Reading time: 3 minutes

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.


New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer