Product Liability In Australia - Dodd-Frank, Consumer Protection Act

Australia's product liability regime is a combination of provisions contained primarily in the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)). These provisions apply to Australian made products as well as foreign made goods that are imported into Australia for sale.

The regime contains the novel prohibition on misleading or deceptive conduct in addition to prohibitions on various forms of misrepresentation, provides a range of consumer guarantees, and imposes liability on manufacturers and importers for goods with safety defects. The regime embraces both public and private enforcement. The regulator, the Australian Competition and Consumer Commission, is given extensive powers. Moreover some provisions are the subject of civil penalties. Further, substantial class actions have increasingly involved actions for breaches of the consumer guarantees and for products with safety defects, with claims being brought in relation to a wide array of products and incidents.

Manufacturers and retailers need to ensure that adherence to Australia's product liability regime is part of their compliance and risk management procedures

BACKGROUND

The Australian Consumer Law ("ACL") is the principal consumer protection legislation in Australia and provides consumer rights whilst also imposing obligations on businesses. It is contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (CCA).

Before 1 January 2011, Australia's consumer policy framework comprised a range of Commonwealth, state and territory laws, including the previous Trade Practices Act 1974 (Cth) ("TPA").

From 1 January 2011, the ACL replaced the consumer protection provisions in the TPA (which was renamed the CCA), establishing a new regulatory environment for consumer protection laws in Australia. The ACL is replicated as a law of each state and territory, making its application universal across Australia¹ .

The ACL does not cover goods and services purchased before 1 January 2011. These consumers will have recourse to the Trade Practices Act 1974 and relevant state and territory legislation in force at the time of purchase.

Structure of the ACL
Chapter 1	Outlines how the ACL applies, and provides a set of definitions and explanations about consumer law concepts, including a definition of "consumer". As outlined below, the definition of a "consumer" will broaden significantly from July 2021.
Chapter 2	Provides a range of general protections, which create standards of business conduct across all industries, including prohibitions against: misleading or deceptive conduct;² unconscionable conduct; and provisions that make unfair contract terms in consumer contracts void.
Chapter 3	Complements the protections in Chapter 2 by offering specific protections which address identified forms of business conduct such as: unfair practices in trade or commerce; making false or misleading representations; providing unsolicited supplies; and multiple pricing. Addresses product recalls that are discussed in a separate Jones Day White Paper. The chapter also sets out the statutory rules for dealing with the liability of manufacturers for goods with safety defects and rights in relation to purchasing goods or services (including consumer guarantees).
Chapter 4	Outlines the offences that apply to breaches of the matters covered in Chapter 3.
Chapter 5	Outlines the enforcement powers, penalties, and remedies that are available under the ACL.
Chapter 6	Regulations made under the ACL are set out in Parts 6 and 7 of the Competition and Consumer Regulations 2010. These give practical effect to implementing certain ACL provisions, for example, they: provide that certain agreements are not unsolicited consumer agreements; set out the reporting requirements for goods or product-related services associated with death, serious injury or serious illness; and set out requirements for warranties against defects.

One of the key concepts of the ACL is the protections afforded to "consumers".

As it stands, under the ACL, a person is a consumer if they:

"Acquire" goods or services³; and
The "price" of the goods or services is less than the prescribed amount, being $40,000⁴; or, if the price exceeds that prescribed amount, the goods are ordinarily acquired for personal, domestic, or household use or consumption.

However, from 1 July 2021, the prescribed amount will more than double, increasing from $40,000 to $100,000 under the

Federal Government's Treasury Laws Amendment (Acquisition as Consumer - Financial Thresholds) Regulations 2020.

The amendment to the definition will impose greater obligations on businesses that manufacture or supply goods or services that cost up to $100,000.

MISLEADING REPRESENTATIONS OR CONDUCT (ACL CHAPTERS 2 AND 3)

As outlined above, Chapter 2 of the ACL establishes the general standards of business conduct. The general consumer protection provisions of the ACL prohibit mislead deceptive conduct, unconscionable conduct, and unfair terms in standard form consumer contracts ("General Protections"). There are also specific protections against certain defined "unfair" practices, including particular instances of misleading or deceptive conduct, pyramid selling, unsolicited supplies of goods and services, component pricing, and the provision of bills and receipts ("Specific Protections").

Footnotes

1 An Intergovernmental Agreement for the Australian Consumer Law was signed on 2 July 2009. The parties to the agreement included the Commonwealth of Australia and all the states and territories.

2 ACL s 18.

3 A person is generally not a consumer if they acquire goods for re-supply or to be used up or transforming them in a production or manufacture process, or of repairing or treating other goods or fixture on land.

4 Or, if the price exceeds the prescribed amount, the goods can also be a vehicle or trailer acquired for use principally in the transport of goods on public roads, or goods of a kind ordinarily acquired for personal, domestic, or household use or consumption.

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