Usually there is a contract involved in the supply of a health product. The contract, which need not be written, is between the supplier (usually the chemist) and the user. If a product is faulty, or not fit for the purpose for which it was sold, the contract is breached.

A breach of the terms of the contract is enough to bring an action. There need not be any carelessness involved unless the contract only promised that the supplier of the services or product would exercise reasonable care. In cases involving the sale of goods, the injured person can use consumer protection laws such as the Sale of Goods Act 1895 or the Competition and Consumer Act 2010 (Cth), see CONSUMER PROTECTION.

Sometimes, an action may be taken against the manufacturer (or possibly importer) as well as the supplier. For example, the contract might not give the injured person the necessary legal rights or the manufacturer may be better able to meet large claims because it is adequately insured. There are statutory rights against manufacturers and importers under the Australian Consumer Law. It will certainly be appropriate to consider suing a manufacturer who has made misleading statements in advertising the product.

Manufacturers are usually sued for breach of the guarantees contained in the Australian Consumer Law, or for negligence [Competition and Consumer Act 2010, Schedule 2, ss 106, 107].

The extent to which negligence, or carelessness, must be proved varies from case to case. It commonly involves satisfying the court that it was more probable than not that the plaintiff's injury was caused by the negligence of the manufacturer. In the case of things 'dangerous in themselves' or inherently dangerous, such as poisons, the duty of care is strict and can become almost absolute, amounting to a guarantee of safety. Where a person is injured by defective goods manufactured after 9 July 1992 it is only necessary to show that the product caused loss or damage.

If a number of people have been injured by the same product it is now easier to take a class action (make a claim as a group) [see the Australian Consumer Law at s 149 and the Federal Court Rules].

Liability may be found if the drug or device was not properly tested, if sterilisation and safety control measures were inadequate, or if the company failed to warn users of adverse reactions.

The manufacturer is also liable for the negligent acts of individual employees.

The court will cnsider the extent to which consumers were warned of potential hazards by information attached to the product.

In the case of therapeutic products, much of the relevant information will be given to the consumer by the doctor. It is unclear whether or to what extent a warning provided by the manufacturer but not passed on to the consumer allows the manufacturer to escape liability.

In a claim of negligence, the manufacturer may argue that the claimant voluntarily accepted the risks associated with the product or medical procedure or was careless in using it. A further difficulty confronting a claimant receiving a drug or device in a hospital or clinic is in proving that the damage or harm complained of has been caused by the product and not by the hospital or clinic. In other words, fault may lie with those administering treatment rather than with the product itself. When the faulty product is not the sole cause of the damage, difficulties and complexities arise which can have an impact not only on the amount which may be recovered, but also on the result of the case. These difficulties may be not only legal but also practical, such as the difficulty of obtaining evidence needed for success in the case.

To defend a claim, the manufacturer must usually show both that the consumer was aware of and understood a particular risk, and that he or she consciously decided to take the risk, or was reckless about whether or not a harmful result might occur.

What if the manufacturer cannot be identified?

If a consumer wishes to take action against a manufacturer for defective goods but does not know or cannot identify the manufacturer, they may request, by written notice, that the supplier provide details to identify the manufacturer [s 147].

If no information is provided to identify the manufacturer within 30 days then the supplier to whom the request was made can be taken to be the manufacturer for the purposes of any action to be pursued.