When consumer goods are faulty, there can sometimes be confusion about who is responsible.  If the matter is not clear cut you should consider speaking with a business lawyer or getting online legal advice.  If you want some basic tips, then here is LegalVision’s guide to manufacturer liability

What are the manufacturer’s legal obligations?

A manufacturer is required to compensate or remedy a customer when it fails to provide goods which:

  • Are of reasonable quality
  • Do not match their description
  • Require repairing

Manufacturers are also under a strict legal obligation to fulfil any warranties they promised the customer.  If a manufacturer fails to fulfil these warranties, a customer has every right to take them to court.

What if the manufacturer didn’t have a warranty?

The customer still has rights under implied consumer guarantees in legislation which means goods still have to be of certain quality or the manufacturer will be liable to compensate the consumer in some way.

What amount of compensation is payable to the customer?

If the item cannot be replaced, then the manufacturer is liable to repay the amount actually paid or the average amount the item would cost on the market.

Consequential loss

The customer may also be able to seek damages for ‘consequential loss’ – that is, loss which flows naturally from the event which the manufacturer caused.  This includes the costs of returning the item to the manufacturer.

When is the manufacturer not liable?

The manufacturer is not legally responsible for faults or problems with goods if the problems were not actually caused by the manufacturer. Hence, the manufacturer will not be liable to pay damages or compensation if:

  • The loss was the result of some representation or omission by a third party who is not related to or an agent or employee of the manufacturer
  • Something happened to the goods when they were outside the control of the manufacturer, such as in the delivery process
  • If the problem was caused by the supplier
  • If the supplier sold the product at an inflated price and this led to higher expectations which were not met

What if the supplier compensates the consumer?

For the sake of convenience sometimes the supplier will compensate the consumer when something is wrong with their goods.  This does not mean the supplier is admitting liability. The supplier still has the right to seek reimbursement from the manufacturer, but they have a three year limitation in which they must seek such reimbursement.

What if there is a dispute between the supplier and manufacturer over liability?

Well, this is a common occurrence. There are often disputes about who is and is not responsible for faulty goods.  If there is a dispute over liability and faulty goods speak to a business lawyer or get legal advice. Better still you should speak to a contract lawyer to ensure that you have strong contractual arrangements with the parties you are doing business with in order to minimise disputes.

Lachlan McKnight
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