Australia’s product liability laws are a mixture of common law and Federal and state legislation.

Manufacturer liability for goods with safety defects

The liability provisions of the Australian Consumer Law (ACL) generally apply to a manufacturer that supplies consumer goods in trade or commerce. A manufacturer may be a company that:

  • makes or assembles the goods
  • imports the goods (if the maker of the goods does not have an office in Australia)
  • uses its own brand name in relation to the goods
  • promotes itself to the public as the manufacturer of the goods
  • permits another person to promote the goods as having been manufactured by the company.

Safety defects

A product has a safety defect if it does not meet the level of safety the public is generally entitled to expect. While the expected level of safety will vary from case to case, it is ultimately for a court to determine whether a product has a safety defect.

The court will take various factors into account when determining whether a product has a safety defect, including:

  • how and for what purposes the product has been marketed
  • product packaging
  • the use of any mark in relation to the product
  • instructions and warnings for assembly and use
  • what might reasonably be expected to be done with the product
  • the time when the product was supplied.

Safety defects and older products

Expected levels of safety differ for older products because they cannot be expected to be as safe as brand-new products. Similarly, older models of products would not necessarily be considered defective simply because more recent models have improved safety features.

Statutory defences to manufacturer liability

A number of statutory defences are provided to a manufacturer against a product liability action.

These defences are available when:

  • the safety defect did not exist at the time of supply by the manufacturer
  • the product was a component of a finished product and the safety defect is only attributable to:
    • the design of the finished goods or the packaging
    • instructions or warnings included in those finished goods—then, the manufacturer of the finished goods is liable and not the component maker
  • the safety defect could not have been discovered at the time the manufacturer supplied the goods because there was insufficient scientific or technical knowledge at that time
  • the safety defect only existed because a mandatory standard was complied with. In this case, the Commonwealth may have to pay any compensation.

Reducing the risk of action

Minimising the risk of action under the product liability provisions generally requires no more of manufacturers, importers and retailers than responsible business practice.

A culture of safety is an important attribute of any responsible organisation and should include being aware of what happens when their product is in the hands of the consumer.

A manufacturer’s quality assurance system, design, production, record keeping and marketing procedures as well as customer information material can promote the safety of its products with consumers.

Consumer compensation claims

Under the ACL, a consumer can seek compensation from a manufacturer who has supplied a product with safety defects if that product has caused loss or damage.

Loss and damage can include:

  • injuries to the person making the claim, or injuries or death to another individual
  • economic loss caused by damage to, or destruction of another good, land, a building or a fixture.

Consumers who suffer loss or damage because of safety defects in a manufacturer’s goods can:

  • take the manufacturer to court
  • make a complaint to a consumer protection agency, who may:
    • seek to conciliate the issue
    • consider if there is significant public value in bringing a representative action against the manufacturer in court.

Dependents of a person injured or killed by a safety defect in goods can also claim for the losses they suffer as a result.

If a consumer succeeds in an action against a manufacturer , the court will decide how much compensation is due. Where the actions or omissions of an injured person contribute to the loss, the court can reduce the amount of compensation payable..

In addition to the product liability provisions in the ACL, people who have been injured, or who have otherwise sustained loss or damage, may have common law rights of action.

Claims not covered

The ACL does not cover claims relating to:

  • damage to commercial property
  • loss arising from a business relationship, such as loss of profit
  • losses for claims made for workers’ compensation; and
  • losses regulated by international agreements.

Time limits on product liability action

Consumers have three years to bring an action from the time they become aware (or ought reasonably to have become aware) of the loss, the defect and the identity of the manufacturer.

Any action must also commence within 10 years of the time the manufacturer supplied the goods with safety defects.

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