When Can a Consumer Claim Against a Manufacturer?

Conversations about consumer law typically focus on the suppliers of goods and services. However, consumers also have rights against a manufacturer.  This article discusses who is a manufacturer and when customers can make a consumer claim against them.

What is a Manufacturer?

The Australian Consumer Law (Cth) (ACL) – Schedule 2 of the Competition and Consumer Act 2010 (Cth) – primarily governs Australian consumer law.

Under the ACL, the term manufacturer has a particular meaning. A manufacturer is a person who:

• Grows, extracts, produces, processes or assembles goods;
• Publicly portrays themselves as the manufacturer of goods;
• Causes or permits the application of their name, business name or brand mark to goods that they supply;
• Allows themselves to be publicly held out as the manufacturer by someone else; or
• Imports goods into Australia in instances where the manufacturer has no Australian place of business.

The Australian importer of a good sometimes stands in the place of the actual manufacturer if they have no place of business in Australia. In these instances, the ACL considers the importer the ‘deemed manufacturer’ of the good.

The ACL also provides for circumstances where a consumer has a claim for a defective good (a good with safety defects) against a manufacturer but cannot bring it because they do not know who the manufacturer is. Be aware that this kind of action differs from claims for failure to meet the consumer guarantees.

In those circumstances, a consumer must give written notice to the supplier of the defective product requesting them to provide particulars sufficient to identify either:

• The manufacturer; or
• The vendor from whom they purchased the good.

If, after thirty days (30), a consumer remains unable to identify the manufacturer, each supplier from whom the purchase requested information and who failed to comply, is taken to be the manufacturer. However, remember that this designation holds only for goods with safety defects.

When is a Manufacturer Responsible to a Consumer?

The ACL prescribes those circumstances in which consumers can make a claim against a manufacturer for breach of a consumer guarantee.  A consumer has recourse to a manufacturer in fewer instances than against a supplier.

A purchaser can take action against a manufacturer when a product:

• Is not of an acceptable quality;
• Does not match its description as applied by the manufacturer/importer;
• Where repairs and spare parts are unavailable;
• Breaches an express warranty.  

These are all actions under the consumer guarantees and are not displaced or limited by any other warranty. All manufacturers must respect a consumer’s rights under the ACL.

Remedies for a Consumer Claim

The remedy for actions against manufacturers is Damages. However, a consumer can only ask for an amount that reflects the cost to them of:

• The decrease in the value of the product; and
• The reasonably foreseeable loss caused by manufacturer’s breach of the consumer guarantees.

Decrease in value of the good

Under the ACL, compensation by a manufacturer for the cost of the reduced value of the product can only equal or be less than the difference between the product’s current value and the lower of either the good’s average retail price when purchased or the actual price paid.

Reasonably foreseeable loss caused by the manufacturer’s breach of the consumer guarantees

A consumer can also request compensation for any reasonably foreseeable loss brought about by the manufacturer’s breach of the consumer guarantees.  ‘Reasonably foreseeable costs’ include the costs of inspecting the goods and of physically returning the good to the manufacturer.

However, a manufacturer is not obliged to compensate a consumer for:

• Any problems unrelated to its conduct or the goods it supplied;
• Loss caused by something independent of the manufacturer after the goods left their control.

While putting an exact price on damages is difficult and depends on context, the overarching legal principle is that the amount paid must put the consumer in the position they would have been in if the good had met the consumer guarantees.

Further information on claims against manufacturers is available on the Australian Competition and Consumer Commission’s website. Contact LegalVision’s business lawyers to assist you. Questions? Call us on 1300 544 755.