit the event to be rescheduled, it is highly likely the consumer will be entitled to a refund. However, if it is possible for the event to be rescheduled, allowing the event to proceed as expected at some point in the near future, then it is likely a voucher will suffice to cure the consumer’s inconvenience.

What else should businesses consider?

Regardless of the details of your particular business, it is important for business owners to be informed of the current legal requirements with regard to the health and safety of all persons. It is imperative that the rights of all parties, with regard to the implementation of the existing terms and conditions of their outstanding contracts, be honored in as practicable a manner as possible. Finally, business owners need to be willing to work cooperatively, and within the guidelines presented, to ensure that consumers are treated fairly under the circumstances.