Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

The new statutory guarantees under the ACL became effective on 1 January 2011 and so apply to contracts entered into on or after that date.

The guarantees relating to the supply of services are found in sections 60 and 61 of the ACL. Section 60 provides that in a contract for the provision of services to a consumer, there is a guarantee that the services will be rendered with due care and skill. Section 61 provides a guarantee that services will be reasonably fit for known purposes. These are largely comparable with their predecessor provisions. The statutory guarantees under the ACL apply to contracts for the supply of services to ‘consumers’. Such services are acquired if they cost $40,000 or less or are for personal, domestic or household use. There is, therefore, sufficient scope to apply legislation to professional engagements. Provided the monetary limitation is met, the provisions can apply to consumption by a business. In considering whether an implied warranty had been breached in Reneham v Leeuwin Ocean Adventure Foundation & Anor, 37 the Supreme Court of the Northern Territory held that an implied warranty is no different from the promise implied by the common law. It is coextensive in content and concurrent in operation with the duty that arises by the law of tort to take reasonable care. However, one slight yet potentially important distinction is that a cause of action based on a breach of a warranty implied by the old TPA remains a claim under the general law of contract, 38 whereas a claim for breach of the consumer guarantees under the ACL gives rise to remedies under the ACL. Like concurrent duties in contract and tort, the two causes of action carry differences in the applicable limitation period and the assessment of loss. A feature of the legislative regimes (unlike the common law) is the prohibition on contracting out. Section 64 of the ACL provides that any contract term that purports to exclude, restrict or modify the operation of the legislation is void. There are certain exceptions that qualify this general prohibition, the most notable being section 64A of the ACL, which permits a contracting party to limit its liability for breach of a warranty or guarantee to either resupplying the services or paying to have the services resupplied. The efficacy of contractual limitations as a means of limiting or avoiding liability is considered further below. The consumer protection provisions of the CCA do not apply to the provision of financial services, which are separately governed by the Australian Securities and Investments Commission Act 2001 (Cth) ( ASIC Act ). Financial service is defined broadly in the ASIC Act (section 12BAB) to include providing financial product advice, dealing in a financial product, making a market for a financial product, operating a registered scheme, providing a custodial or depository service, operating a financial market, clearing a settlement facility, or providing a service otherwise supplied with a financial product. Section 12ED of the ASIC Act implies into contracts for the supply by corporations of financial services a warranty that the services be rendered with due care and skill and be reasonably fit for the purposes made known by the consumer. These warranties similarly cannot be excluded or modified (section 12EB). Implied retainers A more novel situation arises where a party seeks to imply not only the terms of an express retainer (whether written or oral) but also the very existence of the retainer itself. Proving such a retainer will require analysing the conduct of the parties to establish an implied retainer.

37 (2006) 17 NTLR 83 [82]. 38 Arturi v Zupps Motors Pty Ltd (1980) 33 ALR 243.

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