What it means
Under the Australian Consumer Law, a "major failure" is a serious problem that means a reasonable consumer would not have bought the product or service had they known about it — for example, a product that is unsafe, significantly different from its description, or cannot easily be fixed. When there is a major failure, the consumer (not the business) gets to choose between a refund or a replacement, and may also claim compensation for any consequential loss. For minor problems, the business can instead choose to repair the item.
How it's used
Because the brand-new car had a recurring brake fault that could not be fixed, it was treated as a major failure and the buyer was entitled to a full refund.