Businesses that manufacture unsafe products (including the manufacturer of a product's components) are liable to compensate anyone who is injured by, or suffers a loss from, those products. It doesn't matter whether the manufacturer is at fault.
'Manufacturer' also includes businesses that allow their brand name to be applied to products, and businesses that import products (when the actual manufacturer doesn't have a place of business in Australia). Two businesses can be liable at the same time.
A consumer who doesn't know the identity of the manufacturer can ask the supplier of the products to identify the manufacturer. If the supplier doesn't provide this information within 30 days, the supplier will be taken to be the manufacturer.
When is a product 'unsafe'?
Products can be unsafe even though they are not defective. A number of factors must be taken into consideration when determining whether products are unsafe, including the expected uses of the products, and the packaging, instructions and warnings accompanying the products.
The nature of the products is also relevant. For example, guns and knives are inherently dangerous and consumers would expect a degree of risk with them.
Manufacturers of hazardous products should ensure the products are accompanied by comprehensive warnings covering all potential risks.
Case study: A manufacturer of a garage roller was found liable for injuries sustained by a consumer as a result of the door coming off its mountings and falling on her, because the installation instructions it provided were inadequate. (Skerbic v McCormack & Ors)
A business that manufactures unsafe products must compensate:
- any individual to whom they cause personal injury, and any other person who suffers loss or damage as a result of that individual's personal injury
- a person who suffers loss because their consumer products or private land are destroyed or damaged by the unsafe products.
Example: A new toaster explodes and damages a nearby refrigerator. The consumer will be able to recover the cost of repairing the refrigerator or buying a new one. There is a time limit for seeking compensation of 3 years from the date of loss or damage, and 10 years from the date of supply.
Defences available to manufacturers
Four defences are available to businesses that have manufactured unsafe products:
- The cause of the products being unsafe didn't exist when they were supplied by the actual manufacturer (i.e. when they left the manufacturer's control).
- The products were only unsafe because they complied with a mandatory standard.
- No one could have discovered the cause of the products being unsafe at the time they were supplied (due to the existing state of knowledge at that time).
- A component was unsafe only because of an act or omission of the manufacturer of the finished products.
For more information about product safety and recalls visit the Product Safety Australia website.