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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. 

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