Product Liability Overview

Product Liability

• Growing concern: Business entities face increasing liability for injuries caused by their products.
• Examples: A manufacturer in Mumbai could be held liable for defective televisions causing injury in other countries (Africa, Japan, Europe, USA).
• Varying legal systems: Liability rules differ greatly across legal systems. Europe and the USA generally hold manufacturers liable.
• Trend towards consumer protection: Many countries are shifting towards greater consumer protection through increased manufacturer or seller liability.
• Traditional approach (caveat emptor): Historically, the buyer was responsible for inspecting goods for defects.
• Modern approach (caveat vendor): Some countries now hold sellers responsible for defects. This is especially true in the US.
• Contract vs. tort obligations: Product liability traditionally falls under contract and tort obligations.
• Tort obligations: Individuals have a duty to avoid causing harm to others. Negligence in product manufacture leads to liability.
• Strict liability: Some systems hold manufacturers liable even without negligence for injuries related to their products, notably focusing on inherently dangerous products.

Defenses in Product Liability Cases

• Contributory negligence: The injured consumer's actions causing injury. This may lessen or eliminate the manufacturer's liability.
• Assumption of risk: Consumers knowing the risks involved and using the product anyway. This isn't a defense if the consumer had no choice or if the product could be safer.
• Lack of advanced scientific/technical knowledge: If the defect couldn't be discovered at the time of manufacture/distribution.
• Adequate warnings/disclaimers: Providing warnings about product risks may limit manufacturer liability.

Shared Liability

• Multiple producers: All producers of a specific product type might share liability if an injury arises from the use of that type in a particular market.
• Market-wide risk: Businesses must consider this liability when deciding to sell products in specific markets.

Consumer Protection

• Government involvement: Growing government involvement in consumer protection laws is notable. Increased globalization and consumer-business disparity are factors.
• EU Green Paper: A summary of objectives for consumer protection.
• Regulations and laws: Governments (federal and state/provincial) enact laws, agency rules to regulate consumer protection.
• Disparities in power: Business often hold greater bargaining power than consumers, necessitating protection.

Specific Consumer Protection Measures

• Fairness in contracts: Requires fair terms in standard form contracts (e.g., car rental, insurance). Examples include replacement vehicles if defective, dispute resolving mechanisms.
• Deception and fraud: Laws prohibit misleading practices/intentional fraud harmful to consumers.
• Product information disclosure: Companies selling financial products, food, or appliances must provide required information.
• Restricted sales practices: Laws prevent practices like automatically canceling insurance for late payments.
• Consumer access to financial information: Consumers have access to business financial information, personal financial information held by businesses and government.
• Class actions: Individual lawsuits against businesses are increasingly aggregated for greater effect.