Lemon Laws Australian Capital Territory: Faulty Car Refund or Replacement (2026)

Prepared by the Claim Done content team from the legislation and official pages listed under Sources, checked 19 October 2026. Claim Done is not a law firm and does not give legal advice; this page is general information.

Your rights in 60 seconds

• The Australian Consumer Law (ACL) covers every car a dealer sells you, new or used. It applies in the ACT and every state, and no territory warranty or contract term displaces it.
• Major failure: you can reject the car and choose a refund or a replacement. The choice is yours, not the dealer’s (ACL ss 259(3), 263(4)).
• Minor failure: the dealer chooses to repair, replace or refund, within a reasonable time (ss 259(2), 261).
• ACT statutory warranty: used cars driven not more than 160,000 km and manufactured not more than 10 years before the sale must be repaired at the dealer’s cost for any defect that appears within 3 months or 5,000 km, whichever comes first, whether or not it existed at the sale (Sale of Motor Vehicles Act 1977 (ACT) s 23, Schedule 1).
• “Sold as is” changes nothing: the ACL guarantees cannot be excluded (ACL s 64), and a term that tries to exclude or limit the ACT Act is void (s 83).
• Real cooling-off: cancel a dealer purchase within 3 clear business days, finance or not, for $100 or 1% of the price, whichever is greater (s 25B).
• ACAT decides disputes up to $25,000; larger claims go to the ACT Magistrates Court unless you abandon the excess or the dealer agrees in writing to ACAT.

Which state’s law applies to you

What matters is where the dealer you bought from is located, not where you live. The dealer’s state or territory decides the statutory dealer warranty, and usually the regulator and the tribunal or court. One exception for Canberra buyers: Access Canberra helps ACT residents whatever state the business is in, and ACAT can hear a claim if a material part of it happened in the ACT. The ACL applies either way.

So if you live in Queanbeyan, Yass or anywhere else in New South Wales and bought from a Canberra dealer, this ACT page applies. If you live in Canberra but bought from a dealer in Queanbeyan, Goulburn or Sydney, read our NSW page (the NSW dealer guarantee still applies; you can complain to Access Canberra or NSW Fair Trading). Online purchases work the same way. Access Canberra helps non-residents with a dispute with an ACT motor vehicle dealer, and ACAT can usually hear a claim if the dealer was an ACT resident when served or a material part of the claim happened in the ACT.

The interstate rule does not stop an ACAT claim

Under the High Court’s decision in Burns v Corbett [2018] HCA 15, the New South Wales and Victorian tribunals cannot decide a dispute between an individual dealer and a buyer living in a different state. Queensland’s QCAT currently hears these disputes, because the Queensland Court of Appeal has held it is a court (Owen v Menzies [2012] QCA 170), although two appeals challenging that are pending. Territory residents are not affected by that rule, and an ACT dealer is a territory resident. So whether the dealer is a company or a sole trader, and whether you live in Canberra, Queanbeyan or Perth, ACAT is the forum for a claim within its limit.

Your rights under the Australian Consumer Law

The consumer guarantees are in Schedule 2 to the Competition and Consumer Act 2010 (Cth), applied in the ACT as the Australian Consumer Law (ACT). “Goods” expressly include vehicles and second-hand goods (s 2). You are a consumer if the price was not more than $100,000, or the car is the kind normally bought for personal or household use, which covers a dearer family car (s 3(1); Competition and Consumer Regulations 2010 reg 77A).

Acceptable quality and the other guarantees

A car must be as fit for its normal purposes, acceptable in appearance and finish, free from defects, safe and durable as a reasonable consumer, fully aware of its condition including hidden defects, would regard as acceptable, taking into account its nature, price, anything the dealer or manufacturer said about it and the other circumstances (s 54). A ten-year-old car is not judged like a new one, but it must still be safe and reasonably durable for its age, price and kilometres. The car must also be fit for any purpose you told the dealer about, such as towing a particular caravan (s 55), and match its description: model, engine, year and kilometres (s 56).

The guarantee does not cover faults specifically pointed out to you before you agreed to buy, including on a transparent written notice displayed with the car (s 54(4)-(5)), faults your own inspection ought reasonably to have revealed (s 54(7)), or damage from your abnormal use (s 54(6)).

What is a major failure (s 260)

• a reasonable consumer who fully knew about the failure would not have bought the car;
• the car departs significantly from its description or a demonstration model;
• it is substantially unfit for its normal purpose, or for a purpose you told the dealer about, and cannot easily and within a reasonable time be fixed; or
• it is unsafe.

Several minor failures can add up to a major one. For contracts made on or after 18 December 2020, two or more failures are a major failure if a reasonable consumer who knew about them all, taken as a whole, would not have bought the car (s 260(2)). The ACCC’s motor vehicle guide gives examples it treats as major: a new car off the road for a combined five weeks of repair attempts, an engine seizure not repaired within five weeks, and a two-year-old car that could not engage reverse after two months of repairs. That is regulator guidance, not law.

Refund or replacement: your choice

For a major failure you notify the dealer that you reject the car and why (s 259(3)). The dealer must then, as you elect, refund the money you paid plus the value of any trade-in, or replace the car with one of the same type and similar value if reasonably available (s 263(4)). A credit note does not count as a refund (s 263(5)). The ACCC says a refund for a major problem should be the full amount, with no deduction for use; the Act itself says “any money paid”. If the car cannot be returned without significant cost to you, the dealer must collect it at its own expense within a reasonable time (s 263(3)). You can also recover reasonably foreseeable losses, such as towing or an inspection report (s 259(4)).

How long you have to reject (s 262)

There is no fixed number of days. You can reject within the time it would be reasonable to expect the failure to show up, considering the type of car, how it is likely to be used, and how long and how much it should be used before such a failure appears. The ACCC’s guide notes the warranty period can end before this rejection period does. You lose the right if you sell the car, or it is damaged after delivery for an unrelated reason. Act promptly and put everything in writing.

“Sold as is”, the manufacturer and finance

• “As is” does not work. Terms that exclude or limit the guarantees are void (s 64). Calling a car “as is” does not remove the guarantees: only defects specifically drawn to your attention before you agreed to buy are excluded (s 54(4)-(5)).
• The dealer cannot send you to the manufacturer. The ACCC says the dealer must assist and must not tell you to go to the manufacturer for a remedy. The manufacturer must reimburse the dealer (s 274). A claim against the manufacturer gives damages only, not a refund (ss 271-272), within 3 years of when you first became aware, or ought reasonably to have become aware, of the failure (s 273).
• Dealer-arranged finance. A linked lender is jointly liable with the dealer for your loss from a failure of the acceptable quality, purpose or description guarantees (s 278), capped at the amount financed plus interest and costs (s 281). If the sale contract is rescinded or discharged, for example because you rejected the car, you can usually end a tied personal loan from the dealer’s linked lender by written notice and recover the interest you paid (National Credit Code ss 135, 137), unless you found the lender yourself. Tell both the dealer and the lender, and keep paying while a minor fault is repaired. If repayments are a struggle, give the lender a hardship notice orally or in writing (NCC s 72).
• Misleading you is penalised. No penalty applies yet for simply refusing a remedy (reforms are announced, not law). But telling you that you have no rights, for example because a warranty expired, can breach ACL s 29(1)(m). In February 2024 the Federal Court ordered Mazda to pay $11.5 million in penalties for misleading customers about their consumer guarantee rights.

The ACT dealer statutory warranty

The warranty is in s 23 and Schedule 1 of the Sale of Motor Vehicles Act 1977 (ACT), with exclusions in ss 24-25. If a qualifying car is sold by a dealer and “a defect appears or occurs” before the kilometre or time limit, the dealer must repair or make good the defect at its own expense so as to place the car in a reasonable condition having regard to its age, whether or not the defect existed at the time of the sale (s 23(1)). It is treated as a term of the contract (s 23(2)). A “dealer” is anyone who buys, sells or exchanges vehicles as a business, or sells more than 6 vehicles in any 12 months; a revoked or missing licence does not matter (s 23(8)).

Commercial vehicles are those used wholly or principally to carry goods, more than 10 adults, or for industrial or agricultural purposes. The definition does not include utes, station wagons or panel vans of the same make as a factory-produced car, campervans, or 4WDs with a forward-facing rear seat (other than dual-cab or crew-cab vehicles). A dealer calling an ordinary ute “commercial” may be wrong.

Other vehicles: Schedule 1 item 3 excludes motorcycles, and s 25A gives new and demonstrator motorcycles 10,000 km or 6 months, whichever is earlier, so on the wording of the Act a used motorcycle relies on the ACL alone. Personal mobility devices, e-bikes within the bicycle definition, mobility scooters, golf buggies and ride-on mowers are declared not to be motor vehicles for the Act (NI2019-846).

Cooling-off in the ACT

Unlike NSW, the ACT cooling-off right does not depend on dealer finance, and it covers new and used cars (s 25B). A buyer who is not a dealer or a corporation can cancel by written notice to the dealer before the end of 3 clear business days after signing. The dealer refunds everything less $100 or 1% of the price, whichever is greater, returns your trade-in and must not dispose of it meanwhile; any linked credit agreement is discharged. If you already have the car, return it and pay for damage beyond fair wear and tear. It does not apply to commercial vehicles or public auctions, and it ends if you sign the approved loss-of-right form immediately before accepting delivery, so read what you sign at handover.

Compensation fund: motor vehicle dealers compensation fund

A last resort for buyers left out of pocket by a licensed dealer (Sale of Motor Vehicles Act ss 60-65).

• Covers financial loss in connection with a vehicle because a licensed dealer failed to meet an obligation under the Act, including the s 23 repair duty, or failed to pass clear title (s 60(1)).
• How: written particulars to the Commissioner for Fair Trading (s 60(2)), GPO Box 158, Canberra City ACT 2601.
• Time: within 6 months after you become aware of the loss, or longer if the Commissioner allows (s 60(3)).
• Conditions: you must have taken all reasonable steps to enforce your remedies against the dealer (s 61(2)). Review is to the Magistrates Court within 21 days (s 63); if the fund is short, payments are pro rata (s 64).

New cars in the ACT

New cars get the ACL plus an ACT warranty: driven under 15,000 km at sale, 20,000 km after manufacture and 12 months less 1 month per 2,000 km driven (Schedule 1 item 1); driven 15,000 km or more, 3 months or 5,000 km (item 2). If you had possession before buying, the sale date is when possession began (s 25(5)). It passes to later owners, but ends if a dealer later acquires the car or a financier repossesses it (s 23(5)-(6)). There is no higher ACAT limit for new cars. A manufacturer’s warranty adds to your rights but cannot take them away, and the ACCC says servicing at an independent repairer does not affect them. Check vehiclerecalls.gov.au for recalls, which do not replace your rights against the dealer.

Private sales and auctions

The s 23 warranty applies only to sales by a dealer, and anyone selling more than 6 vehicles in 12 months is a dealer. The ACCC says most consumer guarantees and state and territory laws do not apply to private sales, though clear title, undisturbed possession and no hidden debts still apply. Private sellers must not make false statements about a used car they offer, and a non-dealer must not alter or replace an odometer without disclosing it (s 32). The ACL quality guarantees do not apply to an agent-run sale by auction (ACL ss 54-59), though the ACCC says eBay listings are not auctions in that sense. Cooling-off does not apply to public auction purchases.

Bought privately? See private sale rights in the Australian Capital Territory

Evidence checklist

1. Contract and tax invoice showing the dealer’s legal name, address, licence number and price.
2. The notice the dealer gave you at the sale, any defect notice, and the advertisement (screenshot it now).
3. Odometer readings at purchase and now, the car’s build date, and your finance contract.
4. A dated list of each fault, with the kilometres when it appeared.
5. An independent mechanic’s report or quote.
6. Every email and text with the dealer, and notes of calls (date, time, who).
7. Repair invoices with the dates the dealer had the car, and receipts for towing, inspections and hire cars.
8. Your demand letters (Access Canberra asks for proof you wrote to the dealer) and your Access Canberra reference number.

The 5 steps

Step 1: Contact the dealer

Phone the dealer, then email the same day. Describe the fault, when it started and the kilometres, say what you want, and give them 24 hours to respond. Keep a record of every call and message.

Check your evidence first

Step 2: No response or a refusal: send a formal demand

Our letter sets out the car, a schedule of defects, your rights under the ACL and the Sale of Motor Vehicles Act, your chosen remedy and a firm deadline. In the ACT it matters even more: Access Canberra needs proof you have written to the business before it can help.

Send the dealer a formal demand – $49

Step 3: Complain to Access Canberra

Lodge a complaint with Access Canberra, the regulator that enforces the ACL in the ACT, using its “Report an issue” form, and attach a copy of your letter. It says you will need to provide proof that you have written to the business before it can help. It aims to reply within two business days with an initial response within 10 business days. It cannot order compensation, but the complaint puts the dealer on notice with the regulator and gives you a reference number.

Lodge an Access Canberra complaint

Step 4: Send the final demand

When you have the complaint reference number, send the final demand. It quotes your first letter, the dealer’s response and the reference number, with a short final deadline before ACAT, which asks parties to try negotiation first.

Send the final demand – $49

Step 5: Apply to ACAT

Lodge a civil dispute application with the ACT Civil and Administrative Tribunal. There is no separate motor vehicle list: a faulty car claim is a goods, contract or Australian Consumer Law (ACT) application. Use the civil dispute application form, or post it to GPO Box 370, Canberra ACT 2601. Applications are first listed for a directions hearing. Our Tribunal Application prepares it from your facts and evidence; then follow ACAT’s process to the refund, replacement or repair you chose. Over $25,000? See the table below first.

Prepare your tribunal application – $97

Where your claim goes

ACAT fees from 1 July 2026: $93 for $3,000 or less, $195 for over $3,000 to $15,000, $707 above $15,000 (Court Procedures (Fees) Determination 2026).

After you win: getting paid

ACAT does not enforce its own orders. If the dealer does not pay, you file the ACAT money order in a court, usually the Magistrates Court, and it then becomes an enforceable order under the Court Procedures Rules.

Step 1: file the ACAT order in the court

File a copy of the order sealed by ACAT and a supporting affidavit stating the amount owed (ACAT Act s 71). The Magistrates Court is the right court if the amount is within its jurisdiction.

Step 2: serve the enforcement notice and wait 7 days

Serve the debtor with a copy of the judgment and Form 2.49 (notice about Court order and enforcement options). No enforcement method can start until 7 days after the date of service. After that you can use the methods below in any order.

Debt redirection (bank account)

Use Form 2.62 for a one-off redirection of a debt owed to the debtor, including a single redirection from a bank account, or Form 2.63 for regular redirection from a bank account. Each needs an affidavit. Serve the bank or other third party, then serve the debtor within 5 days.

Earnings redirection (wages)

File Form 2.64 with an affidavit. Serve the employer, then serve the debtor within 5 days. The order runs until the debt is paid or the debtor leaves that job. The employer, bank or debtor can apply to vary or revoke it for exceptional hardship, and an instalment order puts it on hold. The employer may keep a compliance fee.

Seizure and sale of property

File Form 2.59 with an affidavit and the fee. The court sends the order to the ACT Sheriff. An order for seizure and sale can last for one year from the date it is issued.

Finding out what they own: enforcement hearing

File Forms 2.50 and 2.51 with an affidavit, and serve the subpoena at least 14 days before the hearing. The debtor must file a financial statement at least 8 days before. At the hearing the Registrar may examine the debtor, order instalments, issue another enforcement method, or issue a warrant if the debtor does not attend.

Enforce your order – $97

Access Canberra head office contacts

Questions people ask

Is there a lemon law in the ACT?

No, the ACT has no separate lemon law Act, but buyers are well protected. The Australian Consumer Law gives you a refund or replacement for a major failure in a car bought from a dealer. On top of that, the Sale of Motor Vehicles Act 1977 makes the dealer repair defects that appear in most used cars up to 10 years old and 160,000 km, within 3 months or 5,000 km.

Can I return a used car to a dealer in the ACT?

Yes, if the car has a major failure. Under the Australian Consumer Law you can reject it within a reasonable time and choose a refund or a replacement. For a minor failure the dealer may repair it first. If you simply change your mind, ACT cooling-off lets you cancel within 3 clear business days of signing, for $100 or 1% of the price, whichever is greater.

What is a major failure for a car?

A failure is major if a reasonable buyer who knew about it would not have bought the car, the car is unsafe, it differs significantly from its description, or it is substantially unfit for its normal purpose and cannot be fixed easily and within a reasonable time (ACL s 260). For contracts from 18 December 2020, several minor failures together can also be major.

Does the Australian Consumer Law apply to second-hand cars?

Yes. Second-hand cars bought from a business such as a dealer must be of acceptable quality for their age, price and kilometres, match their description and be fit for any purpose you told the dealer about. The guarantees do not cover most private sales or sales by auction, and “sold as is” wording cannot remove them.

I live in another state – which tribunal do I use?

Use ACAT for a claim against an ACT dealer, wherever you live. The Burns v Corbett rule that stops the NSW and Victorian tribunals hearing some interstate claims does not affect territory residents, so it does not stop ACAT. ACAT can hear the claim if the dealer was an ACT resident when served or a material part of the dispute happened in the ACT.

How long do I have to reject a faulty car?

There is no fixed number of days. The ACL lets you reject within a reasonable time, judged by the type of car, how it is used and when the fault would reasonably show up (s 262). That period can run past the ACT statutory warranty and any manufacturer’s warranty. You lose the right if you sell the car or it is later damaged for an unrelated reason.

Can the dealer refuse a refund and only offer repairs?

Only for a minor failure. For a minor failure the dealer may choose to repair, replace or refund, within a reasonable time. For a major failure the choice between a refund and a replacement is yours under ACL ss 259(3) and 263(4), and the dealer cannot insist on repairs. Several minor failures together can amount to a major one.

What does it cost to go to ACAT?

An individual pays $93 for a claim of $3,000 or less, $195 for over $3,000 up to $15,000, and $707 above $15,000 (fees from 1 July 2026). So a $5,000 claim costs $195. ACAT’s limit is $25,000: a $30,000 claim costs $707 in ACAT if you abandon the excess or the dealer agrees, or $296 in the Magistrates Court.

What if the car was on finance?

If the dealer arranged the loan, the lender can be jointly liable with the dealer for your loss, up to the amount financed plus interest and costs (ACL ss 278 and 281). If the sale ends, for example because you rejected the car, the National Credit Code usually lets you end a tied personal loan from a linked lender and recover interest you paid (s 135), unless you approached the lender yourself. Tell both the dealer and the lender.

Can I get my money if I win and the dealer still won’t pay?

It can take extra steps, which the section “After you win: getting paid” explains. If a licensed dealer failed to meet its obligations under the Act, you can claim from the ACT motor vehicle dealers compensation fund once you have taken all reasonable steps to enforce your remedies, within 6 months of becoming aware of the loss.

Is there a cooling-off period for used cars in the ACT?

Yes. A buyer who is not a dealer or a corporation can cancel a dealer purchase, new or used, by written notice before the end of 3 clear business days after signing. The dealer keeps $100 or 1% of the price, whichever is greater. It does not apply to commercial vehicles or public auctions, and ends if you sign the approved loss-of-right form before delivery.

Does the ACT statutory warranty cover tyres and batteries?

Not tyres or ordinary batteries: the Act excludes defects in them. The exception is a high-voltage battery that powers an electric or hybrid vehicle, which is covered. Listed accessories such as the radio, navigation system and light globes are excluded too. The Australian Consumer Law still applies, so a faulty part can still breach acceptable quality.

Related guides

• Lemon laws in Australia: every state compared
• NSW and Victoria lemon laws
• Bought a used car from a dealer and it’s faulty: what now?

Sources

• Sale of Motor Vehicles Act 1977 (ACT), Republication 46, checked 19 October 2026
• Notifiable Instrument NI2019-846 (vehicles declared not to be motor vehicles), checked 19 October 2026
• ACT Civil and Administrative Tribunal Act 2008, checked 19 October 2026
• Magistrates Court Act 1930 (ACT), checked 19 October 2026
• Court Procedures (Fees) Determination 2026 (ACT), checked 19 October 2026
• Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Schedule 2), checked 19 October 2026
• Competition and Consumer Regulations 2010 (Cth), checked 19 October 2026
• National Credit Code (National Consumer Credit Protection Act 2009 (Cth), Schedule 1), checked 19 October 2026
• ACAT: civil disputes, checked 19 October 2026
• ACAT: fees, checked 19 October 2026
• Access Canberra: get help with a consumer issue, checked 19 October 2026
• Access Canberra: fair trading and consumer rights, checked 19 October 2026
• Access Canberra: call us, checked 19 October 2026
• ACCC: new and second-hand cars, checked 19 October 2026
• ACCC: Motor vehicle sales and repairs, an industry guide to the ACL, checked 19 October 2026
• ACCC: Consumer issues in the sale of second-hand cars (December 2025), checked 19 October 2026
• Vehicle recalls (Australian Government), checked 19 October 2026