If you are considering selling baby products in Australia, you would know that the users of your product, aside from being very cute, can also be quite vulnerable. Businesses catering to the baby market in Australia are heavily regulated and for good reason. This article outlines everything you need to know about the regulatory landscape before setting up your baby product business.
When Do Legal Obligations Arise?
Legal obligations apply when you are creating, manufacturing, testing and selling your product. While it is possible to limit some of your liability through carefully-drafted contracts, such as your terms and conditions, you cannot contract out of all your obligations. The law seeks to afford protection to consumers.
However, it is essential to note that the way the law may impact you depends on the particular product you are selling and its specific risks to babies. Accordingly, it is crucial to seek tailored advice.
Product Safety Standards
Products, whether sold in-store or online, must meet minimum safety standards set by the Australian Competition and Consumer Commission (ACCC). A wide range of minimum safety standards applies, depending on the type of product and the intended user.
In addition to the mandatory minimum safety standards, the ACCC also publishes voluntary standards for certain products. Whilst voluntary, ensuring your products comply with these standards is good business practice.
Some products are subject to permanent bans by the ACCC and are therefore not permitted to be sold in Australia. For example, you cannot sell children’s products containing DEHP plastic or inflatable products containing loose beads, small particles or pellets. When deciding what products to sell, ensure that your planned inventory does not contain any banned products.
Continue reading this article below the formConsumer Law
If you manufacture or sell products to consumers in Australia, you will have legal obligations under the Australian Consumer Law (ACL). If you sell products in Australia but do not make them yourself, you may still be a ‘manufacturer’. The term ‘manufacturer’ is defined broadly under the ACL. A manufacturer is not only the person or entity physically making the products but also includes:
- the person whose name or business name marks the goods they supply; or
- the importer of products from an overseas manufacturer.
Under the ACL, manufacturers make promises to consumers that their goods meet particular legal standards, known as consumer guarantees. In relation to goods, the guarantees include (but are not limited to) that:
- the goods are of acceptable quality;
- the goods match any descriptions or warranties provided by the salesperson; and
- the goods are fit for purpose as advertised.
You may decide to limit your liability through carefully drafted contracts, which is permissible as long as these limitations do not breach your consumer law obligations.
In addition to the consumer guarantees, the ACL also sets out a range of provisions relating to:
- a manufacturer’s liability for goods with safety defects;
- misleading and deceptive conduct; and
- unconscionable conduct.
As a franchisor, you must not engage in misleading and deceptive conduct. We explain what it is and how to avoid it.
Criminal Law Obligations
Additionally, corporations can commit criminal offences and may be held criminally liable. It is a criminal offence to:
- make false or misleading representations regarding products. These representations may be verbal or in writing, such as:
- on product labelling;
- on product packaging; or
- in marketing materials;
- supply consumer goods that do not comply with safety standards;
- supply products that have been declared unsafe or banned; or
- fail to comply with voluntary and compulsory product recall requirements.
Tort Law
Tort law applies where someone’s behaviour causes injury, suffering, unfair loss or harm to another person. There are four elements of a claim in tort law for product liability relating to baby products:
- you are a person (either as an individual or a company) who owes a duty of care to a class of people (including the plaintiff who would be the baby harmed by your product);
- you are in breach of your duty of care. For example, you would be breaching your duty if you supplied a defective product or defective information about a product;
- the plaintiff suffers foreseeable loss or damage; and
- the breach of your duty of care caused the plaintiff’s loss or harm.
Where you have breached your duty of care and become liable under tort law, you may be required to compensate the plaintiff for any personal injury, property loss or damage they may have suffered. In some cases, it is also not possible to limit your liability for these situations, regardless of how well drafted your contract is.
Contractual Obligations
In addition to your consumer law and tort law obligations, you may also have contractual obligations to your customers, depending on the agreements you enter into. Contracts may be:
- verbal;
- written; or
- a combination of both.
Any contractual agreements you enter form part of your obligations to your customers. It is best for agreements to be in writing, in one comprehensive document where possible. Additionally, it is crucial to ensure that your agreements are well-drafted and thorough, clearly setting out your contractual rights and obligations as a manufacturer.
Non-Compliance
If you supply unsafe products or fail to meet any other obligations under the ACL, the ACCC may require you to:
- recall unsafe products;
- pay fines and costs;
- dispose of unsafe products; or
- pay a penalty (up to $1.1 million for infringing corporations).
Alternatively, the ACCC can issue:
- an infringement notice to caution you; or
- a public warning to warn customers about your conduct.
Key Takeaways
Manufacturers of baby products have a wide range of legal obligations, especially since infants are particularly vulnerable customers. Additionally, your legal risks depend on the particular product you are selling and the potential or real hazards it poses to babies. Accordingly, obtaining specific advice about your product and its distinct risks to babies is vital to limiting your liability.
For more information on your legal obligations when manufacturing baby products, our experienced regulatory and compliance lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Your products, whether sold in-store or online, must meet minimum safety standards set by the Australian Competition and Consumer Commission. You also have consumer law and tort law obligations. Further, depending on the agreements you enter into, you may have contractual obligations to your customers.
If you fail to comply with the Australian Consumer Law, the ACCC can issue an infringement notice to caution you or send a public warning to warn customers about your conduct. You might also need to recall any unsafe products or pay fines up to $1.1 million for infringing corporations.
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