Supplier Delivered Faulty Goods: Demand Refund Guide

You ordered stock. The supplier delivered it. It’s faulty, defective, or not fit for purpose. Now they’re ignoring your calls or refusing to fix it.

Australian Consumer Law gives you automatic guarantees. This guide shows you how to demand a refund, replacement, or damages — and what to do when the supplier won’t cooperate.

Your Rights Under Australian Consumer Law

Australian Consumer Law applies to every business transaction in Australia. When you buy goods from a supplier, you get automatic guarantees that cannot be excluded by contract terms.

Consumer guarantees for goods include:

• Acceptable quality — goods must be safe, durable, free from defects, and acceptable in appearance and finish
• Fit for purpose — if you told the supplier what you needed the goods for, they must be suitable for that purpose
• Match description — goods must match any sample, demonstration model, or description provided
• Title and ownership — the supplier must have the right to sell the goods
• Spare parts and repairs — the supplier must make spare parts and repair facilities available for a reasonable time

Any clause attempting to exclude consumer guarantees is void.

When You Can Demand a Refund vs Replacement

Australian Consumer Law distinguishes between major failures and minor failures. Your remedy depends on which category applies.

Major failure

A major failure occurs when:

• The goods would not have been purchased if the failure had been known
• The goods are substantially unfit for their normal purpose and cannot easily be fixed within a reasonable time
• The goods are unsafe

For a major failure, you can choose:

• Full refund
• Replacement with identical or equivalent goods
• Keep the goods and claim compensation for the drop in value

Minor failure

A minor failure is a defect that can be repaired within a reasonable time. For minor failures, the supplier gets one opportunity to repair or replace the goods. If they fail to do so within a reasonable time, the failure becomes major and you can demand a refund.

Reasonable time depends on the nature of the goods and the urgency of your business needs. For stock you need to on-sell, reasonable time might be days, not weeks.

How to Structure Your Demand

A properly structured demand letter identifies the failure, cites the applicable guarantee, and specifies the remedy you’re claiming.

Step 1: Document the defect

Before you write anything, gather evidence:

• Purchase order, invoice, or receipt
• Delivery docket showing what was received
• Photos or video of the defect
• Any correspondence with the supplier
• Expert reports or test results (if applicable)
• Records of lost sales or business impact

Step 2: Identify which guarantee was breached

Be specific. Don’t just say “the goods are faulty.” State which consumer guarantee applies:

• “The goods are not of acceptable quality — they are defective and unsafe.”
• “The goods are not fit for the disclosed purpose — I told you I needed them for commercial refrigeration and they cannot maintain temperature.”
• “The goods do not match the sample — the bulk order is a different grade of material.”

Step 3: State whether it’s a major or minor failure

If it’s a major failure, say so and explain why. If it’s a minor failure but the supplier has already failed to fix it, state that the failure has escalated to major.

Step 4: Specify your remedy

State exactly what you want:

• “I require a full refund of $8,450 within 7 days.”
• “I require replacement goods delivered by [date] at no additional cost.”
• “I am keeping the goods and claiming $3,200 compensation for the reduction in value, plus $1,800 in consequential losses.”

Step 5: Set a deadline and consequence

Give the supplier a reasonable deadline — typically 7 to 14 days. State what you will do if they do not comply:

“If you do not provide a full refund by [date], I will commence proceedings in [tribunal/court] to recover the amount owed, plus interest, filing fees, and any further losses.”

What About Consequential Loss?

If the faulty goods caused you additional losses, you can claim compensation — but only if the loss was reasonably foreseeable.

Claimable consequential losses typically include:

• Lost profit from sales you couldn’t make
• Cost of hiring replacement equipment
• Wasted labour or materials
• Storage or disposal costs
• Damage to other property caused by the defect

You must prove:

• The loss was caused by the defect
• The loss was reasonably foreseeable at the time of purchase
• You took reasonable steps to mitigate the loss

Keep detailed records. If you’re claiming lost profit, you need invoices, sales records, or quotes from customers you had to turn away.

When the Supplier Refuses or Ignores You

Most suppliers respond to a properly drafted demand letter. Some won’t.

If the supplier ignores your letter:

• Send a follow-up by registered post and email
• Check if they’re still trading (search ASIC register)
• Consider whether the debt justifies tribunal or court action

If the supplier disputes your claim:

• Ask them to put their reasons in writing
• If they claim the defect was caused by you, ask for evidence
• If they offer a repair when you’re entitled to a refund, restate your position

If the supplier offers a partial remedy:

• Evaluate whether it’s commercially sensible to accept
• If you accept, document the settlement in writing
• If you reject it, proceed to tribunal or court

Tribunal vs Court: Where to Take Your Claim

For business disputes, your options depend on the amount claimed.

Small claims tribunals (VCAT, NCAT, QCAT, etc.) typically handle claims up to $10,000–$25,000 depending on the state. They’re fast, cheap, and you don’t need a lawyer. Most tribunal applications cost under $100 and are heard within 8–12 weeks.

Magistrates or District Court handles larger claims. You’ll likely need a lawyer. Filing fees are higher. The process is slower.

If your claim is under the tribunal limit, start there.

How ClaimDone Helps

ClaimDone generates a professionally formatted letter of demand citing the applicable sections of Australian Consumer Law and tailored to your specific facts. You upload your evidence, answer a short intake form, and the platform drafts the letter — then delivers it to the supplier automatically via registered post and email.

What you get:

• Letter citing the relevant consumer guarantees
• Clear statement of major or minor failure
• Specific remedy demanded with deadline
• Professional formatting and tone
• Automatic delivery with proof of service

Flat fee. No subscription. Done in 60 minutes.

If the supplier doesn’t respond or disputes your claim, ClaimDone can also prepare your tribunal application with all supporting documents formatted and ready to file.

Final Checklist Before You Send

Before you send your demand letter, confirm:

• [ ] You have proof of purchase
• [ ] You have evidence of the defect (photos, reports, correspondence)
• [ ] You’ve identified which consumer guarantee was breached
• [ ] You’ve stated whether it’s a major or minor failure
• [ ] You’ve specified your remedy clearly
• [ ] You’ve set a reasonable deadline
• [ ] You’ve kept copies of everything
• [ ] You’re sending via registered post and email

Take Action Now

If a supplier delivered faulty goods and won’t fix it, don’t wait. Your ability to prove the defect and your losses gets harder over time.

ClaimDone generates your letter of demand in 60 minutes. Upload your evidence, answer a few questions, and the platform drafts a legally precise demand letter citing Australian Consumer Law — then delivers it automatically via registered post and email. Start your claim at generate your demand letter automatically.

Frequently Asked Questions

Can a supplier's terms and conditions exclude consumer guarantees?

No. Consumer guarantees under Australian Consumer Law are automatic and cannot be excluded by contract terms. Any clause attempting to exclude or limit these guarantees is void. This applies to both business-to-consumer and business-to-business transactions.

How long do I have to report faulty goods to the supplier?

There’s no fixed time limit, but you should notify the supplier as soon as you discover the defect. The longer you wait, the harder it becomes to prove the goods were faulty when delivered. For commercial stock, inspect and report defects within days of delivery.

What if the supplier says I have to deal with the manufacturer?

You have a direct claim against the supplier you bought from, regardless of who manufactured the goods. The supplier cannot force you to deal with the manufacturer. Your contract is with the supplier, and they are responsible for delivering goods that meet the consumer guarantees.

Can I claim for lost profit if faulty goods stopped me trading?

Yes, if the loss was reasonably foreseeable. If you told the supplier you needed the goods for a specific business purpose and the defect prevented you from trading, you can claim consequential losses including lost profit — but you must prove the amount with invoices, sales records, or customer quotes.

What happens if the supplier goes into liquidation before paying?

If the supplier is liquidated, you become an unsecured creditor. You can lodge a proof of debt with the liquidator, but recovery is unlikely unless the company has assets. Check the ASIC register before spending money on tribunal or court action against a company that may be insolvent.