If your business sells curated hampers online, you should know your legal obligations to your consumers. Below, we explain who is responsible if there is a fault in a good you are reselling as a part of the hamper as well as the manufacturer’s liability.
Who is Responsible If There is a Fault?
The Australian Consumer Law (ACL) sets out a national framework for consumer protection. Under the ACL, a manufacturer is responsible for goods with a safety defect. In certain circumstances, a supplier can also be considered a manufacturer where for example:
- the manufacturer cannot be identified, or
- the manufacturer does not have a presence in Australia.
If you sell a third party’s products in a curated hamper, you may be responsible for faulty and unsafe goods. A manufacturer will be responsible for defective or faulty goods that they supplied if the manufacturer:
- manufactures or assembles the goods;
- imports the goods (in circumstances where the entity that manufactures the goods does not have a presence in Australia);
- sells the goods under their own branding;
- promotes itself as the manufacturer of the goods; or
- permits a third party to promote the goods as having been manufactured by the manufacturer.
In short, if you manufactured the goods you supply (e.g. hand-made soaps or creams), you are considered a manufacturer and will be responsible for any faults or defects in the goods. Importantly, if you import goods and sell them in Australia, you may also be considered the manufacturer under the ACL.
Recent Examples of Product Liability Claims
In 2008, Food Standards Australia and New Zealand, along with other global food and product safety bodies, found high levels of the chemical melamine in milk products produced in China. In China, contamination lead to infant deaths and affected hundreds of thousands of people.
If the companies that had produced the contaminated milk were located in Australia, they would have been liable for any loss or damage caused. Also, if any company re-sold melamine-contaminated milk products, and the Chinese manufacturer did not have a presence in Australia, then the Australian supplier may have been liable.
As it were, the Chinese companies suffered huge reputational damage and pledged publicly never to let their standards slip again.
Are Manufacturers Always Liable?
A manufacturer may not be liable in the following circumstances:
- the manufacturer’s good is a component or forms part of a finished product in circumstances where the defect is connected to:
- the design of the final product or its packaging; or
- the instructions provided with the final product (e.g. supplying the axle of a car where the defect is attributable to the car’s onboard computer system).
- the manufacturer could not have found the defect or fault when supplying the goods to the customer due to a lack of scientific and/or technical knowledge available at the time; or
- where the defect or fault only came into being because the manufacturer followed a compulsory standard.
If you are a manufacturer, you may be able to rely on these defences. Most businesses, however, can avoid product liability claims through logical and commercially sound practices that focus on quality control.
Other Factors to Consider
Providers of curated hampers should also consider the following issues.
Third Party Branding
If you are displaying third party branding on your website, it’s important to confirm whether you have the right to do so and under what conditions. You may need to obtain permission or risk infringing on another party’s copyright.
If you take a photograph, you own the intellectual property and can do what you like with the photo. However, if you engage a third party photographer, ensure they either assign or licence the rights so you can use the images for their intended purpose.
Misleading and Deceptive Conduct
When marketing and advertising curated hampers, it is important to ensure that you are not inadvertently engaging in misleading and deceptive conduct by using half-truths or sweeping generalised statements.
If you sell curated hampers online, then you need to understand whether you could be considered a ‘manufacturer’ under the ACL. Get in touch with our consumer lawyers if you have any questions on 1300 544 755.
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