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When purchasing a product or product-related service, it is assumed that it is safe for its intended use and comes with a safety warning if there is a potential risk of harm. To ensure consumer protection in Australia, there are a number of legal protections available to consumers. These protections include:
- Australian Consumer Law (ACL) – a Federal statute governing consumer protection across Australia
- The common law tort of negligence – a State consumer protection option available under the Civil Liability Act 2002 (NSW)
- Breach of contract – a State consumer protection option available under the Contracts Review Act 1980 (NSW)
In NSW specifically, no formal product liability laws apply except in the case of asbestos related injuries. Asbestos related injuries are dealt with through the Dust Diseases Tribunal. Motor vehicle accidents are also dealt with under the State Insurance Regulatory Authority. The exception to this would be where a vehicle has been manufactured with a product defect e.g. Takata airbags.
Product Liability Claim Actions under the Australian Consumer Law (ACL)
The ACL requires compliance with Australian Safety Standards and applies strict liability. the Australian Government sets safety standards. Goods manufactured in or imported to Australia must comply with these standards. Safety standards are requirements that are reasonably necessary to prevent or reduce injury. For example:
- The performance, composition, contents, methods of manufacture or processing, design, construction, finish or packaging of consumer goods.
- The testing of consumer goods during, or after the completion of manufacturing or processing.
- The form and content of markings, warnings or instructions to accompany consumer goods.
Consumer Guarantee
As well as setting minimum safety standards, the ACL also provides a statutory consumer guarantee on products and services. Below are some examples of the guarantee:
Products
- Are safe, lasting, with no faults
- Look acceptable
- Do all the things someone would normally expect them to do
- Be fit for the purpose the business told you it would be fit for and for any purpose that you made known to the business before purchasing
- Have spare parts and repair facilities available for a reasonable time after purchase unless you were told otherwise
Services
- Be provided with acceptable care and skill or technical knowledge and taking all necessary steps to avoid loss and damage
- Be fit for the purpose or give the results that you and the business agreed to
- Be delivered within a reasonable time when there is no agreed end date
Failure to meet Australian Safety Standards
Failure to meet Australian Safety Standards may result in interim bans, permanent bans, compulsory product recall or voluntary product recall.
Interim Ban
Interim bans can be applied by State or Federal Governments.
- If a State Minister applies an interim ban, the ban applies solely to that state.
- If a Federal Minister applies an interim ban, the ban applies to whole country.
- The responsible Minister can impose an interim ban on a product if it appears:
- The product will cause injury
- A reasonably foreseeable use (or misuse) of a product will or may cause injury
The interim ban starts from the date set by the Minister and lasts for 60 days unless extended by the Minister. An interim ban can be revoked by the Minister at any time.
Permanent Ban
The responsible Minister can impose a permanent ban on a product if:
- One or more interim bans are in force
- The product will cause injury
- A reasonably foreseeable use (or misuse) of a product will or may cause injury
Non-Compliance with Interim Bans
If a person supplies or produces a product or service related product in contravention of an interim or permanent ban, and another person suffers personal injury or economic loss as a result because of that supply, that person is liable.
Product Recalls
Compulsory Product Recall
A responsible Minister can issue a compulsory recall if a supplier supplies a product and the product:
- Will or may cause injury to a person
- Foreseeable use (or misuse) of a product will or may cause injury
- A safety standard is in force and the product does not meet the standard
- An interim or permanent ban is in place
- Suppliers have not taken satisfactory action to prevent the product causing injury
When a recall notice is issued, suppliers can repair or replace the product. Where a supplier repairs the product, the supplier must identify and remedy the product defect and ensure it complies with any safety standard in place.
Where a supplier replaces the product, the product is to be replaced by one that does not contain the same product defect or dangerous characteristic as the product being replaced. If a safety standard is in force, the replacement product must meet the standard.
All costs associated with product repair or replacement due to unsafe or defective products are to be paid by the supplier.
Voluntary Product Recall
A voluntary product recall occurs when a supplier voluntarily takes action to recall a product because:
- The product will or may cause injury
- A reasonably foreseeable use (or misuse) of the product will or may cause injury
- A safety standard is in place and the product breaches or likely breaches the standard.
If a supplier issues a voluntary recall, they must notify the Federal Minister within 2 days.
Manufacturer Liability
A manufacturer is liable for loss or damage suffered by an individual resulting in personal injury if:
- The manufacturer supplies the goods in trade in commerce; and
- The goods have a safety defect; and
- The individual suffers injuries because of the safety defect.
A manufacturer is liable for loss or damage suffered by an individual resulting in personal property damage if:
- The manufacturer supplies the goods in trade and commerce; and
- The goods have a safety defect; and
- The other goods of a kind acquired for personal, domestic, or household use or consumption are destroyed or damaged because of the safety defect; and
- The person used or consumed, or intended to use or consume, the destroyed or damaged goods for personal, domestic or household use or consumption; and
- The person suffers loss or damage as a result of the destruction or damage.
Defences to Defective Goods
A defence to a defective goods action is established if:
- The safety defect alleged to have caused the loss or damage did not exist
- At the time the goods were supplied by the actual manufacturer (in the case of electricity – at the time it was generated (before it was transmitted or distributed); or
- The goods have a safety defect only because of a mandatory standard
- The state of scientific or technical knowledge at the time the good were supplied by the manufacturer was not such as to enable the safety defect to be discovered
If the goods that had the safety defect were comprised of other goods – that safety defect is attributable only to:
- The design of the other goods; or
- The markings on or accompanying the other goods; or
- The instructions or warnings were given by the manufacturer of the other goods
The ACL applies regardless of any contract that may be in force between retailer and consumer or retailer and supplier/manufacturer. This is known as privity of contract.
If the economic loss or personal injury is the result of a workplace accident, product liability claim does not apply. It becomes a workers compensation matter.
Common Law Tort of Negligence Actions
Under the common law, manufacturers owe a duty of care to the purchaser and user of their products.
A retailer, importer or distributor only owes a duty where they know a product is faulty or has a safety standard or ban in force that is being breached.
The common law tort of negligence may be available where a contract exists between two parties but a person not party to the contract receives a personal injury or economic loss as a result of the breach by one party. This is known as privity of contract.
It needs to be proven that:
- A duty of care was owed
- The duty of care was breached
- The breach caused damage (personal injury or economic loss)
- Damages (compensation) are due as a result
Breach of Contract
A contractual relationship exists between:
- The retailer and the consumer; and
- The retailer and the supplier/manufacturer
In the event of product defect, action for breach of contract may be available against a retailer for the sale of a faulty product. Where such actions occur, the retailer may then be able to take action against its supplier or the manufacturer for breach of contract.
Limitation Periods
Limitation periods are time limits set by the ACL or Limitation Act 1969 (NSW) for legal proceeding to be commenced for product liability claims, negligence actions and breach of contract.
Under the ACL, action by an individual for defective goods has 3 years from they notice the defect or ought reasonably to have noticed
- The loss/damage;
- Safety defect; and
- The identity of the manufacturer.
Where 2 or more people are responsible for the loss/damage, they are both equally responsible.
If you intend to make a claim for breach of contract, a party must bring a cause of action within 6 six years from when the breach first occurred.
If you intend to make a claim under the common law tort of negligence, you must bring action within 3 years from the date the negligence took place.
Unknown Manufacturer
Under the ACL, where a manufacturer is unknown, a written application can be made to the supplier of the product for the manufacturer’s particulars. If no response is received within 30 days, it can be assumed that the supplier is the manufacturer.
Remedies
There are a number of avenues available for resolving product liability issues. You should seek legal advice from Jameson Law to determine which remedy is the most appropriate for your situation.
- Contact the manufacturer or retailer in the first instance to notify them of the product defect. They may not be aware that a product fault exists. This is especially the case where warranties are in force. In some cases, the courts require Alternative Dispute Resolution (ADR) to take place before the matter will be heard.
- The Australian Competition and Consumer Commission (ACCC) can commence class actions for defective goods proceedings on behalf of one or more persons who have suffered loss or damage, with their consent.
- Commence proceedings under the ACL. Where proceedings are commenced under the ACL, it will be heard by the Federal Court of Australia.
- The remedies available for breach of contract will depend on the terms set out in the contract. If your matter proceeds to court, the court your matter will be heard in depends on the damages (compensation) you are seeking.
Product Liability Insurance
If you are a business owner that supplies a product or product-related service, it may be mandatory for you to have public liability insurance. Public liability insurance covers a business for third party death or injury due to negligence.
It is also highly recommended that you have product liability insurance to protect your small business in the event of a product liability claim. Product liability insurance covers you for the supply, delivery, repairs or service you provide that result in personal injury, death or economic loss e.g through property damage.
You should speak with your insurer for further information about which insurance policy is right for your business.
Disclaimer
The information on this page does not constitute legal advice. You should speak with Jameson Law about your individual circumstances.
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Frequently Asked Questions.
Attendance at court depends on what actions are taken. If a retailer, importer, manufacturer, etc is made aware of a product defect and takes immediate action to resolve the defect, it is unlikely the matter will proceed to court. However, where serious injury or death has resulted from a product or product related service, it is reasonably likely court attendance will be required. Speak to your legal representative for detailed legal advice about your individual circumstances.
Examples of recent product liability cases in Australia
Choice has a comprehensive list of know product defects and product liability class actions. Some examples of recent product liability cases in Australia include:
- Takata airbags – shrapnel discharged from airbags upon activation resulting in death and serious injury in otherwise minor car accidents. This lead to a global recall of vehicles fitted with the Takata airbag.
- Food contamination – sewing needles found in strawberries supplied by supermarkets across the country. This lead to a nationwide recall of fruit.
- Samsung washing machines – product defect lead to the machine catching fire. A nationwide recall was initiated.
- Thermomix – defective sealing ring lead to scalding incidents. Thermomix’s actions lead to proceedings in the Federal Court of Australia and large fines.
- Financial service providers – have recently been in trouble for deliberately providing poor or conflicting financial advice to consumers. This resulted in serious economic loss for thousands of consumers and a Federal Government review into the financial services industry.
Courts can order the payment of compensation for successful personal injury or economic loss claims. The Australian Competition and Consumer Commission also has the authority to issue penalty notices where it is believed that the mandatory standards have not been met or breaches of bans have occurred.
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Jameson Law Offices
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PO Box 73
Parramatta NSW 2124 - info@jamesonlaw.com.au
- 02 8806 0866
- 02 9052 0840
Contact Us
-
PO Box 73
Parramatta NSW 2124 - info@jamesonlaw.com.au
- 02 8806 0866
- 02 8046 6477
Jameson Law Offices
