Replacement vs repair vs refund: which remedy can you choose?

You bought a product, it's let you down, and now you're standing in front of a customer service counter — or typing an email — trying to figure out what you're actually entitled to ask for. The retailer is offering a repair. You want a refund. Are you stuck with what they're offering, or do you get to choose?

The answer depends on one key question: is the failure major or minor? Under the Australian Consumer Law (ACL), that single distinction determines whether the business gets to pick the remedy or whether you do. Getting this right is the difference between walking away with a repaired product you didn't want and walking away with your money back.

Quick answer

When a product has a major failure, you — the consumer — choose the remedy. You can demand a full refund, an identical replacement, or (less commonly) keep the goods and claim compensation for the drop in value. When the failure is minor, the business gets to choose: they can repair, replace, or refund, as long as they act within a reasonable time. A business cannot force a repair on you when the failure is major. These rights come from sections 259–261 of the ACL and cannot be removed by store policy, a "no refunds" sign, or a warranty disclaimer.

What the law actually says

The Australian Consumer Law sits inside the Competition and Consumer Act 2010 and applies automatically to goods and services bought from Australian businesses for personal use. When a consumer guarantee is breached — for example, the goods aren't of acceptable quality under section 54, aren't fit for a disclosed purpose under section 55, or don't match their description under section 56 — you're entitled to a remedy under sections 259 to 263.

The remedy framework works like this:

Section 259 sets out the general right to a remedy when a guarantee is not met. It splits into two tracks depending on whether the failure is major or not.

Section 260 defines a major failure for goods. A failure is major if:

• a reasonable consumer would not have bought the goods had they known about the failure;
• the goods are substantially unfit for their normal purpose and can't be made fit within a reasonable time;
• the goods are substantially unfit for a purpose you told the supplier about, and can't be made fit within a reasonable time;
• the goods are unsafe; or
• the goods are significantly different from their description, sample, or demonstration model.

Section 261 sets out what happens when there is a major failure. You can:

1. Reject the goods and get a full refund;
2. Reject the goods and get an identical replacement (or the nearest equivalent if an identical one isn't reasonably available); or
3. Keep the goods and recover compensation for the reduction in their value.

When the failure is not major — a minor defect that can be fixed — section 259(2) gives the supplier the right to remedy the problem. They can choose repair, replacement, or refund. But they must act within a reasonable time. If they don't, you then get the same choices as a major failure: reject and refund, reject and replace, or keep and claim compensation.

For services, the structure is similar. A major failure in a service — one where a reasonable consumer wouldn't have engaged the supplier knowing about it, or where the service is substantially unfit for purpose — lets you cancel the contract and get a refund of the amount paid for the unperformed or substandard portion.

One more important piece: section 263 gives you a right to recover against the manufacturer (not just the retailer) for certain guarantee failures, particularly around acceptable quality. This matters when the retailer has gone broke or is being uncooperative — the manufacturer is a separate avenue.

When this applies (and when it doesn't)

The remedy-choice rules apply when:

• You bought from a business, not a private seller.
• The goods or services cost up to $100,000 (or are of a kind ordinarily acquired for personal, domestic, or household use).
• There is a genuine failure of a consumer guarantee — not just a change of mind.
• You haven't caused the failure yourself (misuse, accidental damage, or ignoring obvious care instructions can reduce or remove your claim).
• You haven't already accepted a remedy and then changed your mind about it.

They generally do not apply when:

• You simply changed your mind. The ACL doesn't require any business to accept a return because you found it cheaper elsewhere or decided you didn't want it after all.
• The defect was pointed out to you before purchase ("clearance item — display model, minor scratches"). You can't claim on a fault you knowingly accepted.
• You caused the damage. Dropping a phone and cracking the screen is not a failure of the acceptable quality guarantee.
• The goods were bought from a private individual — a person selling their old couch on Facebook Marketplace isn't bound by the ACL consumer guarantees, though a business selling second-hand goods is. See our guide on buying a used car from a dealer for an example of how this plays out.

One thing worth flagging: the ACL remedy rights apply regardless of whether a manufacturer's warranty has expired. The warranty is a separate contractual promise from the manufacturer. The consumer guarantee is a statutory right against the seller. A washing machine that fails after 14 months isn't necessarily outside your rights just because the warranty was 12 months — if a reasonable consumer would expect it to last longer, the guarantee may still be in play. See our article on consumer guarantees vs warranty for the full breakdown.

What to do today

If a product or service has failed and you want to assert your remedy rights, here's a practical sequence:

1. Work out whether the failure is major or minor. Ask yourself: would a reasonable person have bought this if they'd known about the problem? Can it be fixed in a reasonable time? Is it unsafe? If yes to the first question, or no to the second, you're likely in major failure territory — and you get to choose the remedy. Our article on what "major failure" means under the ACL goes deeper on this.

2. Decide what you want. Refund, replacement, or compensation? You don't have to accept a repair if the failure is major. Know your position before you contact the business.

3. Gather your evidence. Proof of purchase (receipt, bank statement, email confirmation), photos or video of the fault, any written communications with the seller, and notes on when the fault first appeared and how it has affected your use of the product.

4. Contact the seller in writing. A written record is far more useful than a phone call. State the date of purchase, describe the failure, identify it as a major (or minor) failure under the ACL, cite the relevant guarantee (section 54 for acceptable quality is the most common), and state clearly which remedy you are seeking under section 261.

5. Set a deadline. Give the business a reasonable timeframe to respond — typically 7 to 14 days for straightforward goods. State what you will do if they don't respond (escalate to Fair Trading or a tribunal).

6. Keep the goods. Don't dispose of a faulty product. The business may want to inspect it, and any tribunal will want evidence.

If drafting the letter feels daunting, you can generate a free demand letter in about 90 seconds using Fairgo. The tool identifies the relevant ACL sections for your situation and produces a letter you send under your own name.

What if the business refuses

A business that refuses a remedy you're legally entitled to is in breach of the ACL. You have several escalation options:

• Your state or territory Fair Trading body. Each state and territory runs a free conciliation service. They contact the business on your behalf and try to reach a resolution without you having to go to a tribunal. Contact details for every Fair Trading body are at /agencies.

• Your state consumer tribunal. If conciliation doesn't resolve things, you can file a claim at NCAT (NSW), VCAT (Victoria), QCAT (Queensland), SAT (Western Australia), SACAT (South Australia), or the equivalent in your state. Filing fees are modest, the process is designed for self-represented consumers, and tribunals have extensive experience with exactly these disputes. Businesses know tribunals apply the ACL strictly — the threat of a hearing often produces a settlement.

• The manufacturer. Under section 263, you can pursue the manufacturer directly for certain guarantee failures, particularly acceptable quality. This is useful when the retailer is unresponsive or has closed.

• ACCC. Worth noting: the ACCC investigates systemic or industry-wide conduct, not individual disputes. For your specific case, Fair Trading and the state tribunal are the right forums. The ACCC can still be worth contacting to report the conduct, but don't expect them to resolve your individual claim.

Common mistakes

These are the errors that most often undermine an otherwise solid claim:

• Accepting a repair when you're entitled to a refund. If the failure is major, you don't have to accept a repair. Once you agree to a repair, it can be harder to insist on a refund later if the repair doesn't fix the problem — though a failed repair on a major failure still entitles you to reject the goods.

• Letting the business define whether the failure is major. The business will often say "it's a minor fault, we'll repair it." That's their preference, not a legal determination. If you believe it's a major failure, say so in writing and explain why.

• Waiting too long to reject. You must reject goods within a reasonable time of discovering the failure. What's "reasonable" depends on the type of goods and the nature of the fault, but sitting on a claim for months without action can complicate things. Act promptly once you identify the problem.

• Confusing the manufacturer's warranty with your ACL rights. "Your warranty has expired" is not the end of the story. The consumer guarantee is a separate, statutory right that often extends well beyond the warranty period for durable goods.

• Going straight to a tribunal without trying to resolve it first. Most tribunals expect you to have made a genuine attempt to resolve the dispute directly. A written demand letter is evidence you tried. It also often works — many businesses fold once they receive a letter that correctly cites the ACL.

• Not keeping records. If the dispute escalates, the tribunal will want to see your evidence. A folder with your receipt, photos of the fault, and copies of your correspondence is far more persuasive than a verbal account of what happened.

For a step-by-step guide to what happens after a business refuses, see business refused your refund — what now?.

Related reading

• Can I demand a refund? When Australian Consumer Law gives you the right
• What "major failure" really means under the ACL
• Consumer guarantees vs warranty — what's the difference?

This article is general information about Australian Consumer Law, not legal advice. The ACL is complex and your situation may have details that change the analysis. For advice on your specific case, see your state's Fair Trading body — full list at /agencies.