Reading time: 6 minutes

As a consumer, you should be aware of your rights when you experience a problem with a product or service you have purchased. Products or goods should be of acceptable quality. However, this is not always the case. Fortunately, there are specific things you can do when the problem is a ‘major failure’. This article will explain:

  • how you will know when you have received goods or services with a major failure;
  • what you can do about it; and 
  • how to go about claiming your remedy. 

Major vs Minor Failures

You will want to know whether your problem with the goods or service you have received can be classified as a ‘major’ or ‘minor’ failure to work out which remedies you are entitled to. The Australian Consumer Law provides guidance as to what a ‘major’ failure is. If you have a major failure with a product or good, you can ask for a replacement or a refund. Where you have been provided a service with a major failure, you can either ask for:

  • compensation for the drop in value; or 
  • a refund. 

If the problem with the product or service is only minor, you are still entitled to a remedy. However, you must accept a repair if the business offers one. 

How Do I Know If The Failure Is Major?

A major failure in a good or product occurs where a reasonable consumer would not have purchased the good or product had they known about the problem, or where the good or product is:

  • significantly different from the sample or description at the time of purchase; 
  • substantially unfit for its normal purpose and unable to be easily fixed within a reasonable amount of time; 
  • substantially unfit for the specific purpose you bought it for, if that purpose was made known to the supplier at the time of purchase, and cannot easily be fixed within a reasonable time period; or
  • unsafe. 

For example, if you order a red toaster online and receive a blue toaster instead, this would be a major failure as the product you received is significantly different from the description online. Similarly, if the toaster is faulty and sparks when you turn it on, it would be considered unsafe, and constitute a major failure. 

A major failure concerning a service occurs where a reasonable person would not have acquired the service had they had known about the problem, or the service:

  • is substantially unfit for its normal purpose and you cannot easily fix it within a reasonable amount of time; 
  • is substantially unfit for the specific purpose you asked for, if that purpose was made known to the supplier at the time of purchase, and you cannot easily fix it within a reasonable amount of time; or
  • creates an unsafe situation. 

For example, if you hire a carpet cleaning service to clean your carpet and the process turns the carpet a different colour, this would constitute a major failure. Similarly, if chemicals spill on electrical appliances during the carpet cleaning process, this would create an unsafe situation and constitute a major failure. 

Replacements and Refunds

If there is a major failure with the good or service you have purchased, you are entitled to a replacement, refund or compensation. In most cases, you can choose the remedy you prefer.

If you ask for a replacement of the damaged goods, you are entitled to a product of the identical kind originally supplied. If you want a refund, you are entitled to receive the same amount you originally paid. 

However, you should be aware of the factors a business may take into account should you ask for a refund or replacement.

For example, these may include:

  • the type of product; 
  • how long the product is reasonably expected to last or be used; and
  • how a typical consumer would use the product. 

Who Should You Claim Your Remedy From?

You should approach the retailer or supplier who sold you the product or service to ask for a replacement or refund. The retailer should not direct you to approach the manufacturer or importer directly. 

There are limited circumstances in which you can claim a remedy directly from the manufacturer or importer. 

For example, if spare parts or repair facilities are not reasonably available after purchase, you can approach the manufacturer directly.

Exceptions to Consumer Guarantees

There are a few circumstances where you may not be entitled to a remedy after purchasing a good or service.

For example, if you:

  • simply changed your mind about the purchase, decided you did not like it or found a cheaper price somewhere else; 
  • caused the the product’s failure by misusing it; 
  • knew about the failure before you purchased it, or were made aware of it; or
  • instructed your service provider to perform the service against their advice, or you were unclear with your instructions.

Currently, your rights to the remedies discussed in this article only apply where the goods or services you have purchased are worth: 

  • less than $40,000; or 
  • more than $40,000 but are of a kind ordinarily acquired for domestic, household or personal use or consumption. 

From 1 July 2021, the definition of ‘consumer’ in the Australian Consumer Law is changing to increase this threshold. This means that transactions worth $100,000 or less will soon be subject to consumer guarantees.

Other situations in which your right to a remedy does not apply include where:

  • you plan to on-sell or re-supply the product;
  • the product is bought as a one-off through a private seller, such as at a garage sale, or at an auction; and
  • the contract is to store or transport the products as part of usual business activities. 

Key Takeaways 

When purchasing goods or services, you should keep in mind that you are protected by consumer guarantee rights. If you have received a good or service with a ‘major’ failure, you are entitled to a remedy to redress the issue. If you have any questions, or you believe these circumstances apply to you and you would like to find out more about how we can help, contact LegalVision’s competition lawyers on 1300 544 755 or fill out the form on this page. 


Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards