Responding to a Faulty-Car Claim at VCAT: a Victorian Motor Dealer’s Guide

You are a licensed Victorian motor car trader, and a buyer has lodged a claim at VCAT about a car you sold. It is unsettling, but it is manageable. The dealers who come out of these claims well are the ones who understand their obligations, test the claim honestly, meet every deadline, and turn up prepared. This page explains how the process works, what the law actually requires of you, and what a good defence looks like. Our motto for this is simple: know your obligations, prepare your response, protect your business.

For the forms, fees and each step, see our guide to making an VCAT application.

Two sets of rights apply to your buyer – and you must address both

A Victorian buyer of a used car from a licensed trader usually has two separate, overlapping sets of rights:

• the Australian Consumer Law (ACL) consumer guarantees, which apply nationwide; and
• the Victorian statutory warranty for used-car sales under the Motor Car Traders Act 1986 (Vic).

The statutory warranty is in addition to the consumer guarantees, and the buyer can still have ACL rights after the statutory warranty ends. A defence that answers only one of these layers is only half a defence.

The central ACL guarantee: acceptable quality

Most faulty-car claims turn on the guarantee of acceptable quality in section 54 of the ACL. Goods are of acceptable quality if a reasonable consumer, fully acquainted with their state and condition, would regard them as fit for purpose, free from defects, safe and durable – judged against the factors in section 54(3), which include the nature of the goods and the price. For a used car, its age, kilometres and price are legitimate and important parts of the standard. A ten-year-old car with high kilometres is not held to the standard of a new one. That is a real point in your favour – but it sets the standard, it does not remove the guarantee.

Major failure or minor failure? This changes everything

The remedy the buyer is entitled to depends on whether the failure is major or minor.

• A major failure (section 260) – for example, a fault so serious that a reasonable consumer would not have bought the car, or one that makes the car unsafe – lets the buyer choose to reject the car (refund or replacement) or keep it and claim compensation for the drop in value.
• A non-major failure that can be remedied puts you in a stronger position. Under section 259(2) the buyer must give you a reasonable opportunity to remedy it first, and under section 261 you choose the method – repair, replacement or refund.

So one of the first things to work out, honestly, is which kind of failure the buyer is really describing. If it is a minor, repairable fault, your right to fix it first is often your best answer – provided you act promptly.

What you cannot do

Some common dealer reactions are not available to you, and relying on them tends to lose cases and attract the regulator. According to the ACCC, you cannot:

• use an “as is” or “no refund” clause to escape the consumer guarantees – such terms are void under section 64 of the ACL, and contracting out of the Victorian statutory warranty is void and an offence under section 56 of the Motor Car Traders Act;
• send the buyer to the manufacturer – “The dealer must assist and must not tell the consumer to go to the manufacturer for a remedy”;
• rely on an expired manufacturer’s warranty – it “cannot avoid providing a remedy merely because the problem occurred one month after the expiry of the manufacturer’s three year warranty period”;
• exclude unsafe items such as brakes or tyres; or
• tell the buyer the statutory warranty has expired so you have no further obligations – the ACL can still apply.

The ACCC’s December 2025 report specifically lists these as conduct of concern. Telling a buyer they have no rights when they do can itself breach section 29 of the ACL.

The Victorian statutory warranty, in plain terms

Under section 54 of the Motor Car Traders Act 1986, a used car you sell carries a statutory warranty if it was manufactured not more than 10 years before sale and driven less than 160,000 km. The warranty runs for the shorter of three months or 5,000 km from delivery (time you hold the car for warranty work does not count). Within that period you must, at your own expense, repair or make good a covered defect so as to place the car in a reasonable condition having regard to its age. Consumer Affairs Victoria confirms that if a warranty defect stops the car being driven, you pay towing but need not supply a replacement car. Tyres, the battery and prescribed accessories are excluded, as are defects properly listed on a valid section 55 defect notice.

That defect notice is the one lawful way to exclude a listed defect – but only if it was attached to the contract, signed by the buyer at or before the sale, a true copy given, and your repair-cost estimate is reasonable.

How VCAT works, and your key deadlines

Goods and services and ACL disputes now sit in VCAT’s Consumer and Business Disputes practice area. Here is what matters for a respondent dealer:

• You should receive the application and all supporting documents. If you have not within seven days of the notice, VCAT says to contact the applicant directly.
• Defending only? You generally do not need to lodge your own application or a defence form – but some case types require a written response, and the notice will state the deadline. Whether or not a response is required, come to the hearing.
• No respondent fee. You do not pay a fee when an application is made against you.
• Steps to a hearing: a directions hearing may manage the case (and can order the car to be inspected by a mechanic); then mediation or a compulsory conference to try to settle; then the hearing. VCAT is not bound by the rules of evidence and runs informally.
• If you do not attend, VCAT may decide the case in your absence and make a costs order, enforceable by a court. If that happens, VCAT Act section 120 lets you apply for review – VCAT’s guidance is within 14 days of finding out – but attending the first time is far better.

Where VCAT cannot decide (for example, a dispute between an individual dealer and an interstate individual buyer), the Magistrates’ Court of Victoria hears it. There you must give a notice of defence (Form 8A) within 21 days of being served, stating which facts you admit, deny or do not admit – a fact you do not address is taken to be admitted.

What a good defence looks like

• It is built on documents. Your contract and invoice, any signed disclosure or defect notice, service and inspection records, dated photographs, your correspondence with the buyer, and – often decisively – an independent mechanic’s report on whether a defect exists, its cause, and whether it is major or minor.
• It is shared on time. At VCAT you must not “ambush” the other side: send your evidence to the applicant at least 14 days before an in-person hearing. An expert report should be filed and served at least 10 business days before the hearing.
• It tests each lawful limit against the real facts. Was the specific defect disclosed in writing before sale (s 54(4)-(5))? Should the buyer’s own inspection reasonably have revealed it (s 54(7), noting hidden engine or gearbox faults usually would not)? Was the damage caused by the buyer or abnormal use (s 54(6))? Has the rejection period ended (s 262)? Raise a limit only where you can prove the facts it needs.
• It is honest. Under VCAT Act section 136 you must not knowingly give false or misleading information to the Tribunal, and the Magistrates’ Court requires you to act honestly. Never deny a defect you know exists. An honest, well-prepared defence is both lawful and far more persuasive.

Often the sensible outcome is to settle: offer a prompt repair of a genuine fault, or a fair contribution, and record it in writing. VCAT can turn an agreement into a binding consent order. Just do not use a confidentiality term to misrepresent the buyer’s rights – the ACCC warns that doing so can itself breach the ACL.

Get the full VIC Defence Guide – $29

General information, not legal advice. Claim Done is not a law firm and does not provide legal advice. Laws, rules, forms and fees change – confirm the current position against the official source, and obtain legal advice where the amount, complexity or your licence warrants it.

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