The Liability of Manufacturers and Importers under the Trade Practices Amendment Act 1978
| DOI | 10.1177/0067205X7901000403 |
| Date | 01 December 1979 |
| Author | Gary M. Gregg,Ted D. Tzovaras |
| Published date | 01 December 1979 |
| Subject Matter | Article |
THE, LIABILITY
OF
MANUFACTURERS AND
IMPORTERS UNDER
THE
TRADE PRACTICES
AMENDMENT ACT 1978
By GARY M.
GREGG*
AND
TED
D. TZOVARAS**
The
introduction
of
Division
2A
into Part V
of
the Trade
Practices
Act
h,QS
brought Australia firmly into line with current
thinking
in
the Western world
on
the liability
of
manufacturers.
The
new
Division has two aspects. First, it provides consumers, and
in some cases their successors in title, with astatutory right
to
compensation from manufacturers and importers in specified
circumstances. Secondly, it grants
to
sellers
of
goods aright
to
indemnity from amanufacturer (or importer) where the latter is
liable
to
compensate the consumer under this Division.
This article examines the likely effect that the introduction
of
Division
2A
will have
on
the liability
of
manufacturers and
importers
of
goods. The article commences
by
outlining the liability
of
manufacturers in Australia prior to the recent amendments.
The
operation and scove
of
Division
2A
are then described.
The
article concludes
by
focusing
on
certain, practical difficulties
an,d
problems
of
interpretation inherent in the
new
Division.
Recent amendments1to the Trade Practices Act 1974
(Cth)
represent asignificant extension of the existing bases of product
liability in Australia. The amendments, which insert anew Division 2A
into
Part
Vof the Act, came into effect on 6December 1978.
Division 2A has two principal objects. First, it provides for manufac-
turers and importers selling through an intermediary to be concurrently
liable with the actual seller of the goods in relation to certain statutory
obligations. Secondly, it grants to aseller astatutory right to
be
indemnified by the manufacturer where the seller
is
liable to compensate
aconsumer for abreach of an obligation implied by the Act.
The new Division can be seen
as
part of atrend in the Western
world towards stricter liability for defective products.2
In
the United
States the liability of aseller or manufacturer of adefective product
has come to
be
governed by aseparate body of law known as "products
liability". According to Professor Prosser, "products liability"
is
"
...
the
name currently given to the area of case law involving the liability of
sellers of chattels to third persons with whom they are not in privity of
*B.A. (V.N.S.W.), M.A., LL.B. (Syd.).
**
LL.B. (Syd.).
1Trade Practices Amendment Act 1978 (No. 206
of
1978).
2
For
abrief international survey
of
products liability see the Report
of
the
Royal Commission
on-
Civil Liability and Compensation for Personal Injury Cmnd
7054 (1978) Vol.
3.
398
1979] Liability
of
Manufacturers and Importers 399
contract".3 The courts have been primarily responsible for the develop-
ment of the law of products liability in the United States. Originally, the
courts enabled the purchaser to recover from the manufacturer for an
injury resulting from adefective productby giving effect to either express
or implied contractual warranties despite the absence of privity.4 Subse-
quently, this device was extended to allow persons other than the
purchaser to recover.5More recently, most jurisdictions have adopted
the doctrine ofstrictliability in tort, which was first applied in Greenman
v.
Yuba
PowerProductsInc.GUnder
this,
doctrine aplaintiff will succeed
in an action in tort if he shows that the product was defective when
it left the manufacturer, irrespective of fault on the part of the
manufacturer."
The nations of Europe are also moving towards strict liability for
defective products. The Council of Europe has recently approved a
Draft Convention on Products Liability in Regard to Personal Injury
and Death,8 known as the "Strasbourg Convention", which adopts a
system of strict liability. The Strasbourg Convention, which
was
opened
for signature by member states in January 1977, has been signed by
Austria, Belgium, France and Luxembourg.9Further, the European
Economic Community has produced aDraft Directive
10
which contains
terms similar to those of the Strasbourg Convention. However, unlike
the latter, the Directive also covers damage to personal property.11
In
the United Kingdom the English and Scottish Law Commissions
have also recommended asystem of strict liability for defective
3Prosser, The Law
of
Torts (4th ed. 1971) 641.
4Coca-Cola Bottling Works
v.
Lyons (1927)
111
Southern Reporter 305.
5Henningsen
v.
Bloomfield Motors Inc. (1960)
161
Atlantic Reporter 2d 69.
6(1962) 377 Pacific Reporter 2d 897.
'1
For
acomprehensive treatment
of
the U.S. position see
Frumer
and Friedman,
Products Liability (1978). See also: Prosser, "The Assault upon the Citadel (Strict
Liability to the Consumer)" (1960) 69 Yale Law Journal 1099; Prosser, "The
Fall of the Citadel (Strict Liability to the Consumer)" (1966) 50 Minnesota
Law Review 791; Jolowicz, "The Protection
of
the Consumer and Purchaser
of
Goods under English Law" (1969) 32 Modern Law Review 1; Leigh-Jones,
"Products Liability: Consumer Protection in America" (1969)
27
Cambridge Law
Journal 54; Gibson, "Products Liability in the United States and England: the
Difference and Why" (1975) 3Anglo-American Law Review 493; and Waddams,
"The Strict Liability
of
Suppliers
of
Goods" (1974) 37 Modern Law Review 154.
For
reform proposals see Gingerich, "The Interagency Task Force 'Blueprint'
For
Reforming Product Liability
Tort
Law in the United States" (1978) 8Georgia
Journal
of
International and Comparative Law 279.
8The Convention
is
reproduced in the Royal Commission's Report, supra
D.
2,
Vol.
1,
Annex 10.
9The other member states are the United Kingdom, Eire, Federal Republic of
Germany, Switzerland, Italy, Sweden, Denmark, Norway, Iceland, Cyprus, Malta
and Turkey.
10
Reproduced in the Royal Commission's Report, supra n. 2, Vol.
1,
Annex 11.
11
For
adiscussion
of
the European position see: Lorenz, "Some Comparative
Aspects
of
the European Unification
of
the Law
of
Products Liability" (1975) 60
Cornell Law Review 1005; Harland, "Products Liability and International Trade
Law" (1977) 8Sydney Law Review 358; Goldring, "Liability
of
Manufacturers for
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