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

The answer turns on two questions: is the failure major, and can it be remedied? Under the Australian Consumer Law (ACL), those decide whether the business gets to pick how the problem is fixed or whether you choose.

Quick answer

When a product has a major failure, or a failure that cannot be remedied, you — the consumer — choose, under section 259(3). The choice is two-way, not a menu of three: either reject the goods and then elect a refund or a replacement under section 263(4), or keep them and claim compensation for the drop in value below the price you paid. Refund and replacement sit inside the rejection branch, and rejection is only open while the section 262 rejection period is still running and none of the other section 262 restrictions applies.

When the failure is non-major and can be remedied, you can require the business to fix it within a reasonable time under section 259(2), and section 261 lets the business choose how: repair, replacement or refund. If it refuses, doesn't fix it, or takes too long, you can have the fault fixed elsewhere and recover the reasonable cost from the business, or reject the goods, subject to section 262.

Separately, section 259(4) lets you recover damages for other reasonably foreseeable loss the failure caused, whether it was major or not. A store policy, "no refunds" sign or warranty disclaimer can't take these rights away, though some contracts for goods or services not ordinarily bought for household use can limit them, as explained below.

What the law actually says

The Australian Consumer Law sits inside the Competition and Consumer Act 2010. You get the consumer guarantees when you acquire goods or services as a consumer under section 3: broadly, where the price was $100,000 or less ($40,000 for things acquired before 1 July 2021), or they were of a kind ordinarily acquired for personal, domestic or household use, or (goods only) a vehicle or trailer acquired mainly to carry goods on public roads. Any one limb is enough, so business use alone doesn't remove coverage, with two limits. For goods only, you are not a consumer if you bought them, or held yourself out as buying them, to resell or to use up or transform in trade or commerce in production, manufacture, repair or treatment (section 3(2)). And for goods or services not of a kind ordinarily bought for personal, domestic or household use, section 64A lets a contract limit the supplier's liability: for goods, to repair, replacement or the cost of either; for services, to supplying them again or that cost. It doesn't reach the guarantees of title, undisturbed possession and undisclosed securities (sections 51 to 53), and doesn't apply if you establish that relying on the term isn't fair or reasonable. Check how section 3 applies to you.

When a consumer guarantee is breached — for example, the goods aren't of acceptable quality (section 54), aren't reasonably fit for a disclosed or represented purpose (section 55), or don't match their description (section 56) — your remedies sit in sections 259 to 266.

Section 260 defines a major failure

Under section 260, a goods failure is a major failure if any one of the following applies:

• a reasonable consumer, fully acquainted with the nature and extent of the failure, would not have acquired the goods;
• the goods depart in one or more significant respects from their description, or from a sample or demonstration model;
• the goods are substantially unfit for a purpose goods of the same kind are commonly supplied for, and cannot easily and within a reasonable time be remedied to make them fit;
• the goods are unfit for a particular purpose you disclosed to the seller, or to whoever handled the sale, and cannot easily and within a reasonable time be remedied to make them fit; or
• the goods are not of acceptable quality because they are unsafe.

Note the asymmetry in the two fitness limbs: the common-purpose limb requires the goods to be substantially unfit, but the limb for a purpose you disclosed requires only that they are unfit. Section 260(2) adds that two or more failures, which need not relate to the same guarantee, are together a major failure if a reasonable consumer fully acquainted with them, taken as a whole, would not have acquired the goods, which matters when a business insists each fault is minor and repairable. That rule applies only to goods supplied under a contract entered into on or after 18 December 2020, so check your purchase date.

Section 259(3) is your election: a major failure, or one that can't be remedied

This is the provision to cite when you are the one choosing. It applies where the failure is major or cannot be remedied, and gives two alternatives:

1. Reject the goods under section 259(3)(a) — and then, under section 263(4), elect either a refund, or a replacement of the same type and similar value if one is reasonably available to the supplier; or
2. Keep the goods and recover compensation for the reduction in their value below the price you paid or are liable to pay (section 259(3)(b)).

Section 261 is the supplier's choice, on a non-major failure that can be remedied

Where the failure is not major and can be remedied, section 259(2)(a) lets you require the supplier to remedy it within a reasonable time. Section 261 then lets the supplier choose how: repair, replacement with goods of an identical type, a refund of your money plus the value of anything else you gave, such as a trade-in, or, for a problem with title, curing that defect. It is the provision a business relies on when it insists on a repair, and it doesn't apply to a major failure or one that can't be remedied.

If the supplier refuses or fails to remedy the failure, or does not do so within a reasonable time, section 259(2)(b) gives you two ways out: have the failure remedied elsewhere and recover the reasonable costs from the supplier, or reject the goods (subject to section 262). Compensation for reduction in value is not on that list: it is a section 259(3)(b) remedy, for a failure that is major or can't be remedied.

Section 259(4) applies on either track

Whichever track you are on, section 259(4) lets you recover damages for other reasonably foreseeable loss the failure caused, in addition to the remedies above (section 259(6)): the costs the failure generated, not just the price of the goods. It doesn't apply where the failure happened only because of a cause independent of human control after the goods left the supplier's control (section 259(5)).

Rejection has a clock: section 262

The rejection period decides whether refund and replacement are still available. Under section 262(2) it runs from the time the goods were supplied to you, and lasts as long as it would be reasonable to expect the failure to become apparent, having regard to the type of goods, the use a consumer is likely to put them to, and how long and how much it is reasonable to use them before such a failure becomes apparent. It is not measured from when you discovered the fault, and the ACL has no "acceptance" rule: using the goods does not by itself end the right to reject; only the section 262 grounds do.

The right is also lost where you lost, destroyed or disposed of the goods, where they were damaged after delivery for reasons unrelated to their state or condition at the time of supply, or where they have been attached to or incorporated in other property and cannot be detached or isolated without damaging them.

If you reject, tell the supplier the ground or grounds, ideally in writing. Under section 263 you must return the goods unless the supplier already has them, or returning them would cost you significantly because of the nature of the failure or their size, height or method of attachment, in which case the supplier must collect them at its own expense. The supplier can't meet a refund by letting you take other goods instead, such as store credit (section 263(5)), and replacement goods carry fresh guarantees (section 264).

Services run on their own track

The services guarantees are sections 60 to 62 (section 63 excludes contracts of insurance and some business transport or storage of goods), the remedies are sections 267 to 270, and section 268 decides whether a services failure is major. For a major failure, or one that cannot be remedied, section 267(3) lets you terminate the contract — section 269 then entitles you to a refund of what you paid, to the extent the services had not been consumed — or keep it and recover compensation for the reduction in value below the price paid.

The manufacturer route is damages only

Sections 271 and 272 let you recover against the manufacturer, not just the retailer, for failures of acceptable quality, a description the manufacturer applied, repairs and spare parts, or its express warranty, which matters when the retailer is unresponsive or has closed. The manufacturer's liability is damages. The ACL gives no refund or replacement right against a manufacturer, though its warranty may promise repair or replacement. Section 273 also bars that action three years after you first became, or ought reasonably to have become, aware that the guarantee was not complied with.

When this applies (and when it doesn't)

The remedy-choice rules apply when:

• You bought from a business, not a private seller, and, for quality, fitness or description claims, not at an auction conducted by the seller's agent, in person or online (an ordinary marketplace listing usually isn't one).
• You acquired the goods or services as a consumer on any one of the section 3 limbs above. The limbs are alternatives, so business use does not by itself remove coverage, though the section 3(2) carve-outs for goods still apply.
• 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).

They generally do not apply when:

• You simply changed your mind, for example because you found it cheaper elsewhere.
• The defect was pointed out to you before purchase ("clearance item — display model, minor scratches"). You generally can't claim that fault makes the goods unacceptable quality.
• The goods were bought from a genuine private individual. Acceptable quality, fitness for purpose and description apply to business sales only. The title, undisturbed possession and undisclosed securities guarantees can apply to a private sale too, but the section 259 remedies need a supply in trade or commerce, so a private buyer looks to contract or other law. A business selling second-hand goods is covered: see buying a used car from a dealer.

Your ACL rights apply regardless of whether a manufacturer's warranty has expired: the warranty is the manufacturer's own promise, while the consumer guarantees are statutory rights, mainly against the seller. A washing machine that fails at 14 months isn't necessarily outside your rights because the warranty was 12 months. See consumer guarantees vs warranty.

What to do today

A practical sequence (for services, sections 267 and 268 apply instead):

1. Work out which track you're on. The failure is major if any one of the section 260 tests above applies. If the failure is major, or it can't be remedied at all, the election is yours. Our article on what "major failure" means under the ACL goes deeper on this.

2. Decide what you want — and check the clock. On the section 259(3) track, a refund or replacement runs through rejecting the goods, so check whether the section 262 rejection period is still open, counting from supply. If it has closed, compensation for the drop in value may still be available. On the non-major, remediable track, if the supplier refuses, fails or stalls, you can have the fault fixed elsewhere and recover the cost, or reject while the period is open and no other section 262 restriction applies. Damages under section 259(4) are available on either track.

3. Gather your evidence. Proof of purchase (a receipt, bank statement or email confirmation that identifies the business and the goods), plus photos or video of the fault, written communications, and notes on when the fault appeared and the date of supply. For other losses, keep invoices and quotes: you must show the failure caused the loss, it was reasonably foreseeable, and you took reasonable steps to limit it.

4. Get an independent opinion if the cause is disputed. A written report from an independent repairer or expert on the cause and the repair cost carries more weight than your own view.

5. Check your payment route. If you paid by card, ask your card issuer now whether a chargeback is available; if you used buy now pay later, ask the provider about its dispute process; both follow the card scheme's or provider's own time limits, not the ACL's.

6. Contact the seller in writing. State the date of purchase, describe the failure, say whether it is major, or can't be remedied, and why, cite the guarantee you rely on (for example, section 54 for acceptable quality), and state the remedy you want. Cite the right provision for it: section 259(3) if the failure is major or can't be remedied and you are electing (with section 263(4) for a refund or replacement), and section 259(2) if it is non-major and you are requiring the supplier to remedy it. Section 261 is the provision under which the supplier chooses, so it isn't the one to cite for a remedy you are choosing.

7. Set a deadline. Around 14 days is often practical, though there is no ACL 14-day rule. Say what you'll do if they don't respond — for example, go to your state or territory consumer body, or the court or tribunal with jurisdiction.

8. Keep the goods. Don't dispose of a faulty product: that can end your right to reject under section 262. The ACCC says a business can assess the product before giving a remedy, so make it available and ask for its assessment and proposed remedy in writing. A court or tribunal will want your evidence too.

If drafting the letter feels daunting, you can generate a free demand letter 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

Your escalation options:

• Your state or territory consumer body. Each has a complaints service that may inform, assess or offer dispute resolution. They may expect you to have tried the business first, and they generally cannot compel a business to take part or make binding orders. Contact details are at /agencies.

• A court or tribunal with jurisdiction. Several states and territories route consumer claims to a tribunal, but not all: in Western Australia, South Australia and Tasmania an ordinary ACL claim goes to the Magistrates Court instead. Confirm which forum has jurisdiction, and its limits and fees, before filing. Our state guides, such as South Australia and New South Wales, set out which forum hears ordinary claims.

• The manufacturer. Sections 271 and 272 may let you claim damages from the manufacturer (not a refund or replacement), within the section 273 time limit described above.

• ACCC. It investigates systemic conduct, not individual disputes, though reporting can still be worthwhile.

Common mistakes

• Accepting a repair when the election is yours. If the failure is major or can't be remedied, a repair cannot be imposed on you — section 261 does not apply. Letting the business try a repair doesn't waive your rights, but the rejection period keeps running, so put your position in writing and act promptly. A failed repair may show the failure can't easily be remedied in a reasonable time, or open the section 259(2)(b) exits on a non-major one, with rejection still subject to section 262.

• Waiting too long to reject. The rejection period runs from the time the goods were supplied, not from when you discovered the failure, and lasts as long as that kind of failure would reasonably take to become apparent (section 262(2)). Delay eats into a period that started without you. Act promptly once you identify the problem, and if the period has closed, ask about your other remedies rather than assuming the claim is over.

• Skipping the written demand. On a non-major failure that can be remedied, your fallback rights under section 259(2)(b) only arise after you've required the supplier to remedy it, and a written demand is the evidence you did. Check what the forum with jurisdiction expects before filing.

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?
• Refund, replacement or repair in Australia: a practical ACL decision tree
• Business refused your refund? Here's what to do next

This article is general information about Australian Consumer Law, not legal advice. It also touches on complaint and escalation pathways (state and territory consumer bodies, tribunals and courts, the ACCC) and card chargeback rules, whose scope, rules, thresholds and processes sit outside the ACL or can change. Confirm the current position with the relevant body before lodging. For advice on your specific case, see your state or territory consumer body — full list at /agencies.