Each year, almost 800 Australians die due to using items that were unsafe due to their production or the way they were sold. The ACCC’s analysis shows fatalities due to faulty products were predominantly a result of:
- Fire, flames, or heat (burns)
- Falls
- Threats to breathing, such as suffocation or choking.
Defective products cost Australia $5 billion annually, per the ACCC. This guide outlines retailers’ duty-of-care, emphasising the impact of product liability on business reputation and the importance of selling safe goods.
Recent product recall example – Aldi
Aldi recalled double USB power points in mid-September, citing a heightened risk of fire or electrocution. The ACCC’s official notification web page and Aldi’s product recall page provide essential information and updates for consumers.
Who’s liable for product defects?
Product defect laws, rooted in common law tort and contract law, prioritise customer protection.
Product liability encompasses manufacturer’s liability, holding retailers, wholesalers, suppliers, importers, distributors, and manufacturers legally responsible for defective products.
- Are defective and on sale or available to the public
- Result in the buyer experiencing loss, damage, injury or being killed.
In Australia, if a manufacturer is overseas, product liability shifts to the importer. Manufacturers are typically responsible, but vendors may also face liability. Consumers pursue damages only against manufacturers, while a wider range of legal remedies is available against suppliers, including retailers. If the manufacturer remains unidentified after 30 days, the supplier assumes that role.
Most common liability claims
Typical liability claims include:
- Defective products, i.e. are not fit for their stated purpose.
- Manufacturing defects
- Design issues
- Deficient instructions or warnings
- Warranty breach
- Fraudulent misrepresentation, involving the manufacturer intentionally making false claims (such as through marketing) about the item.
- Strict liability holds manufacturers responsible for personal injuries caused by their products, irrespective of their awareness of risks. Typically applied to highly dangerous items like chemicals and explosives.
Consumers generally have three years to lodge a claim from when they:
- Became aware of the loss or defect
- Learned of the manufacturer’s identity
Product liability laws may differ across states and territories, especially concerning children. Proof of injury, death, economic loss, or damage is required for legal action against the manufacturer, with consumer protection agencies as alternative recourse.
Retailer responsibilities
Retailers bear responsibility for injuries or damage caused by the faulty products they sell, especially if aware of the issue. Consumers can claim remedies such as repair, replacement, or refund under consumer rights, with retailers prohibited from misleading about these entitlements.
By the way, produce liability policies have a multi-pronged definition of products that cover:
- Manufacture
- Construction
- Erection
- Assembly
- Installation
- Growth
- Production
- Processing
- Treatment
- Alteration
- Modification
- Repair
- Servicing
- Bottling
- Labelling
- Handling
- Sale
- Supply
- Re-supply
- Distribution
- Import or export by you or on behalf of your business.
Do retailers need product liability insurance?
Manage product liability in retail by exercising diligence in sourcing, updating terms and conditions, and incorporating legal waivers. Implement product testing, warnings, and marketing strategies while regularly reviewing suppliers. Consider product liability insurance for coverage against compensation and legal defence costs, tailored to your business and products.