The liability to consumers of manufacturers of defective goods — An Australian perspective

There is an increasing tendency for consumers to regard the manufacturer as being primarily responsible for the safety and quality of consumer goods, even though in many if not most legal systems the common assumption by the consumer that the manufacturer rather than the retailer bears the primary liability for defective goods is not in fact correct. The legal position of the consumer in Australia under the general law of contract and tort is outlined as a background to the reforms made in 1978 by an important amendment to the Federal Trade Practices Act. A manufacturer (or importer) of consumer goods now is bound by statutory obligations, enforceable by the consumer, in respect of the quality of his goods. He is also bound by any express warranty given by him, and is liable where the goods require to be repaired or where replacement parts are required, but repair facilities or spare parts are not reasonably available. Except in the case of the obligations relating to the provision of spare parts and repair facilities, the manufacturer's statutory obligations cannot be excluded or limited. The Act also contains provisions limiting the time during which a consumer can commence an action against a manufacturer.Although the author considers that there are some defects in the legislation, he concludes that it represents a significant advance in the legal protection of the consumer's economic interests. There is a need for the expansion of existing mechanisms for the informal resolution of consumer claims, but the author also believes that the existence of the new legislative code setting out reasonably clearly defined rights will often in practice greatly strengthen the position of government agencies and others in attempting to negotiate a settlement on behalf of a consumer. Damages recoverable by a consumer from a manufacturer extend to consequential losses, including death or personal injury. As a result, a measure of strict liability for personal injury caused by defective products has been imposed on manufacturers. The legislation does not, however, offer a comprehensive regime of strict liability for personal injury and many anomalous situations will arise. The author considers that there is therefore a need in Australia for a review of the whole question of strict liability for personal injury caused by defective products, although even were this to occur there would still exist a strong need for a scheme such as that discussed in the article to govern the claim of a consumer for economic losses caused by the supply of defective or inferior products.

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Die Haftung des Warenherstellers bei Mängeln der Sache — eine australische Position zum Verbraucherschutz

Zusammenfassung Konsumenten gehen in immer stärkerem Maße davon aus, daß primär der Hersteller für die Güte und Sicherheit von Bedarfsgegenständen verantwortlich ist. Dem steht bislang die Rechtstradition der meisten Länder entgegen, wonach der Verkäufer und nicht der Hersteller primär für Fehler und Mängel verantwortlich ist.Der Aufsatz stellt die rechtliche Stellung des Konsumenten in Australien vor dem Hintergrund allgemeiner vertrags- und deliktsrechtlicher Regelungen dar. 1978 ist durch eine Novelle des Federal Trade Practices Act eine wichtige Reform eingeführt worden. Der Hersteller oder Importeur von Verbrauchsgütern (consumer goods) ist jetzt kraft Gesetzes, das vom Verbraucher im Klagewege durchgesetzt werden kann, einstandspflichtig für die Qualität seiner Waren. Er ist gleichermaßen unter einer Garantieerklärung haftbar. Er hat auch dafür einzustehen, daß Güter, die Wartung, Reparatur oder Ersatzteile benötigen, ordnungsgemäß und zu vernünftigen Bedingungen gewartet werden können. Die Pflichten des Herstellers können durch vertragliche Abrede nicht ausgeschlossen oder eingeschränkt werden, mit der Ausnahme der Wartungsverpflichtung. Die Novelle enthält schließlich Bestimmungen über Ausschluß- und Verjährungsfristen für die Ansprüche des Verbrauchers, wobei sie sich an den EG-Richtlinienentwurf zur Produkthaftung anlehnt.Auch wenn der Autor einige Vorschriften der Novelle kritisch würdigt, so geht er davon aus, daß sie einen wichtigen Fortschritt im rechtlichen Schutz der wirtschaftlichen Interessen des Verbrauchers darstellt. Daneben besteht weiterhin ein Bedarf zur Verbesserung der Rechtsdurchsetzung, aber die Existenz der Novelle und der dort enthaltenen klar definierten Pflichten des Herstellers erleichtert staatlichen Behörden und anderen den Schutz der Rechte des Konsumenten. Die vom Hersteller zu liquidierenden Schäden betreffen auch Folgeschäden einschließlich Tod und Personenschäden. Im Ergebnis haftet der Hersteller ohne Verschulden für Produktfehler. Allerdings ist die Gesetzeslage nicht vollständig befriedigend; es fehlt ein umfassendes System der Gefährdungshaftung für Produktfehler, etwa gegenüber Dritten, die das fehlerhafte Produkt lediglich benutzen, ohne es selbst gekauft zu haben. Nach Auffassung des Autors muß deshalb in Australien die Produkthaftung für Personenschäden neu überdacht werden. Daneben bleibt die — durch die Novelle befriedigte — Notwendigkeit, den Verbraucher gegenüber Vermögensschäden bei Lieferung eines mangelhaften Produktes dadurch zu schützen, daß man ihm einen Direktanspruch gegen den Hersteller zuerkennt.

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David Harland is Professor of Law, University of Sydney Law School, 173–175 Phillip Street, Sydney, N.S.W. 2000, Australia.     

AN ECONOMIC RESPONSE MODEL OF HERBICIDE APPLICATION FOR WEED CONTROL

A biologically realistic model of crop yield response to herbicide application is presented. It includes functions for weed mortality from herbicide application and yield loss due to surviving weeds. The optimal herbicide rate and two types of decision thresholds are derived theoretically and illustrated with empirical examples. Responses of the various decision criteria to changes in parameters are also examined theoretically and empirically. A multidimensional threshold for weeds based on weed density and weed-free yield is presented. The issue of farmers using other than officially recommended herbicide rates is discussed.     

Testing for non-linear dependence in inter-war exchange rates

Testing for Non-Linear Dependence in Inter-War Exchange Rates. — This paper tests weekly inter-war floating exchange rate data for the pound-dollar, pound-franc and pound-reichsmark for non-linearity. Initial tests reveal strong evidence of generic non-linearity in these series and indicate neglected non-linear structure in the residuals of linear representations. Attempts to model this structure using GARCH residual processes have only been partially successful. Thus, two parametric models of such non-linearity were estimated. Comparing the forecasts from these models shows the mean square forecast errors of linear-GARCH and bilinear models to be lower than those from linear forecasts for all series, and that SETAR model forecasts outperform all other models for the pound-dollar.     

Employment response to supply and demand shocks under envy in wage formation

Summary We analyse the impact of wage envy on employment and on its sectorial allocation. A multi-sector general equilibrium model in which externalities among sectors arise through wage envy and decentralized bargaining is presented. In the no externality case, sectorial employment is a function of sectorial productivity and of the disutility of work. In the externality case, sectorial employment is additionally affected by union power in all sectors (with a negative sign even though bargaining is efficient), by the productivity in the other sectors (with an undetermined sign) and by the relative average propensity to consume goods of this sector (with a positive sign).Rijksuniversiteit Limburg, FNRS and Université Catholique de Louvain. I would like to thank Franz Palm for valuable comments on an earlier draft. This paper benefitted also from discussions with Torben Andersen, Jacques Drèze and Henri Sneessens (without implying them in any mistake). The detailed comments of the anonymous referee contributed to a large extent to clarify the exposition of the model.     

LONGER‐RUN EFFECTS OF ANTI‐POVERTY POLICIES ON DISADVANTAGED NEIGHBORHOODS

We assess evidence on the longer‐run effects of minimum wages, the Earned Income Tax Credit, and welfare on key economic indicators of economic self‐sufficiency in disadvantaged neighborhoods. The evidence suggests that the longer‐run effects of the Earned Income Tax Credit are to increase employment and to reduce poverty and public assistance. We also find some evidence consistent with higher welfare benefits having longer‐run adverse effects, and stronger evidence that tighter welfare time limits reduce poverty and public assistance in the longer‐run. The evidence on the longer‐run effects of the minimum wage on poverty and public assistance is not robust. (JEL J22, J23, J38)     

Public utility valuation and risk under incentive regulation

The objective of providing inducements for public utilities to seek to improve the efficiency of their operations has been a longstanding regulatory concern. Among the evolving strategies for furthering that objective is a shift toward what has come to be referred to as incentive regulation. We examine here how this departure from past regulatory practice will affect the market value and market risk of the utility firm, and the specific manner in which an incentive mechanism can be implemented in order to achieve a desired valuation outcome. A particular focus is the establishment of boundaries on allowed rates of return under incentive regulation which are consistent with that desired outcome. The likely impact on utility ratepayers is considered.