Faulty Goods in Australia: Major vs Minor Failure and Who Chooses the Refund

Under the Australian Consumer Law, whether a faulty product entitles you to a refund of your choosing, or only a repair the supplier chooses, depends on one legal question: is the failure major or minor under section 260 of the ACL.

This article addresses remedies for goods supplied to a consumer under Subdivision A of Division 1 of Part 5-4 of the Australian Consumer Law (sections 259 to 263). It does not address the parallel, differently worded remedy provisions for services (sections 267 to 269); see consumer rights for services for those.

The core rule: severity decides who chooses

Section 259(1) lets a consumer act whenever a guarantee that applies to a supply of goods under Subdivision A of Division 1 of Part 3-2 (other than the repairs-and-spare-parts guarantee in section 58, or the manufacturer's express-warranty guarantee in section 59(1), which have their own separate remedy provisions) has not been complied with. From there, the ACL splits into two tracks. Section 259(2) applies if the failure can be remedied and is not a major failure: the consumer must first require the supplier to fix it within a reasonable time, and only if the supplier refuses, fails, or does not fix it within a reasonable time can the consumer either arrange their own fix and recover the reasonable cost, or reject the goods. Section 259(3) applies if the failure cannot be remedied at all, or is a major failure: the consumer can immediately reject the goods for a refund or replacement, or keep the goods and claim compensation for the reduction in their value. The dividing line between these two tracks is entirely the major-versus-minor question in section 260.

What makes a failure "major" under section 260

Section 260(1) gives five separate ways a failure can be major, and only one needs to be met:

• (a) A reasonable, fully informed consumer would not have bought the goods. If a consumer who knew exactly about the fault, in full, would have walked away from the purchase entirely, the failure is major.
• (b) Significant departure from description, sample or demonstration model. Not any difference; the ACL requires the departure to be significant.
• (c) Substantially unfit for the goods' common purpose, not easily fixed. Both halves of this limb must be true: the unfitness must be substantial, and fixing it must not be easy or quick.
• (d) Unfit for a disclosed purpose, not easily fixed. Where the consumer told the supplier (or someone involved in the sale) a specific purpose before buying, and the goods cannot easily be made fit for that purpose.
• (e) The goods are unsafe. A safety problem is treated as automatically major; there is no "how unsafe" threshold built into paragraph (e) itself.

Section 260(2) then adds a cumulative rule that is easy to miss: two or more failures, none of which might individually clear the section 260(1) bar, can together be treated as a major failure if a reasonable, fully informed consumer would not have bought the goods knowing about all of those failures taken as a whole. The note to section 260(2) makes clear the failures do not need to relate to the same guarantee, and section 260(3) confirms this applies whether or not the consumer has already tried to act on any one of the individual failures. A product with three separate minor defects is not automatically excused from major-failure treatment just because each defect, viewed alone, looks small.

What "minor" means in practice, and who fixes it

A failure that does not meet any limb of section 260, and that can genuinely be fixed, is minor. For a minor failure, section 259(2)(a) gives the supplier the first opportunity: the consumer must ask the supplier to remedy it within a reasonable time, and section 261 spells out how the supplier may do that: curing a defect in title, repairing the goods, replacing them with an identical type, or refunding the price paid and the value of any other consideration given. The supplier, not the consumer, chooses which of those four options to use for a minor failure. Only if the supplier refuses, fails outright, or does not act within a reasonable time does section 259(2)(b) let the consumer either have the fault fixed elsewhere and recover the reasonable cost, or move to rejecting the goods.

What happens once goods are rejected

Where a consumer validly rejects goods under section 259, section 263 sets out the consequences. The consumer must generally return the goods, unless they have already been returned or retrieved, or returning them would be significantly costly given the nature of the failure or the goods' size or how they are fixed in place, in which case the supplier must collect them at its own expense within a reasonable time. The supplier must then, according to the consumer's election, refund the price paid and the value of any other consideration, or replace the goods with goods of the same type. A rejection is not available in every circumstance; section 262 removes the right to reject where the "rejection period" (the time it would be reasonable to expect the type of failure to become apparent, given the type of goods, how a consumer would normally use them, and how long and how much they would reasonably be used) has passed, where the goods have been lost, destroyed or disposed of by the consumer, where they were damaged after delivery for reasons unrelated to their condition at the time of supply, or where they have been permanently attached to or built into other property.

Compensation and consequential loss

Section 259(4) allows a consumer to claim damages for any reasonably foreseeable loss or damage caused by the failure, on top of whichever primary remedy applies, whether that is a supplier-chosen repair for a minor failure or a consumer-chosen refund for a major one. Section 259(5) removes this consequential-loss right only where the failure happened solely because of a cause independent of human control, occurring after the goods left the supplier's control, such as certain shipping or storage events outside anyone's fault. Section 259(6) confirms the consequential-loss right applies in addition to, not instead of, the primary remedy paths in sections 259(2) and (3).

Why "we only do repairs" is not always correct

A common point of friction is a retailer telling every customer with a faulty product that a repair is the only option available. That statement is only accurate for a minor, fixable failure. Once a failure meets any limb of section 260(1), or the cumulative test in section 260(2), the choice of remedy shifts to the consumer under section 259(3): reject for a refund or replacement, or keep the goods and claim the drop in value. A business cannot lawfully insist on a repair-only approach once a failure is major. Because whether a specific fault is major depends on the detailed facts of that product, that purchase and that failure, this article explains the legal test in section 260 rather than applying it to any individual reader's situation; a consumer working through a real dispute should weigh their own facts against the five limbs above, or seek advice, rather than assume either outcome.

This page provides general legal information about remedies for faulty goods under the Australian Consumer Law, verified 21 July 2026. It is not legal advice about your own purchase or dispute. For advice on your situation, consult a legal practitioner admitted in the relevant Australian state or territory.

For the underlying guarantees a failure must breach before this remedy framework applies at all, see consumer guarantees in Australia. For the equivalent test for services, see consumer rights for services. If a dispute cannot be resolved directly with the supplier, see who to complain to about a consumer problem and small claims tribunals across Australia. Return to the Australian Consumer Law hub for the full picture.

Frequently Asked Questions

Who decides whether I get a refund or a repair for a faulty product?

It depends on whether the failure is major or minor under section 260 of the ACL. For a minor, fixable failure, the supplier chooses between repair, replacement or refund under section 259(2). For a major or unfixable failure, the consumer chooses under section 259(3): reject for a refund or replacement, or keep the goods and claim compensation for the reduced value.

What makes a product fault a "major failure"?

Section 260(1) lists five tests: a reasonable, fully informed consumer would not have bought it; it significantly departs from its description, sample or demonstration model; it is substantially unfit for its common purpose and cannot easily be fixed; it is unfit for a disclosed purpose and cannot easily be fixed; or it is unsafe. Meeting any one of these makes the failure major.

Can several small problems add up to a major failure?

Yes. Section 260(2) allows two or more failures, none of which need meet the section 260(1) test individually, to be treated together as a major failure if a reasonable, fully informed consumer would not have bought the goods knowing about all of them.

Can a business insist on only offering a repair?

Only for a minor, fixable failure. Once a failure is major under section 260, the consumer, not the business, chooses between a refund, a replacement, or keeping the goods with compensation for reduced value, under section 259(3).

Is there a time limit on rejecting faulty goods?

Yes. Section 262 removes the right to reject once the "rejection period" has passed, which is the time it would be reasonable to expect that type of failure to become apparent, given the type of goods and how they are normally used. There is no single fixed number of days; it varies by the type of product.

Can I claim for other losses caused by a faulty product, not just the refund?

Generally yes. Section 259(4) allows a claim for reasonably foreseeable consequential loss or damage caused by the failure, in addition to the repair, replacement, refund or compensation remedy, unless the failure happened only because of a cause independent of human control after the goods left the supplier's control.

Does this test apply the same way to services?

A parallel but differently worded major-failure test applies to services under section 268, with remedies under section 267 (terminating the contract, or compensation for reduced value, rather than a straightforward refund of goods). See our guide to consumer rights for services for that framework.