If you are considering selling baby products in Australia, you would know that, aside from being very cute, your customers are also vulnerable. Accordingly, your obligations to care for babies as vulnerable consumers arise under different types of law. This article provides an overview of your legal obligations.
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 important 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.
Consumer Law Obligations
By manufacturing products to consumers in Australia, you have legal obligations under the Australian Consumer Law (ACL).
If you are selling 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. You do not need to contract into these guarantees, however, you cannot contract out of them.
However, it is possible to lawfully limit your liability, as long as these limitations do not breach your consumer law obligations.
Consumer Law Guarantees
Legislation substantially governs your duties and liabilities as a manufacturer. The ACL addresses:
- consumer guarantees;
- liability of manufacturers for goods with safety defects;
- misleading and deceptive conduct; and
- unconscionable conduct.
However, under the ACL, it does not matter what your intention was if you breach the legislation. It is merely a question of whether the breach occurred.
|Consumer Law Guarantees||Implications|
The meaning of ‘acceptable quality’ is subjective. Therefore, it must be considered in the context of the particular product in question.
‘Acceptable quality’ means that the good must be:
Additionally, other considerations include:
Therefore, as the intended users (babies) are particularly vulnerable, consider whether a reasonable person would be satisfied with the safety and durability of your product.
|Correspond with the descriptions you provide to consumers||Consider the accuracy of the product’s:
|Comply with any express warranties that you make||
An express warranty is a warranty, promise or undertaking that you make in addition to your legal obligations. For example, you might say that your product is unbreakable or comes with a lifetime guarantee. Ultimately, these are express warranties that your consumers can expect you to uphold.
Therefore, if you make express warranties, you must be confident of your ability to deliver on that promise.
|Fit for any disclosed purpose||
A disclosed purpose is a particular purpose for which the goods are commonly supplied. Therefore, ask yourself: “How would a regular person use this product?”
The packaging, directions and any representations may influence the answer.
Accordingly, be specific and precise in your:
Misleading and Deceptive Conduct
Beyond your consumer guarantees, you also need to be aware of the ACL’s prohibition on misleading and deceptive conduct. Misleading or deceiving your customers is a ‘strict liability’ offence. ‘Strict liability’ means that your intention does not influence your liability.
For example, if you make representations on your packaging that your product can be used in certain strollers but the product does not fit those strollers, this is misleading and deceptive. You are also breaching an express warranty made about your product.
In addition, it is also a criminal offence to make false or misleading representations in connection with a product.
Obligations Under Tort Law
Tort law applies where someone’s behavior 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: the baby who has been 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
- your breach of your duty of care caused the plaintiff’s loss or harm.
Duty of Care and Breach
|Duty of care||
As a manufacturer who sells baby products, you have a duty to take reasonable care in relation to those products.
In addition, the extent of your duty of care is proportionate to the risks to the babies using your products. While you are not required to mitigate all risks, you must take reasonable care to prevent loss or damage from occurring.
Therefore, be particularly cautious about potential risks, seek advice and determine what you need to do to ensure that you are taking reasonable care.
Whether you have breached your duty depends on your situation. Courts consider the magnitude of the risk and the likelihood of the risk occurring. Furthermore, courts balance this against the expense, difficulty and inconvenience for you to mitigate the risk. Finally, the court considers what a reasonably prudent manufacturer would do.
As a manufacturer, you have a duty to act reasonably in view of the risks and the babies who will be affected by your product.
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:
- written; or
- a combination of both.
Any contractual agreements you enter into form part of your obligations to your customers. However, it is best for agreements be set out in writing, in one comprehensive document where possible. Additionally, it is important to ensure that your agreements are well-drafted and thorough, clearly setting out your contractual rights and obligations as a manufacturer.
Criminal Law Obligations
Finally, corporations can commit criminal offences and may therefore, 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.
Risks for Non-Compliance
If you supply unsafe products, the Australian Competition and Consumer Commission (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, it can issue:
- an infringement notice to caution you; or
- a public warning to warn customers about your conduct.
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, it is important to obtain specific advice related to your product and its distinct risks to babies. Therefore, if you need advice on your legal obligations when manufacturing baby products, get in touch with LegalVision’s competition lawyers on 1300 544 755 or fill out the form on this page.
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