Chapter 23: Product Liability - Thomson Reuters

161Ch 23: Product Liabilitydamage and the identity of the producer. 235 Claims are further subject to a longstop of 10 years from the date of supply.Warranties and Statutory GuaranteesHistorical development – the persistence of privity[23.180] Historically, the liability of distributors to their immediate transfereesdepended on the nature of their relationship and terms of agreement. Asbetween buyer and seller of goods it was largely controlled by certain impliedwarranties which, during the 19th century at the crest of imaginative judicialreform, progressively replaced an earlier individualistic philosophy epitomisedin the maxim “caveat emptor”. By attaching “implied” warranties to thecontract, reflecting the parties’ presumed intent, the seller in effect became aninsurer of his goods with respect to their quality and fitness. The two principalwarranties are now implied into contracts by the State and Territory Sale ofGoods Acts: 236 (1) where the buyer, expressly or by implication, makes knownto the seller the particular purpose for which they are required (so as to showthat the buyer relies on the seller’s skill and judgment) and the goods are of adescription which it is in the course of the seller’s business to supply, there is animplied warranty that the goods shall be reasonably fit for such purpose, exceptwhere the sale is of a specified article under its patent or other trade name; and(2) where goods are bought by description from a seller who deals in goods ofthat description, there is an implied warranty of merchantable quality, providedthat if the buyer has examined the goods there is no warranty as regards defectswhich such examination ought to have revealed. Similar provisions are found inmost Australian jurisdictions implying identical warranties in consumer salecontracts. 237 Unlike the Sale of Goods Act warranties, the consumer protectionimplied warranties cannot be excluded by contract. 238Although originating in the desire to protect the commercial buyer againstfinancial loss in marketing the goods, 239 the old implied contractual warrantiesattained added and, for present purposes, momentous significance as their reachexpanded to property damage 240 and eventually to personal injury. 241 Therebya mercantile concept became a device for consumer protection, the moreremarkable for ensuring strict liability long before the courts were ready toendorse so much as a tort duty sounding in negligence. For these warranties,DRAFT235 Australian Consumer Law, s 143 (formerly Trade Practices Act 1974 (Cth), s 75AO). Seealso Consumer ProtectionAct 1987 (UK), s 6(6).236 SaleofGoodsAct1954 (ACT), s 19;SaleofGoodsAct1923 (NSW), s 19;SaleofGoodsAct(NT), s 19; Sale of GoodsAct 1896 (Qld), s 17; Sale of GoodsAct 1895 (SA), s 14; Sale ofGoodsAct1896 (Tas), s 19;GoodsAct1958 (Vic), s 19;SaleofGoodsAct1895 (WA), s 14.These provisions are based on the Sale of GoodsAct 1893 (UK) (now 1979), Sale of GoodsAct 1893s 14 (but not the Sale and Supply of Goods Act 1994 (UK), which substituted“satisfactory” for “merchantable”).237 Fair Trading Act 1987 (NSW), s 40Q; Consumer Affairs and Fair Trading Act (NT), s 64;ConsumerTransactionsAct 1972 (SA), s 6(3), (4); FairTradingAct 1999 (Vic), ss 32I, 32IA;Fair TradingAct 1987 (WA), s 38.238 See below, n 256.239 Hence the name merchantable (that is, saleable) quality. See also Sale of Goods Act 1979(UK), s 53(3) which contemplates only commercial loss in prescribing the measure ofdamages for breach of warranty.240 Smith v Green (1875) 1 CPD 92; Randall v Newson (1877) 2 QBD 102.session: 5 October 28, 2010 page no: 26 folio no: 161@syd-tlrapp-p19/syd-tlrapp-p191/CLS_law/GRP_flemings/JOB_update10/DIV_19PROOF COPY