A customer walks in, three weeks after buying a $650 blender, and says it stopped working. The sales assistant tells her they have a "no refund" policy. She produces her receipt. The assistant shrugs. That exchange costs the retailer more than a refund ever would — because under Schedule 2 of the Competition and Consumer Act 2010 (Cth), that "no refund" sign is not just wrong. It is illegal.
The Australian Consumer Law (ACL) is Schedule 2 of the CCA 2010. It runs nationally; state and territory fair trading legislation mirrors and adopts it. Consumer guarantees under Part 3-2 of the ACL attach automatically to goods and services sold to consumers. You cannot contract out of them, cannot display signage that contradicts them, and cannot charge a restocking fee to sidestep them. The ACCC has significant investigation and enforcement powers, and in 2023 infringement notices under s 134A ACL reached six figures per breach for corporations.
The threshold question: who is a consumer?
Section 3 ACL defines "consumer" in two ways. First, if the price of goods or services is $100,000 or less (raised from $40,000 in October 2022 — a change many businesses still haven't absorbed). Second, even above that price, if the goods are ordinarily acquired for personal, domestic, or household use. A $120,000 caravan sold to a retiree for recreational use is a consumer sale. A $50,000 industrial oven sold to a restaurant probably is not. The distinction matters because consumer guarantees only apply in consumer transactions.
What the guarantees actually require
For goods, the guarantees run across ss 51–59 ACL. Acceptable quality is the big one — s 54 requires goods to be fit for all purposes they are commonly supplied for, free from defects, acceptable in appearance, safe, and durable. Durability is often the contested point. "Acceptable quality" is assessed through the eyes of a reasonable consumer who knows the goods, their price, and any representations made about them. A $30 kettle and a $300 kettle are both required to be of acceptable quality, but what that means differs.
Section 55 adds fit-for-purpose: if a consumer tells the supplier they need goods for a specific purpose and relies on the supplier's skill and judgment, a guarantee that the goods are fit for that purpose attaches. Section 56 covers correspondence with description; s 57 covers compliance with samples. If you operate a service business, ss 60–62 give consumers guarantees that services are rendered with due care and skill, are fit for disclosed purposes, and are completed within a reasonable time when no time is fixed.
Major versus minor failures — the remedies split
This is where most businesses go wrong. Not every defect entitles a consumer to a full refund. The ACL distinguishes major failures from minor ones, and the remedies differ significantly.
A failure is major (s 260 for goods, s 268 for services) if a reasonable consumer would not have bought the goods knowing of the problem, if the goods are significantly different from description or sample, if they are substantially unfit for their common purpose, or if they are unsafe. For a major failure the consumer gets to choose the remedy: they can reject the goods and demand a refund, they can reject and ask for an identical replacement, or they can keep the goods and seek compensation for the reduced value. The choice is theirs, not the retailer's.
For a minor failure the retailer has a chance to fix it first. The supplier can offer repair, replacement, or refund. If the repair isn't completed within a reasonable time — and "reasonable" is measured by what it should take, not by how long the retailer's supply chain is — the consumer can go back and request a different remedy. I've watched this clause sink a hardware supplier who kept promising a repair was coming, for four months, on a $400 power tool. By then the consumer was entitled to a full refund regardless.
What businesses cannot do
Section 64 voids any term of a contract that purports to exclude, restrict, or modify consumer guarantees. This includes "as is" sale clauses in consumer transactions. You can still sell second-hand goods, display goods, or end-of-line stock — but if those goods fail to meet the acceptable quality standard given their condition and price, the guarantee still applies.
The ACCC's position on "no refunds after 30 days" or "exchange only" signs has been consistent: they are misleading conduct under s 29(1)(m) ACL if they suggest consumers have no legal rights to refunds or replacements. The fine exposure for corporations runs up to $50 million under s 224 ACL (as amended by the Treasury Laws Amendment (More Competition, Better Prices) Act 2022).
State-specific overlay on gifts and third parties
One nuance: the ACL consumer guarantee scheme gives rights to the "consumer" who acquired the goods. But ss 267–271 provide that if a manufacturer (not just a retailer) gives an express warranty, that warranty binds the manufacturer. The ACL defines "manufacturer" broadly to include importers and entities that hold themselves out as the manufacturer. A business importing white-label goods from overseas and selling under its own brand name is the "manufacturer" for ACL purposes — it cannot disclaim its way out by pointing at a factory in Shenzhen.
Guarantees for goods generally run for a "reasonable time" rather than a fixed period, though s 271 sets a framework for damages claims against manufacturers up to three years from when the failure became apparent. For services, the due-care-and-skill guarantee (s 60) has no stated expiry.
Practical documentation
Australian retailers, service providers, and online sellers should review their purchase agreements, website terms, and refund policies against the ACL benchmarks. If your current terms of sale say anything like "we reserve the right to refuse refund requests" without carving out ACL rights, you are exposed. A properly drafted sale agreement that acknowledges consumer guarantees while setting out the business's preferred process (contact us first, provide proof of purchase, allow 48 hours for assessment) gives you a clean record if a dispute escalates to a state tribunal.
The template library at https://forms-legal.com/australia/ includes sale-of-goods agreements and service contracts with ACL-compliant language as a starting point. Tailor them to your industry, add your repair and assessment process, and make sure your staff know the difference between a major and a minor failure — because that single distinction drives almost every consumer dispute.
The floor doesn't move
There is no opt-out. Voluntary additional warranties (s 59 ACL) are permitted — you can offer extended coverage on top of the statutory guarantee — but you cannot take away what the ACL grants. Consumer guarantees are a floor, not a ceiling. The practical takeaway for any business selling goods or services to Australian consumers is simple: build your returns and complaints process around the legal entitlements, not around what you wish consumers were entitled to. Get that right and most disputes resolve before they reach the tribunal.
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