Damages and compensation

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

This is particularly the case where the defect means the supplier or manufacturer failed to comply with a consumer guarantee. Manufacturers are also liable to compensate consumers for loss or damage resulting from safety defects in their products that cause death or injury, or damage to personal property.

The loss or damage must have been reasonably foreseeable and not caused by something outside human control, such as a natural disaster.

A consumer can apply to the business directly for damages or compensation. If the business refuses to pay or to reach an agreement to settle a dispute, the consumer can take their claim to formal dispute resolution services or take legal action.

For more information, view our Resolve your problem or complaint section.

Case Study

Examples only (outcomes may differ in individual cases):

A faulty toaster sets fire to Ben’s kitchen. Ben is entitled to compensation to make up for that loss and damage, not just to a refund for the faulty toaster.

Ivana 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 that 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.

Russell’s washing machine breaks down due to a fault. As a result, there is water damage to carpet in part of the house. The supplier 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.

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.