Returns and refunds clause: change of mind and faulty goods

Sample clause

the terms of sale of Bilby Lane Homewares, a fictional homewares retailer in Fremantle selling cookware, linen and small appliances to consumers in store and online

12. Returns and Refunds 12.1 Change of mind. A Customer who changes their mind about an item may return it within 30 days after the Purchase Date for Store Credit equal to the price paid, if the item is unused, in its original packaging and returned with proof of purchase. 12.2 Excluded items. Clause 12.1 does not apply to opened pillows and bedding, gift cards, or items marked as clearance at the time of sale. 12.3 Store Credit. Store Credit is issued as a credit note, is valid for 3 years from its issue date and cannot be exchanged for cash. 12.4 Faulty items. Nothing in this clause limits the Customer's rights under the Australian Consumer Law. Where an item has a major failure, the Customer may choose a refund or a replacement, and a refund is paid to the original payment method. 12.5 Online orders. The Customer pays the postage for a change of mind return. Bilby Lane Homewares pays the return postage for an item that is faulty or not as described.

Sample wording, not legal advice.

Variants

What to negotiate

• Store credit or money back

  For change of mind returns the business chooses the outcome, and store credit keeps the money in the business. The clause should say how long credit lasts and whether it can be split across purchases. The same choice is not available for a major failure, where the consumer chooses a refund or replacement and the refund cannot be swapped for a credit note.

• Conditions on the returned item

  Unused, in original packaging and with proof of purchase are reasonable conditions for a goodwill return. They should be written so they plainly apply only to change of mind, because a consumer can still reject faulty goods whose packaging has been thrown away. Staff scripts and signs should repeat that limit.

• Postage and collection

  Online retailers often charge change of mind postage to the customer and pay it for faulty or wrongly described goods. For faulty goods, a consumer usually returns small items, while the business collects large or installed goods, such as a television or a bed, at its own cost within a reasonable time.

The risk of leaving it out

Without the clause, an Australian business has no duty to accept change of mind returns, but staff tend to decide case by case, and a promise made to a customer has to be honoured. Silence also invites signs and verbal answers suggesting faulty goods cannot be refunded, which misstates the Australian Consumer Law and risks misleading customers.

Change of mind against a failure

According to the ACCC, a consumer is not entitled to a repair, replacement or refund because they changed their mind, found the product cheaper elsewhere or decided they did not like it, but a business that offers a change of mind policy must honour it. When goods have a major failure, the consumer chooses a refund or replacement, the refund is the full amount paid, and it goes back in the original form of payment unless both sides agree otherwise. For a minor failure the business may choose to repair.

Sale items, clearance and disclosed faults

Consumer Affairs Victoria states that consumers have the same refund rights on sale items as on full price products, and a no refund notice cannot remove them. The exception is a fault the store pointed out before the sale, such as a marked down item with a known flaw. A clearance exclusion in a returns clause can therefore only reach change of mind returns, never faults the customer was not told about.

Where it sits in a generated document

In generated terms of sale, returns and refunds becomes a numbered clause, so change of mind, excluded items and faulty goods each sit in a separate sub clause that staff can quote by number. The generated text does not cite sources, so the faulty goods wording is checked against the regulator's guidance before the terms go on a website or receipt.

Documents that carry this clause

Payment receiptA bike workshop hands this over with the bike. It records money already taken rather than money owed, and it is the piece of paper the customer needs again if a fitted part fails.Credit noteA printer credits four hundred misregistered paperbacks back to a publisher. The money is the small part; the value is that the document explains itself well enough that nobody has to ring about it.Puppy sale contract template with a health guarantee and a return termA puppy contract has two jobs: to record what the buyer is getting on the day, and to say what happens years later when life changes. This one puts the microchip, the source number and the vaccination dates in a table, gives 72 hours for a vet to look, and commits the breeder to take the dog back at any age rather than see it advertised online.

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