LIABILITY DISPUTES BROUGHT ABOUT DUE TO UNSAFE OR DEFECTIVE PRODUCTS
In brief, product liability disputes typically involve claims brought about due to unsafe or defective products. This is an area of dispute in which risk management, insurance, regulatory and litigation practice intersect.
Product liability disputes are seen in a variety of areas such as pharmaceuticals, aviation, machinery, appliances, food and other goods. Lawyers may become involved when there are such matters as product recall, personal injury, property damage or otherwise allegations of defective products.
Such disputes may occur at various points of the supply chain but are typically between the consumer and the manufacturer. A “manufacturer” has a broader meaning than may be commonly thought, and may include the company the imports the goods, uses its brand name in relation to the goods, promotes itself to the public as the manufacturer of the goods, or permits another person to promote the goods as having been manufactured by the company.
Product liability cases are on the rise in Australia. This may be due to several factors including growing public awareness, activity by the ACCC, the reporting of product safety cases in the media, and the access to class actions.
Class actions allow a claim to be brought by a class of persons arising out of the same, similar or related set of circumstances, and a substantial common issue of law or fact. If a particular defective product has impacted a number of people, a class action allows a single action to be brought on behalf of all parties. These have been seen in the motor vehicle, medical device and financial products or services sectors, among others.
Another reason for the availability of class actions may be the access to litigation funding. This is a practice whereby lenders loan funds to litigants as a means for access to the legal system where prospective plaintiffs may otherwise be denied that access. Litigation funders have previously focused on class actions relating to financial services, but are now being seen in a broader variety of cases.
Sources of law
Generally, product liability issues arise from three main sources of law.
Australian Consumer Law
This legislation includes provisions for customer protection which impose obligations on suppliers, importers, manufacturers and advertisers.
The ACL deals with matters including but not limited to misleading and deceptive conduct, breach of safety or information standards or statutory consumer guarantee (such as that goods are to be of a certain acceptable quality), and damage suffered due to a safety defect.
In addition to the ACL, however, there is also legislation covering specific categories of goods such as motor vehicles, pharmaceuticals and food, outlining the relevant standards and practices.
Common law – tort of negligence
Although the common law tort of negligence has to an extent been codified in civil liability legislation enacted on a state level, the rules developed under common law remain importance sources for a court to consider whether liability is owed in product liability.
A plaintiff may have prospects of success in recovering damages from a manufacturer if the plaintiff can show:
- That the manufacturer owed a duty of care to the plaintiff;
- That the manufacturer breached the standard of care required by the law; and
- That the plaintiff suffered loss or damage as a result of that breach of duty.
Depending on which state the claim is relevant to, different state laws apply in relation to special defences and caps or thresholds for damages recoverable.
Common law – contract
Contract law may be another source of product liability claim. For instance, a plaintiff may seek to base their claim on the breach of a term of a contract with the manufacturer or supplier.
There is an intersection here between legislative and common law, in that sale of goods legislation can imply terms relating to product quality into contracts for the supply of goods. There are instances where such terms cannot be “contracted out” or otherwise altered.
Depending on which basis is used, the court may consider different factors to determine liability, but such factors may include, among other matters:
- Whether the good supplied was unsafe, defective, not fit for purpose or had inadequate warnings;
- Any warnings issued with respect to product assembly and use;
- Reasonably expected use for the product;
- When the product was supplied;
- Whether the safety defect existed at time of supply by the manufacturer; and/or
- Whether the product was a component of a finished product.
The main basis of a product liability claim is to return the plaintiff to the position he or she would have been in prior to suffering the loss or damage as a result of the defective or unsafe product.
Accordingly, damages which may be recovered in a product liability claim are such things as the following:
- Expenses incurred in treating an injury, both past and future, including medical expenses;
- Expenses incurred in rectifying damage to property;
- Compensation for pain and suffering;
- Compensation for loss of income, both past and future, due to injury or damage; and/or
- Compensation for loss of life expectancy or impairment of earning capacity.
Other damages may flow according to the particular circumstances of the case.
Although not considered as “damages” per se, one consequence to the manufacturer of supplying defective or unsafe goods may be to undertake a product recall. This is because manufacturers and suppliers have a duty to take reasonable care to ensure that their products do not injure customers – a duty which can go further than simply manufacture and sale, extending to products already on the market which are found to pose a risk to consumers.
Ideally, a manufacturer should take the step of product recall proactively, taking into account the seriousness and probability of the potential harm.
Further, if a product is to be recalled, the manufacturer has certain reporting obligations which must be met within a specified timeframe. A manufacturer can further be ordered to recall or stop supply of an unsafe product by the Australian Competition and Consumer Commission (ACCC) or other specialist regulators.
How we can assist
A lawyer can act on or advise as to product liability at various stages, whether prior or after a claim has been made, and includes such matters as:
- Liaising with regulatory agencies, manufacturers, suppliers, distributors, insurance companies, medical institutions and others;
- Advising on investigations;
- Advising on liability through all stages of manufacture;
- Advising on confidentiality;
- Defending or settling a claim, before or after court proceedings have commenced.
If you have any questions about product liability and your entitlements or liabilities, please do not hesitate to contact our office.