Consumers typically know when they are experiencing a problem with a good or service.  However, when the problem with a good or service is extremely severe, it is known as a ‘major failure’. In these circumstances, the law prescribes specific steps (remedies) to rectify the major failure. This article will explain exactly what a major failure is for goods or services and the remedies available if you have experienced one.

Major vs Minor Failures

Depending on what has occurred, a consumer issue is either ‘minor’ or ‘major’.  The Australia Consumer Law (ACL) governs consumer problems defines a major problem as a ‘major failure’.  The term applies equally to goods and services. It is essential to know if a problem constitutes a major failure because it affects the remedies available you if you have experienced one. 

Major Failure and Goods

For goods, a major failure occurs when no reasonable consumer would have made the purchase if they had known about the problem, and the good is:

  • significantly different from the description, sample or demonstration model shown to the consumer;
  • substantially unfit for its normal purpose and cannot be easily made fit in a reasonable time;
  •  substantially unfit for a purpose that the consumer made known to the supplier, and it cannot be made fit easily and within a reasonable time; or
  • unsafe.

For example, a consumer tells a car dealer that she requires a car with an engine powerful enough to enable her to tow her boat. Despite this information, the car dealer sells her a car with an engine that is small. The car is therefore not powerful enough to tow her boat. Therefore, this is a major failure because the good is substantially unfit for the purpose for which the consumer purchased it.

Similarly, an electric blanket with faulty wiring that catches fire when you switch it on also constitutes a major failure. The product is unsafe.  

Major Failure and Services

For services, a major failure occurs when a reasonable customer would not have acquired the service if they were aware of the nature and extent of the problem, and the;

  • service is substantially unfit for its normal purpose, and it cannot be made fit for that purpose easily and within a reasonable time;
  • consumer informed the supplier that they required the service for a particular purpose, but the service and any resulting product dis not achieve that purpose and cannot be easily made fit in a reasonable time;
  • consumer told a supplier about the particular result they wanted from the service but the service and any resulting product, do not achieve that result; or
  • supply of a service created an unsafe situation.

For example, a major failure would occur if a consumer employs a carpet cleaning service to clean their carpet and the cleaning process turns the carpet a different colour. The service is substantially unfit for its ordinary purpose.

Similarly, if an electrician wires the wall sockets in a new apartment incorrectly and renders all the electrical outlets unsafe to use, their service has created a dangerous situation. This is a major failure.

Remedies for Major Failures

Major failures entitle consumers to different remedies than minor problems. Further, the purchaser chooses the remedy. In comparison, a supplier selects the remedy at first instance for a minor problem. 

If you have a major failure with a product, you have a right to:

  • reject it and request either a refund or replacement; or
  • request compensation equal to the drop in the value of the product owing to the problem.

If a product doesn’t match its description as stated by the manufacturer, you can recover compensation.

If you experience a major failure with a service, you have the right to:

  • cancel the service contract with the supplier and obtain a refund for any part of the service not consumed; or
  • keep the contract and receive compensation for the difference in value between the service supplied and the service for which they paid.

Key Takeaways

In the circumstance that you have purchased a product or service that was fundamentally different to what any reasonable person would expect, it may be classified as a major failure. If so, there are a number of remedies available to rectify the issue. If you have any questions about major failures or other consumer problems, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page. 


About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Carole Hemingway

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