MLL217 Final: 10 Manufacturer’s Liability
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Department
Business and Law
Course Code
MLL217
Professor
Sharon Erbacher

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Manufacturers 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
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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 dont
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
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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
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find more resources at oneclass.com

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Description
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 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 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 Section 7(2)(a): A name, brand or mark is taken to be applied to goods if: (i) it is woven in, impressed on, worked into or annexed or affixed to the goods or (ii) it is applied to a covering, label , reel or thing in or with which the goods are supplied Section 7(2)(b): if the name or mark is applied to goods, it is presumed, unless the contrary is established, that the person caused or permitted the name, brand or mark to be applied to the goods. Persons to whom the obligation is owed: Consumers Consumer guarantees apply only where the goods have been supplied in trade or commerce (otherwise than by way of sale by auction) to a consumer See s 3(10): if alleged in a proceeding arising under the ACL that a person is a consumer, it is presumed, unless the contrary is established, that the person was a consumer in relation to those goods or services Defined in s 3(1) of the ACL: Deems a person to have acquired particular goods as a consumer on three grounds: a) Amount paid or payable for the goods did not exceed $40,000 (or as prescribed), or b) The goods were of a kind ordinarily acquired for personal, domestic or household use or consumption, or c) The goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads. Guarantees generally apply only to ordinary consumers not business consumers However, s 3(1) subject to the non consumer use exception in s 3(2) Consumers Ground 1 - Prescribed amount Unless non-consumer use exception applies, if goods $40,000 or less a person is a consumer - its unnecessary to inquire into the nature of the goods. Where the purchase price includes multiple quantities, generally it will be the individual unit price that will be the price of the goods for the purposes of s 3 Business and Professional Leasing Pty Ltd v Dannawi Two pizza ovens, collective price above $40,000 Was the person still a consumer? Yes, two separate items each less than $40,000, merely sold and invoiced together
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