Grant v Australian Knitting Mills [1936] AC 85

Facts

• Mr. Grant purchased two pairs of long underwear manufactured by Australian Knitting Mills.
• The garments contained excess sulphite, a chemical that caused Mr. Grant to develop severe dermatitis.
• Mr. Grant initiated a negligence claim against the manufacturer.
• The manufacturer argued that, unlike a sealed product, the underwear packaging allowed for possible tampering between manufacture and use.
• The underwear was purchased and used as intended, with no alterations or warnings regarding hidden dangers.
• The alleged defect (excess sulphite) was latent and not discoverable by reasonable inspection.

Issues

1. Whether the manufacturer owed a duty of care to the ultimate consumer in the absence of contractual privity.
2. Whether the existence of a latent defect that caused harm established liability in negligence.
3. Whether the manufacturer’s duty was discharged by the possibility of intermediate tampering or inspection.
4. Whether warnings or opportunities for intermediate examination affected the scope of liability.

Decision

• The Privy Council ruled in favor of Mr. Grant, finding Australian Knitting Mills liable for negligence.
• The court held that the possibility of intermediate tampering, without evidence, did not relieve the manufacturer of liability.
• The presence of a latent defect (excess sulphite) for which no warning was given rendered the manufacturer responsible for the resulting injury.
• The judgment required that the product reach the consumer in substantially the same condition as when it left the manufacturer.
• The manufacturer’s duty of care persisted when no reasonable opportunities for intermediate inspection existed, and no warnings were provided.

Legal Principles

• Manufacturers owe a duty of care to the ultimate consumer, even in the absence of direct contractual relations.
• Liability arises for latent defects not discoverable by reasonable inspection, provided the product is used as intended.
• Mere theoretical opportunities for intermediate tampering or examination do not suffice to discharge the manufacturer’s duty of care.
• The duty may be mitigated if the manufacturer provides adequate warnings or if reasonable opportunity for intermediate inspection exists.
• The case clarified and affirmed the principles in Donoghue v Stevenson regarding product liability for manufacturers.
• Subsequent legal developments, such as the Consumer Protection Act 1987, introduced strict liability, but the negligence-based principles in this case provided a key basis.

Conclusion

Grant v Australian Knitting Mills clarified and expanded the principle that manufacturers are liable for injuries caused by latent defects when goods reach the consumer in unchanged condition, limiting defenses based solely on hypothetical intermediate tampering and emphasizing the necessity of reasonable care in manufacturing products intended for public use.