Is a manufacturer liable for defective goods?

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• Liability
• What is a defective good?
• Australian Consumer Law
• Conclusion

The short answer is yes, possibly. The Australian Consumer Law (ACL) includes consumer protection rights that relate to hazardous or defective goods and in it manufacturers have certain responsibilities to ensure that their products will not cause harm to consumers. On top of the ACL, there are often additional legislative standards that need to be met in specific manufacturing industries.

Liability

A manufacturer may be held liable if a safety defect of their good were to cause loss, damage or injuries to an individual, to goods or to land, buildings or fixtures. If a consumer were to experience harm, they may be able to recover damages, compensation or another remedy that is appropriate to alleviate the harm they have suffered.

What is a defective good?

A good will be defective if it does not reach the standard which a person would generally be entitled to expect. The good needs to be unsafe and the harm caused needs to be as a result of the defect. A good that is of poor quality or inoperative does not necessarily mean it is defective. Both the manufacturer and supplier will need to consider the safety of the goods, and in particular the way the goods have been manufactured, their purpose, instructions for use or warnings.

If a good is found to be defective and subsequently causes harm, a consumer can go not only to the supplier of the good in order to make a claim, but they can also request a supplier to identify the name of the manufacturer in order to make a claim directly with the manufacturer.

Australian Consumer Law

It is important for consumers, suppliers and manufacturers to be aware of the ACL, particularly when it comes to defective goods. For business owners who are engaging manufacturers, it is important to consider not only the way in which you can maintain the quality of the goods that are being manufactured, but also the contractual options you may have to limit your liability. Although it is common to include terms and conditions that limit your liability in the sale of goods, it can only be done to an extent that is permissible by the ACL.

Conclusion

Manufacturers or suppliers who are unable to reach their duties to protect consumers according to the ACL may face penalties or may be held liable for claims from the consumers themselves. If you are conducting business where you are providing goods to consumers, remember to speak to one of the LegalVision commercial lawyers so you understand your responsibilities.