Faults in Your Product - Who is responsible for the Quality and Safety?

I don’t often author in the legal environment but the issue below struck me as being very important and often misunderstood one.

Responsibility for a product has recently come to the fore in the building industry with many property builders and developers going under over recent years, many involving faulty product. So often, the monkey will be moved from the shoulder of the developer to that of the builder, the engineer or the certifier and then back and forth. Whatever the final outcome, this toing and froing of responsibility ends up with the purchaser being frustrated and rejecting the “product”, which is the brand of the developer. Just like for sunscreens, the building industry has some enticing names like “Toplace” and “AIA” which imply high quality in their product. It seemed to me that process for building an apartment tower was very similar to developing a sunscreen so I thought I would set out a comparison…

Think about your own product and how you perceive the responsibility chain. How does it fit in the above?

When TGA implemented good manufacturing practices [GMP] in 1990, the process was similar to the complexity of the home unit situation for home brands sold in grocery. In this case the brand was the property of the supermarket group but in almost all situations, contract manufactured. The procedure for the grocer was to transfer responsibility for complaints and quality issues to the contractor even though the grocer itself owned the brand. A similar arrangement to what is shown in the chart above could be set up in the form of a GMP agreement which spells out who is responsible for what. Clearly, the GMP Inspectorate Group of TGA were constantly frustrated during their audits when they were unable to tie down the party with final responsibility, flip flopping between the maker, the tester and the seller.

The definition of a "Sponsor" varies between E.U. , USA and Australia but the dame principles apply. For sunscreens, the responsible person is the “Sponsor”, whereas for residential buildings it is the “Developer” as defined under the Fair Trading Act [1]. The principle is the same in that regulation is trying to define what we might commonly see as the “marketer”. [ Note that in neither case, does the person need to be technically competent in their product area.]

The Therapeutic Goods Act [2] defines a Sponsor as …

???????????????????? (a)? a person who exports, or arranges the exportation of, the goods from Australia; or

???????????????????? (b)? a person who imports, or arranges the importation of, the goods into Australia; or

???????????????????? (c)? a person who, in Australia, manufactures the goods, or arranges for another person to manufacture the goods, for supply (whether in Australia or elsewhere);

According to TGA regulation [3] “The Sponsor must be a resident of Australia or be an incorporated body in Australia and conducting business in Australia where the representative of the company is residing in Australia.” For imported products, including those sold on the web, this often means appointing a local contact to address this responsibility. It is unknown as to how many on line marketers do not comply with this process!

Here we come back to the essential message.? As faulty home unit purchases have discovered, it costs much more to repair the damaged product than the cost of making the batch in the first place. However, unlike in the building industry, a Sponsor of a faulty sunscreen is clearly going to be the eventual recipient of the action required. A sunscreen product can be recalled, unlike an apartment block which practically cannot!

References.

1.?? Fair Trading NSW

https://www.fairtrading.nsw.gov.au/trades-and-businesses/construction-and-trade-essentials/DBP-regulated-buildings/developers-working-on-regulated-buildings#:~:text=A%20developer%20is%20defined%20in,work%20to%20be%20carried%20out

2.?? Therapeutic Goods Act 1989

https://www.legislation.gov.au/Series/C2004A03952

3.?? TGA Role of the Sponsor

https://www.tga.gov.au/role-sponsor

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