Product Liability

Product Liability – What Does It Mean?

Manufacturers, distributors, suppliers and retailers who make and/or supply products for use by the public must ensure that their products are safe to use. When a product causes harm to the person using the product, it can make the seller liable for the harm caused, often referred to as product liability.

How might product liability affect you?

If a product causes harm to the person who uses the product, they can generally seek compensation three ways:

  1. the tort of negligence;
  2. contract law;
  3. breach of the Australian Consumer Law “ACL” which is found in Schedule 2 of the Competition and Consumer Act 2010 (Cth).

Negligence

The manufacturer who produces the goods owes a duty of care to safeguard the people who use the product against forseeable harm if the product is used as intended.

Contract

Where there is a breach of contract between a retailer and a consumer, the retailer would bear the liability.

Breach of ACL

Under the Australian Consumer Law, the manufacturer is directly liable to consumers for goods that:

  • do not correspond with the description;
  • are not of an acceptable quality;
  • don’t conform with the sample;
  • are unfit for the stated purpose intended for; and
  • are not compliant with express warranties.

These statutory warranties only apply if consumers have suffered loss and damage due to the consumption or use of the goods purchased.

For the consumer to be in a position to receive damages for any loss or damage suffered, they still have to provide proof that the product that they used or consumed caused the loss or damage that is claimed.

How do the manufacturers, distributors, suppliers and retailers protect themselves?

It is important that each part of the chain from manufacturer to selling the good on the shop floor carry product liability insurance to protect themselves in case a product that they produced or supplied to the public causes harm to the consumer who consumed or used their product.

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