In Australia, as in Europe, there is an acceptance that the common law does not provide adequate protection to consumers who may be injured by defects in goods; for such persons are not always able to obtain a remedy against the seller or supplier of those goods. For reasons similar to those which have led to the development of a law of “Products Liability” in the United States, and to moves by the Council of Europe and the Commission of the European Economic Community, as well as the review of the law by the Law Commission and the Scottish Law Commission, two States of Australia (South Australia and New South Wales) and the Australian Capital Territory, have introduced legislation which will, in appropriate cases, render the manufacturer of goods liable for defects in products which render them “unmerchantable.” The approach of the Australian legislation follows that of Ontario, rather than any of the models adopted in Europe.

The legislation is the Manufacturers Warranties Act 1974 (South Australia); the Manufacturers Warranties Ordinance 1975 (Australian Capital Territory); and Part VIII of the Sale of Goods Act 1923, inserted by the Commercial Transactions (Miscellaneous Provisions) Act 1974 (New South Wales). The A.C.T. Ordinance was repealed by the Commonwealth Government in 1976, due to a party political difference, but following a thorough investigation and a strongly favourable report by a Senate Standing Committee, is likely to be re-enacted with minor amendments during 1977.

Much of the South Australian Act, and the A.C.T. Ordinance, which follows it closely, is based on the work of the Ontario Law Reform Commission, which took careful account of the economic effects of the introduction of a system of strict liability on the manufacturers of defective products. The New South Wales provisions, which are simpler, and in many ways less satisfactory, apparently did not flow from any such detailed consideration, for at the time of the enactment of the provisions the New South Wales Law Reform Commission was engaged in an extensive examination of the law of sale of goods. Its report, which appeared in 1975, did consider the question of products liability, but the Commission’s recommendations differ significantly from the provisions of the Act.

Part VIII of the Sale of Goods Act 1923 (N.S.W.) applies to a “consumer sale,” which is defined as a sale in the course of a business where the goods are sold to a person who does not buy, or hold himself out as buying, in the course of a business and the goods are “of a kind commonly bought for private use or consumption.” There is a rebuttable presumption that all sales are consumer sales. The Part also contains a definition of “merchantable quality” which follows closely the definition in s. 62 of the Sale of Goods Act 1893, as amended by the Supply of Goods (Implied Terms) Act 1973.