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PRODUCT LIABILITY

ESTABLISHING A CLAIM

Part VA of the Trade Practices Act gives a right of action against manufacturers of goods where a person has suffered loss because of a defect in those goods. The Act also deems importers of goods to be manufacturers for the purposes of this part of the Act. The Act only applies to goods supplied after 9 July 1992 which is the date Part VA was inserted into the Act.

How do I establish a claim?

There are four basic conditions required to be satisfied to establishing a claim under the Act:

Condition 1: "a corporation, in trade or commerce, supplies goods manufactured by it"

The Constitution limits the power of the Commonwealth Parliament to make laws only in certain areas. The federal Trade Practices Act is a Commonwealth law and is made under the so-called corporations power. It can therefore only apply to corporations acting in trade and commerce. Thus a manufacturer who is not a corporation, such as an individual or a partnership, cannot be made liable under the Trade Practices Act. Unlike many other parts of the Trade Practices Act the state parliaments have not enacted mirror legislation to fill the gap.

Thus, manufacturers which are corporations are liable under the Act. The Act also extends the definition of manufacturers to include importers of goods.

It is not possible for a manufacturer to exclude, restrict or modify liability by including a term in a contract to that effect.

"Supply" is defined under the Act to include supply by way of sale, exchange, lease, hire or hire-purchase.

"Manufactured" includes grown, extracted, produced, processed and assembled.

"Goods" are defined under the Act to include:

  • ships, aircraft and other vehicles
  • animals, including fish
  • minerals, trees and crops, whether on, under or attached to the land or not; and
  • gas and electricity.

While the definition is a broad one, it should be noted that some of the statutory rights of action available under Part VA are limited to loss in respect of goods which are ordinarily acquired for personal, domestic or household use.

Condition 2: There must be a defect in goods supplied.

The Act is concerned with issue of the safety of goods rather than their quality. A defect is said to exist under the Act where the safety of goods is not such as persons generally are entitled to expect. In considering whether a defect exists, regard may be had to factors, including:

  • the manner in which and the purposes for which goods have been marketed.
  • their packaging
  • the use of any mark in relation to them
  • any instructions for or warnings with respect to doing or refraining from doing anything with or in relation to the goods
  • what might reasonably be expected to be done with or in relation to the goods
  • the time when they were supplied by the manufacturer.

The Act provides that an inference that goods have a defect is not to be made only because of the fact that after they were supplied by their manufacturer, safer goods of the same kind were supplied.

Condition 3: Loss or damage

There are four classes of loss which may give rise to a claim under Part VA:

  • Loss by an injured individual.
  • Loss suffered by a person as a result of injuries to another person because of the defect. It should be noted that this section specifically excludes claims for loss arising from a business or professional relationship (including a relationship of employer and employee) between the injured person and the person suffering the loss.
  • Loss suffered by a person who used or intended to use other goods destroyed or damaged because of a defect in goods. This section only applies in relation to destroyed or damaged goods which are of a kind ordinarily acquired for personal, domestic or household use.
  • Loss suffered by a person who used or intended to use land, buildings or fixtures which are destroyed or damaged because of the defect in the subject goods. This section only applies to destroyed or damaged land, buildings and fixtures ordinarily acquired for private use.

In all categories the manufacturer will not be liable to compensate the person who suffered the loss if there is a workers compensation claim available or a claim under an international agreement.

In all categories it is also the case that the liability of the manufacturer will be reduced by the amount of any contributory negligence, that is, loss may be reduced if the court thinks the person had a share in causing the loss they have suffered.

Condition 4: Causal relationship between the defect and the loss suffered

There must be a causal link between the defect in the goods and the loss claimed.

FINDING THE MANUFACTURER

It will not always be the case that you will know who the manufacturer is. The Act provides some assistance by providing for the service of a notice on a supplier of the goods who must then supply you with particulars identifying the corporation which manufactured the goods or the supplier who supplied the goods to them. If the particulars are of the latter type, the process can be repeated to eventually get to the manufacturer. The notice can be served not only on the person who actually supplied the defective goods but also on any other suppliers who supply the goods in question.

The supplier is obliged to provide the particulars requested within 30 days - if they do not, they will be deemed to be the manufacturer for the purposes of an action.

DEFENCES AVAILABLE TO MANUFACTURERS

There are a number of defences available to manufacturers. These are:

  • the defect did not exist when the goods were supplied
  • the defect occurred because of compliance with a mandatory standard.
  • the defect could not have been discovered given the state of scientific or technical knowledge when the manufacturer supplied the goods
  • if the defect is in finished goods, the defect is attributable to the design of those finished goods, the markings on them or instructions given with them.

Where the second of these defences is raised and the standard involved is a Commonwealth mandatory standard, the Act provides for notice to be served on the Commonwealth by which the Commonwealth then becomes a defendant. If it can be shown that the action would have succeeded against the manufacturer but for this defence, the Commonwealth will then become liable to pay the plaintiff for the amount of the loss caused by the defect.

TIME LIMITS FOR COMMENCING ACTIONS

Actions under Part VA may be commenced at any time within 3 years after the time the person became aware, or ought reasonably to have become aware, of the alleged loss, the defect and the identity of the person who manufactured the defective goods. This means that time does not start to run until all these elements are satisfied. The Act also provides that the action must be commenced within 10 years of the supply by the manufacturer of the goods alleged to have a defect.

INFORMATION TO SUPPORT YOUR CLAIM

To establish a claim, you should think about the four conditions discussed above. When you are collecting information in support of your claim, you should give particular consideration to the second and third conditions:

  • that there is a defect in goods
  • that you have suffered loss or damage

You will recall that in considering whether a defect exists the court may have regard to all the relevant circumstances. The Act specifically mentions:

  • the manner in which and the purposes for which goods have been marketed
  • their packaging
  • the use of any mark in relation to them
  • any instructions for or warnings with respect to doing or refraining from doing anything with or in relation to the goods
  • what might reasonably be expected to be done with or in relation to the goods
  • the time when they were supplied by the manufacturer.

For this reason you should keep:

  • packaging
  • instruction manuals or pamphlets
  • promotional literature or advertisements
  • the goods themselves - these may be required for evaluation at a later stage
  • receipts, invoices and the like.

In establishing the amount of any loss you have suffered it will be useful to keep any of the following information which is relevant in your case:

  • receipts for hospital and medical expenses including medication, bandages etc.
  • receipts for repairs or replacements of goods
  • receipts for any money you have paid out which you would not otherwise have had to pay such as for renting alternative accommodation or hiring replacement goods
  • details of time lost from work, regardless of whether sick leave was paid.

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