Legal Obligations Of Business When Selling Defected Products

Selling faulty goods and products is unethical for businesses. They must provide the customers with the right products and services. In Australia, as per Australia Consumer Law (ACL), businesses are under legal obligations if they sell defective products. The customers can sue the companies for selling the wrong products. If proven guilty, the business will be required to compensate the customer. In this case, having product liability insurance can be helpful. It covers legal fees, court fees and other expenses. Consult the best insurance broker in Brisbane to get product liability insurance and ensure adequate coverage to safeguard your business during such circumstances.

Duties Of The Business When Selling Defected Products

The following are businesses, legal duties if they sell defective products:

  • Responsibility for faulty goods – It is the responsibility of the business to provide goods that meet the industry standards quality and match the description mentioned. 
  • Remedies for consumers – If the goods the business provides are faulty, customers have the right to repair, replace, or refund remedies.
  • No exclusion of guarantees – A business or seller cannot restrict, modify or exclude consumer guarantees under the ACL. 
  • Penalties for non-compliance – Failing to comply with consumer protection laws can cause businesses to face penalties and fines. Even their reputation can be damaged. Thus, having product liability insurance from the best insurance provider in Brisbane is necessary to help cover the legal cost and compensate consumers.
  • Refund or replacement – The business or seller is liable to provide a refund or replacement to the customer if they sell defective products.

Common Liability Claims

The most common liability claims by customers include:

  • Design issues
  • Manufacturing defects
  • Defective product 
  • Warranty breach 
  • Wrong warnings or instructions
  • False or fraudulent representation

Responsibilities Of Businesses And Retailers

Faulty products can cause harm to the customer and also to the business. Customers can take legal action against the business if they get defected product or experience danger due to the product. Consult a finance broker in Brisbane and invest your finances appropriately to ensure the products manufactured or produced are of good quality. 


The business and retailers are responsible for selling the right products. If you become aware of defected product, do not sell it. Contact the wholesaler, manufacturer or factory who provided the product. Take action to correct the mistake rather than make another mistake by selling it further. 

Product Liability Insurance

For businesses, investing in product liability insurance is essential as it is specially designed to protect the business in such scenarios. If your product has caused harm or damage to third parties such as customers, suppliers, vendors, or the general public, you are legally liable to compensate them. 


You can get product liability insurance by consulting the best insurance broker in Brisbane. Understand the insurance policy’s terms and conditions and ensure adequate coverage. Make sure it covers your assets or other things you want coverage for, and get a customised insurance plan to safeguard your business. 


Businesses, retailers, manufacturers, assemblers, etc., are required to provide the right services and products. Providing defective products can cause harm to the business, and customers can lose their trust. The business’s reputation can be affected negatively. Thus, consult a finance broker in Brisbane and ensure you invest in the right property, machinery, equipment, and staff so that you can produce good-quality products. Also, to avoid financial burden, get product liability insurance from your insurance provider to cover the legal cost of fighting lawsuits from the customers. 


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