Grant v Australian Knitting Mills [1936] AC 85

The case of Grant v Australian Knitting Mills [1936] AC 85 is a landmark decision in the development of consumer protection law in the United Kingdom and Australia, primarily in the area of negligence and implied warranties under the Sale of Goods Act. The case involved the liability of manufacturers for defective products that cause harm to consumers, specifically focusing on the duty of care owed by manufacturers to the end consumer. 

The ruling is significant in its endorsement of the principle that a manufacturer may be held liable for latent defects in goods sold, even if the goods have passed through a third-party retailer before reaching the consumer. This case is also crucial in understanding the application of the Sale of Goods Act, particularly in terms of implied warranties regarding the fitness of goods for their intended purpose.

Facts of Grant v Australian Knitting Mills

The appellant in Grant v Australian Knitting Mills was Richard Thorold Grant, a fully qualified medical professional practising in Adelaide, South Australia. Grant purchased two pairs of woollen underwear from a retailer, John Martin & Co. Ltd., which had been manufactured by Australian Knitting Mills. 

Upon wearing the underwear, Grant developed a severe skin condition, dermatitis, caused by the presence of excess sulphite in the fabric, specifically around the cuffs and ankle ends of the garments. The sulphite was a chemical by-product from the manufacturing process, which had not been properly washed out of the fabric before it was sold to consumers.

Grant argued that the dermatitis was caused by the negligence of the manufacturer in failing to adequately remove the chemical from the wool before it was sold. He contended that the manufacturers, Australian Knitting Mills, had breached an implied warranty or condition under the Sale of Goods Act, 1930. This act implied that goods sold should be fit for their intended purpose and of merchantable quality. Moreover, Grant asserted that both the manufacturers and the retailer were responsible for the defective condition of the goods, as the retailer had sold the goods to him without due regard to their safety.

Issues in the Grant v Australian Knitting Mills

The central issue in Grant v Australian Knitting Mills was whether there had been a breach of an implied warranty or condition as to the quality of the goods, specifically whether the goods were fit for the purpose for which they were sold. Under the Sale of Goods Act, goods sold must be of merchantable quality and fit for the purpose for which they are intended. The appellant contended that the defect in the underwear, caused by the presence of sulphite, made the goods unfit for their intended purpose, leading to injury.

A secondary issue was whether the manufacturers could be held liable despite the fact that the garments were sold to Grant through a third-party retailer. The manufacturers argued that the retailer, as the intermediary between the manufacturer and the consumer, might have been responsible for any defect in the goods, and they sought to distance themselves from liability by suggesting that third-party tampering was a possibility.

Grant v Australian Knitting Mills Judgement

The Privy Council, in their decision, emphasised the importance of the relationship between the manufacturer, retailer, and the consumer in determining liability for defective products. The Court held that the retailers were liable under the implied warranty provisions of the Sale of Goods Act, particularly under Section 14, which deals with implied conditions regarding the quality and fitness of goods for their intended purpose.

The Court found that the damage suffered by Grant was the result of the negligent manufacturing process, which led to the presence of sulphite in the woollen underwear. The presence of this chemical rendered the goods unfit for their intended purpose – to be worn as comfortable undergarments. The Court acknowledged that there was no evidence that the garments had been tampered with after they were packaged by the manufacturers, and this possibility was not enough to absolve the manufacturers of liability.

The case also dealt with the issue of the relationship between the manufacturer and the consumer. While the manufacturer sold the goods to the retailer, and not directly to Grant, the Court found that the duty of care owed by the manufacturer extended to the end consumer. This was consistent with the principles established in earlier cases, such as Donoghue v Stevenson [1932] AC 562, which held that manufacturers owe a duty of care to the consumers who ultimately use their products, even when those products are sold through an intermediary.

Lord Wright, delivering the judgement of the Privy Council, made it clear that the potential for third-party interference with the goods before they reached the consumer was not sufficient to discharge the manufacturer’s responsibility. The defect in the goods was attributable to the negligence of the manufacturer, and the harm suffered by Grant was directly caused by the defective condition of the garments.

Conclusion

The decision in Grant v Australian Knitting Mills is a significant one in the context of consumer protection law and the development of negligence claims in tort. It established that manufacturers can be held liable for defects in their products that cause harm to consumers, even if the goods are sold through a third-party retailer. The case reinforced the principle that goods must be of merchantable quality and fit for their intended purpose, as implied by the Sale of Goods Act.

The case also highlighted the importance of the relationship between the manufacturer, retailer, and consumer in determining liability for defective products. By holding the manufacturer liable, the Court emphasised that the duty of care owed to the consumer extends beyond the immediate seller and includes the manufacturer, even if the goods were sold through an intermediary.