All businesses have a legal liability to their customers, suppliers and the general public. If a third party suffers bodily injury or damage to their property arising out of your business activities, including the actions of you or your employees, you may be held liable.
Similarly if your product causes bodily injury to, or damages the property of, a third party you may be held liable. A product is defective if it does not provide the level of safety that the community generally is entitled to expect. The level of safety will vary from case to case and it is ultimately for the court to determine whether a product is defective. However, there are various factors the court will take into account when making its determination, including:
how and why the product has been marketed
instructions for, or warnings about, doing or refraining from doing anything with or in relation to the product what might reasonably be expected to be done with the product.
The product liability provisions of the Trade Practices Act will generally apply to a company that:
– manufactured the product, or
– imported the product, or
– sold ‘own brand’ goods manufactured under licence.
The court can award significant compensation against you, the affect of which may be compounded by the impact on your time, your company’s reputation and defence costs.
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