MLL217 Study Guide - Final Guide: Office Chair, Lawn Mower, Photocopier
2 Jun 2018
School
Department
Course
Professor
Manufacturers liability for failure to comply with consumer guarantees
Statutory regimes relating to manufacturers product liability
▪ Part 3-2 of the ACL (consumer guarantees)
▪ Part 3-5 of the ACL (goods with a safety defect)
▪ Part 3-3 of the ACL (consumer product and information standards/ recalls) (not
covered) – public is notified ASAP about a product recall
▪ NB: common law negligence not examinable.
▪ With the introduction of the ACL, a national product liability and product safety
regime was established for the first time
▪ Concerned in this unit only with the liability of manufacturers for loss or damage
because goods are not of the expected quality, or are unsafe.
Rationale for ACL product liability provisions
Statutory regimes in the ACL enacted to overcome perceived flaws with law of negligence:
Not sufficient to show product caused loss/injury: Defendant must have been negligent –
failed to take precautions a reasonable manufacturer would take.
▪ e.g. D just needs to prove that a reasonable quality control system in place
▪ Contrast statutory regimes: liability attaches if product is not of acceptable quality
(see Part 3-2) or is defective (Part 3-5) even if no proof of negligence.
▪ Ryan v Great Lakes Council; Graham Barclays Oysters v Ryan
▪ Fulcher v Knott Investments Pty Ltd
Statutory regimes in the ACL enacted to overcome perceived flaws with law of negligence:
No recovery of pure economic loss at common law
▪ Recovery denied where product not dangerous but an inherent defect reduced its
value
▪ Minchillo v Ford Motor Co of Australia
▪ Contrast Part 3-2 - allows recovery of economic loss (a reduction in the value of the
goods (s 271(1)(a)) as well as personal injury and property damage
Consumer Guarantees
▪ Part 3-2 of the ACL
▪ Enacts minimum performance standards for goods (and services)
▪ A regime for the recovery of loss caused by unsatisfactory products
Deficiencies of the tort of negligence
▪ Part 3-2 is designed to overcome a number of shortcomings of the tort of negligence
as it applies to product liability claims:
▪ Negligence law does not impose a form of strict liability on the manufacturer
find more resources at oneclass.com
find more resources at oneclass.com
▪ There is uncertainty about whether a duty of care will be imposed where the
defective product results in economic loss only.
▪ Addressed by the statutory regime:
▪ Imposes a form of strict liability
▪ An affected person is able to recover loss or damage caused by a breach of
a consumer guarantee: s 272
▪ Part 3-2 is still limited in important respects in terms of who can commence a cause
of action.
Introduction to Part 3-2
▪ Formerly Division 2 and Division 2A of the TPA (unsatisfactory goods) – implied non-
excludable warranties of, e.g., fitness for purpose and merchantable quality
▪ Div 2 and Div 2A repealed and replaced with Part 3-2
▪ Part 3-2:
▪ Implements a system of consumer guarantees - aims to ensure those who
supply and market goods accept responsibility for those goods if they dont
meet minimum performance standards
▪ Provides consumers with a statutory basis for seeking remedies against a
manufacturer and/or supplier when the consumer guarantee is breached
▪ Part 3-2 provides a cause of action in respect of goods that are not safe and
also goods that are safe but not of acceptable quality
Cause of action against manufacturers in Part 3-2
▪ Section 271 of the ACL provides for four causes of action against manufacturers for
a breach of the following consumer guarantees:
▪ The guarantee as to acceptable quality (s 54) – main focus
▪ The guarantee that goods match their description (s 56)
▪ The guarantee as to the availability of repairs and spare parts (s 58), and
▪ The guarantee that any express warranty is complied with (s 59)
Limitations
1. Goods must have been supplied to a consumer
2. Title to sue
▪ Only affected persons can sue
▪ Defined in Section 2 of the ACL: Consumers and persons who acquire title
through consumers other than for the purposes of resupply
▪ Excludes users and bystanders with no title to the goods
▪ E.g. heater catches on fire – injures house occupants – only
owner/lessor of heater can sue
find more resources at oneclass.com
find more resources at oneclass.com
Goods covered by Part 3-2
▪ Goods broadly defined in s 2(1) as including:
▪ Ships, aircraft and other vehicles
▪ Animals, including fish
▪ Minerals, trees and crops, whether on, under or attached to land or
not
▪ Gas and electricity
▪ Computer software
▪ Second hand goods
▪ Any component, part of, or accessory to goods
▪ But note that electricity and gas suppliers exempt from consumer guarantees:
Section 65 ACL
▪ Section 8 of the ACL: goods are taken to be supplied to a consumer even if they are
affixed to land or premises at the time of the supply
▪ Common law definition of goods still applies, which is: tangible and moveable
objects
Manufacturer
Section 7(1) of the ACL: A manufacturer includes the following:
a) A person who grows, extracts, produces, processes or assembles goods
▪ Ryan v Great Lakes Council
b) A person who holds himself or herself out to the public as a manufacturer
c) A person who causes or permits the name of the person, a name by which the
person carries on business or a brand or mark of the person to be applied to goods
supplied by the person
▪ Glendale v ACCC (topic 9 & 11) – lack of instruction on bottles
d) A person who permits another person to hold out the first person to the public as the
manufacturer
e) A person who imports goods into Australia if the person is not the manufacturer of
the goods and at the time of the importation, the manufacturer of the goods does not
have a place of business in Australia
▪ Rasell v Cavalier Marketing (Australia) Pty Ltd
▪ Fulcher v Knott Investments Pty Ltd
• Plaintiff can sue both actual manufacturer and deemed manufacturer concurrently
• Leeks v FXC Corporation
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Manufacturer(cid:1685)s liability for failure to comply with consumer guarantees. Part 3-5 of the acl (goods with a safety defect) Part 3-3 of the acl (consumer product and information standards/ recalls) (not covered) public is notified asap about a product recall. Not sufficient to show product caused loss/injury: defendant must have been negligent failed to take precautions a reasonable manufacturer would take. e. g. d just needs to prove that a reasonable quality control system in place. Contrast statutory regimes: liability attaches if product is not of acceptable quality (see part 3-2) or is defective (part 3-5) even if no proof of negligence. Ryan v great lakes council; graham barclays oysters v ryan. Statutory regimes in the acl enacted to overcome perceived flaws with law of negligence: No recovery of (cid:1684)pure(cid:1685) economic loss at common law: recovery denied where product not dangerous but an inherent defect reduced its value.
