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In Australia the Competition and Consumer Act 2010 (Cth) provides for the general protections that are given to consumers when it comes to the supplying of goods and services in trade and commerce.

Contained within volume three under schedule two of the Competition and Consumer Act 2010 is what is known as the Australian Consumer Law (“ACL”). The ACL is a set of laws which protect a consumer from, among other things:

  • Misleading and deceptive conduct;
  • Goods having safety defects; and
  • Misrepresentations made by suppliers.

For the legislation to apply the manufacture or supplier must be Australian or have an Australian office. So what happens if a manufacturer is not in Australia? How can a consumer be compensated for any damages that they have suffered if they cannot sue a manufacturer?

Under section 7 of the ACL a manufacturer where goods have been imported into Australia is deemed to be the person or company who imported the goods into Australia providing that the actual manufacturer does not have a place of business in Australia.

To use an example, if a fictional Australian company named XYZ Pty Ltd imported 1000 chairs into Australia from a manufacturer in China, and that Chinese manufacturer does not have an office, warehouse, store or factory in Australia then XYZ Pty Ltd will be classed as the manufacturer of those chairs even though they did not actually make them.

The reasoning behind this provision in the ACL is because the Chinese manufacturer is not within the Australian Jurisdiction, Australia’s laws wouldn’t apply to that manufacturer and it would leave consumers exposed in that they would be unable to receive compensation for any loss or damage suffered by them.

The word ‘goods’ is defined under section 2 of the ACL and is defined broadly to include:

  1. Ships, aircraft and other vehicles;
  2. Animals, including fish;
  3. Minerals, trees and crops, whether on, under or attached to land or not;
  4. Gas and electricity;
  5. Computer software;
  6. Second-hand goods; and
  7. Any component part of, or accessory to, goods.

This list is not exclusive and other things can be held to be good even if they are not on the list.

Looking at the previous example of the importation of chairs, the chairs are generally made of wood or a metal which both fall under category (c) above as wood is from a tree and because metal is a mineral.

Another common example is of fruit, nuts, vegetables and berries which, although not specifically provided for, would be classed as a good under category (g) above because it is a component part of, or accessory to a tree.

Under the ACL a manufacturer is liable for the loss and damage suffered as a result of goods that possess a safety defect. The manufacturer will be liable for:

  • The loss or damage suffered by an injured individual;
  • The loss or damage suffered by a person other than an injured individual;
  • The loss or suffered by a person if other goods are destroyed or damaged; and
  • The loss and damage suffered by a person if land, buildings or fixtures are destroyed or damaged.

If a defective goods case is made against a manufacturer it will be a defence to the claim if the manufacturer can prove any of the following defences:

  • The safety defects in the goods did not exist:
    1. In the case of electricity: at the time at which the electricity was generated, being a time before it was transmitted or distributed; or
    2. In any other case: at the time when the goods were supplied by their actual manufacturer;
  • The goods had the safety defect only because there was a compliance with a mandatory standard for them;
  • The state of scientific knowledge at the time when the goods were supplied by the manufacturer was not such as to enable that safety defect to be discovered. This means at that time there was no technology in existence which would have been able to detect the safety defect; or
  • If the goods that had the safety defect were comprised in other goods, that safety defect is attributable only to:
    1. The design of the other goods;
    2. The markings on or accompanying the other goods; or
    3. The instructions or warnings given by the manufacturer of the other goods.

Goods have a safety defect if their safety is not such as persons generally are entitled to expect.

When determining the extent of the safety of a good you should consider all of the relevant circumstances including:

  • The manner in which, and the purpose for which, the good has been marketed;
  • The packaging of the good;
  • The use of any mark in relation to the good;
  • Any instructions for, or warnings with respect to, doing, or refraining from doing, anything with or in relation to the good;
  • What might reasonably be expected to be done with or in relation to the good; and
  • The time when the good was supplied by their manufacturer.

Using the importation of chairs example, if those chairs were made using a sub quality wood, or if the wood was subject to some defect in its grain which caused the chair to collapse when sat on then that would most likely be regarded as a safety defect because one would generally expect that a chair could support a seated person.

If however there was no weakness in the chair and there was a warning that states not to be used by anyone over 100kg, if a 150kg person sat on the chair and it broke then it is more likely that the chair would not be deemed to have a safety defect because of the warning.

If you would like further advice please don’t hesitate to contact us on 9375 3411 to make an appointment.



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