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About product safety and liability
Product safety in Australia is mainly covered by the Australian Consumer Law, sometimes referred to as ACL.
The Australian Consumer Law is contained in a schedule to the Competition and Consumer Act 2010.
There are 2 kinds of rules for product safety:
- laws about product safety
- laws about who is responsible if a product is found to be unsafe.
Product safety laws
Australian Consumer Law
The Australian Consumer Law product safety rules set out how the Australian Government and the state and territory governments can regulate consumer goods and product related services to address safety hazards. This can include:
- imposing mandatory safety standards or information standards for consumer goods or product related services
- banning consumer goods or product related services with either an interim (temporary) or permanent ban
- issuing a compulsory recall notice requiring suppliers to recall consumer goods.
The rules also regulate responsibilities of suppliers and manufacturers, including:
- when and how to conduct a voluntary recall for safety related reasons
- responsibilities relating to exports of certain goods
- when to report an incident with a consumer good to the ACCC
- who may be liable for loss or damage caused by a product with a safety defect.
Product safety regulations
The safety of consumer products and product related services under the Australian Consumer Law is regulated through a harmonised, nationally consistent framework.
Mandatory safety and information standards
Under the Australian Consumer Law, only the Commonwealth Minister has the power to make or declare mandatory safety and information standards for a consumer product or product related service. These standards apply nationally.
Interim and permanent bans
The Commonwealth Minister and the relevant state or territory ministers have the power to impose an interim ban. Interim bans last for 60 days, and can be extended by 30 days on 2 separate occasions. Interim bans only apply in the state or territory in which they are imposed. Interim bans imposed by the Commonwealth Minister apply nationally.
The Commonwealth Minister has the power to impose a permanent ban on a consumer good or product related service. Permanent bans apply nationally.
Compulsory recall notices
The Commonwealth Minister and the relevant state or territory ministers can issue a compulsory recall notice for consumer goods. This can require the supplier to take certain action. If the supplier can’t be found, the ACCC or the state or territory regulator can take action.
Public warning powers
Under the Australian Consumer Law, there are 2 ways to warn the public about certain product safety matters:
- the Commonwealth Minister or the relevant state or territory ministers can issue a safety warning notice that:
- states that certain consumer goods or product related services are under investigation and/or
- advises of the risks involved in the use of the consumer goods or the supply of the product related services.
- the ACCC and state and territory consumer protection agencies can issue public warning notices if:
- they suspect a product breaks the rules of the consumer protection provisions, and
- someone is likely to suffer loss or injury from such actions, and
- it’s in the public interest.
Mandatory reporting
Suppliers are required by law to advise the ACCC when they become aware that the use or foreseeable misuse of a consumer good or product related service they have supplied has caused or is associated with the death or serious injury or illness to any person.
Suppliers are also required to report if another person, such as a customer, considers that the death, injury or illness was, or may have been, caused by the use or foreseeable misuse of the consumer good or product related service.
Substantiation power to check claims
The ACCC has investigative powers and can issue substantiation notices.
A substantiation notice requires a person to give information and/or produce documents that can support a claim or representation made by that person. This includes claims made in promoting the supply of goods or services.
For example, where a supplier has claimed compliance with a particular standard, the ACCC can require the supplier to provide test results or other evidence that the product meets the standard.
Infringement notices
The ACCC can issue an infringement notice where we believe someone has breached the consumer protection provisions. This allows us to deal efficiently with matters that need a quick regulatory response.
Infringement notices require person to pay a penalty to resolve a matter with the ACCC. If a person who is issued with an infringement notice doesn’t pay the penalty, further legal action may be taken.
Financial penalties
The ACCC can commence court proceedings for financial penalties on behalf of the Australian Government. The court may order a person to pay a fine if they decide that the person contravened or attempted to contravene a product safety related rule of the Australian Consumer Law.
Disqualification orders
A court can disqualify a person from managing corporations for a period if that person contravenes the consumer protection related provisions, including provisions relating to product safety. Disqualification orders could be used to address repeat offenders.
Redress for non-party consumers
The ACCC can seek orders for redress for consumers not party to the legal action. This allows the ACCC to deal efficiently with matters that affect multiple consumers.
Product liability laws
Manufacturer liability for goods with safety defects
The liability rules of the Australian Consumer Law generally apply to a manufacturer that supplies consumer goods in trade or commerce.
A manufacturer may be a company that:
- makes or assembles the goods
- imports the goods (if the maker of the goods does not have an office in Australia)
- uses its own brand name in relation to the goods
- promotes itself to the public as the manufacturer of the goods
- permits another person to promote the goods as having been manufactured by the company.
Safety defects
A product has a safety defect if it doesn’t meet the level of safety the public is generally entitled to expect.
Determining if a product has a safety defect
While the expected level of safety will vary from case to case, a court determines whether a product has a safety defect.
The court will take various factors into account when determining whether a product has a safety defect, including:
- how and for what purposes the product has been marketed
- product packaging
- the use of any mark in relation to the product
- instructions and warnings for assembly and use
- what might reasonably be expected to be done with the product
- the time when the product was supplied.
Safety defects and older products
Expected levels of safety differ for older products because they can’t be expected to be as safe as brand-new products. Similarly, older models of products wouldn’t necessarily be considered defective simply because more recent models have improved safety features.
Reducing the risk of action
Minimising the risk of action under the product liability laws is generally a matter of responsible business practices by manufacturers, importers and retailers.
Any responsible organisation should have a culture of safety.
A manufacturer can increase the safety of its products by having good processes for:
- quality assurance
- design
- production
- record keeping
- marketing
- information for customers.
Consumer compensation claims
Under the Australian Consumer Law, a consumer can seek compensation from a manufacturer who has supplied a product with safety defects if that product has caused loss or damage.
Loss and damage can include:
- injuries to the person making the claim, or injuries or death to another individual
- economic loss caused by damage to, or destruction of another good, land, a building or a fixture.
Consumers who suffer loss or damage because of safety defects in a manufacturer's goods can:
- take the manufacturer to court
- make a complaint to a consumer protection agency.
The consumer protection agency may then decide if there is enough public value in taking action against the manufacturer in court.
If a consumer succeeds in an action against a manufacturer, the court will decide how much compensation is due.
Claims not covered
The Australian Consumer Law doesn’t cover claims relating to:
- damage to commercial property
- loss arising from a business relationship, such as loss of profit
- losses for claims made for workers' compensation
- losses regulated by international agreements.
Time limits on product liability action
Consumers have 3 years to bring an action from the time they become aware (or ought reasonably to have become aware) of the loss, the defect and the identity of the manufacturer.
Any action must also begin within 10 years of the time the manufacturer supplied the products with safety defects.
Common law rights
In addition to the product liability parts of the Australian Consumer Law, people who have been injured, or who have otherwise sustained loss or damage, may have common law rights of action.
For more information, seek independent legal advice.