The Laws for Product Liability - Term Paper Example

Product Liability Product liability is the liability of a manufacturer for marketing a defective product to the consumer. In US, product liability claims are under the jurisdiction of state law. Each state has a set of commercial statutes based on Uniform Commercial Code. It has the warranty rules governing product liability. They are covered under negligence, strict liability or breach of warranty. Earlier if one wished to claim for the injuries caused by a product, one had to have ‘privity of contract’ which is a contractual contract between the supplier and the buyer of the product. Now this is not required any more. A claim can be made for product liability even if the injured person is not the buyer of the product. As long as the product has been sold and there is a possibility of injury from that product, a product liability claim can be made. In other words we can say that if a product fails to meet the requirement or expectation of a customer or can cause a possible injury, it is covered by the product liability law. The sale of the product is a must for the product liability to arise. In fact the responsibility of the defective products lies with all the sellers who may be in the chain like the manufacturer, wholesaler and the retailer or even the party that assembles and installs the product. The strict liability is applicable when the products are sold in the regular way. For example if someone sells something through a garage sale, he would not be liable for the product liability. Laws for Product Liability The laws for product liability have been developed over a long period of time. In English courts, there was a doctrine called – ‘caveat emptor’. This meant that- ‘let the buyer beware’. This doctrine expected the consumer to protect himself from the obvious and hidden defects of a product and he could not make a claim from the manufacturer. Later the English courts included a rule that made the manufacturer own the responsibility of any hidden defects of their products. The American courts had the ‘caveat emptor’ rule for a longer time. It was there is most of the nineteenth century. In late nineteenth century the US courts started the implied warranty that provided the consumer with privity of contract with the defendant. In other words, the consumer can claim any product liability only if he had directly purchased it from the manufacturer. Since most of the manufacturers sold through the retailers, there was no privity of contract and the consumers could not claim it from the manufacturers. It was only in 1950’s and 1960’s that the consumers could claim from the manufacturers whom they were not in their direct contact. In 1965, the Restatement of Torts was officially introduced by the ALI or the American Law Institute. Since then the law of product liability has started to develop. This development was recognized by the ALI in 1998 by approving the Restatement (third) of Torts: Product Liability. In cases related to product liability, the plaintiff or the consumer holds the manufacturer of the product liable for the damages caused to him due to the defect in the product or due to incorrect representation of the product. The defendant or the manufacturer tries to prove his innocence by either claiming that the product was not defective or that the consumer had misused it. Product liability law is a mixture of tort law and contract law.( Baldwin, 1998) Tort law is normally related to strict liabilities, negligence and deceit. Contract law relates mostly to the warranties. A consumer can have a mixture of claims related to negligence and warranty like breach of express warranty or breach of implied warranty of fitness or may be a fraud. Types of Defects For lodging a complaint regarding product liability, a plaintiff needs to prove the injury has been caused by a defective product and the defect was such that caused the injury. The defects that make the manufacturer or supplier liable for product liability, can be of three types – manufacturing defects, design defects and marketing defects. (U.S. Product Liability, website) Design defects If there is a flaw in the design of the product that could be a possible cause of injury to the user, then it is a design defect. For example a baby walker with a heavy top can be considered dangerous and a design defect as it can topple easily and cause injury to the baby. Although this is considered a design defect and a product liability claim can be made, but to make the claim the consumer will have to prove that this was the only product available in that category and price range. He has to prove that he had no other option but to buy this design. If there was an alternative product of a better design then the consumer cannot make a claim. However, if the design defect was unreasonably dangerous to have been considered for manufacturing, then the consumer need not prove availability of an optional product and he can hold the designer at guilt for product liability. Manufacturing defect Manufacturing defects are possible defects in the course of manufacturing or at the time of assembly. This has to be a case where the product has not been made or assembled as per the designer’s specifications or the manufacturer’s own specifications. A consumer can prove these defects easily by comparing them with the given specifications. But to prove how or why that defect was there, there are two special doctrines to help the consumer. This makes it possible for the consumer to recover for the damages caused even if it is difficult for him to prove that the it was the manufacturer’s fault. The first doctrine is – “res ipsa loquitur”. This Latin term means that – the thing speaks for itself. In other words it means that the defect itself is liable for the damage or the injury caused and it is due to someone’s negligence. It shifts the product liability and its proff to the defendants in some cases. Here the onus of proving that the fault was not at his end shifts to the manufacturer and he has to prove that he was ‘not’ negligent rather than the consumer proving that the manufacturer was negligent. The second doctrine is related to strict liability. Under strict liability a consumer need not prove the negligence of the manufacturer, he just has to prove the defect of the product. Strict liability option helps the consumer to make a claim for product liability by eliminating the need of proving manufacturer’s fault. Marketing defects These defects are related to negligence towards proper labeling to inform the consumer about proper instruction of usage and warnings of possible dangers. A misrepresentation, whether intentional or not, can lead to product liability claim. Exceptional products Some products are dangerous by nature and their danger is related to their utility itself. For example the sharpness of the edge of a knife is essential for its utility and is a possible danger also. Such kinds of products depend on the consumer for putting them to safe use. The manufacturers and the suppliers are supposed to provide warnings regarding the possible hazards so that the consumers can take correct decisions to use them. (Baldwin, 1998) Problems related to the claims There could be a problem in making a product liability claim if the consumer cannot have sufficient evidence regarding the manufacturer or the supplier, whose product has caused him injury or damage. He has to find the connection of the product to its manufacturer. ‘Market share responsibility’ is an exception that helps out a consumer from this situation. This exception rule is applicable in cases of defective medications. According to this rule if the consumer cannot identify which particular company is the supplier of the particular drug that caused him damage, then every manufacturer will be responsible for it and it will depend on the percentage of his sales in the area where the damage has taken place. The consumer can face another obstacle if the manufacturer says that the consumer altered the product after purchasing it and this alteration has caused him the injury. The manufacturer can also make a claim that the product was misused and that is the cause of the injury. (American Society for Quality Product Safety and Liability Prevention Interest Group, 1999) Legal basis for Product Liability For claiming product liability, a consumer may base his case on more than one theory. Primarily there are theories for negligence, tortious misrepresentation, breach of warranty and strict liability in tort. (Baldwin, 1998) Negligence In the law of Product Liability, the tort of negligence is a central part. To make a claim under the theory of negligence, a consumer needs to prove five elements:- The manufacturer owed a duty to the consumer The manufacturer breached a duty to the consumer The breach of duty was the actual cause of the consumer’s injury The breach of duty was the proximate cause of the injury The consumer suffered actual damages as a result of the negligence The law makes it mandatory for the manufacturer that he exercises a reasonable standard of care. But for making a claim on this ground, it is not sufficient to just prove that the manufacturer has not maintained the required standard of care. The consumer actually needs to prove two more things. He has to prove that the injury caused was solely due to the negligence of the manufacturer and could not have been caused otherwise. Another thing that he needs to prove is that the manufacturer could have foreseen the risks and made necessary changes during manufacturing. Tortious Misrepresentation If the manufacturer conveys false or wrong information regarding his product, he can be held responsible for product liability. If the consumer has used the product on the basis of the misleading information, and that has caused him damage, he can make a claim against the manufacturer. The basis of this claim is not the defect of the product but its misrepresentation. This misrepresentation may be of three types:- The manufacturer has misrepresented or deceived and knows about it, i.e. it is intentional and his motive of misrepresentation is to mislead the consumer. The manufacturer has made a misrepresentation by his negligence to ascertain the truth of a statement. A manufacturer may be held responsible for misrepresentation if he ahs made a public statement about the safety of his product, under ‘strict liability’ . this is allowed in some jurisdictions. Warranty Warranty is a type of guarantee of the quality of the product given by the seller. It can be express, which means that the certain representation have been made by the seller about the quality of the product. If the quality does not conform to the representation the seller can be held responsible for breach of express warranty. A waraty may also be implied due to the nature of the sale. In the United States, the warranties are based on the Uniform Commercial Code. This code has been adopted partly by the states. According to the U.C.C., there are express warranties and two types of implied warranties. These are:- 1. The implied warranty of merchantability 2. The implied warranty of fitness for a specific purpose An implied warranty of merchantability means that he seller promises that the product he is selling is in good working order and it will do what it is meant to do. An implied warranty of fitness for a specific purpose means that the advice given by the seller about how to use the product is correct. Strict Liability There is a provision in section 402A of the Restatement (second) of torts about the strict liability on the manufacturer. This makes a manufacturer liable for the product defects that occur during the process of manufacturing. It has no relation with the level of care taken by the manufacturer. Now this covers not only that but any case where the manufacturer has failed to give sufficient warnings. The Restatement (third) is applicable to other types of cases of product liability. Used Product Liability For selling or repairing used products, there are different rules. Generally, a person who is involved in repairing, rebuilding and reconditioning of a product, can be held liable if he is negligent in treating the product but he is not liable for the strict liability of the defects. In some cases, where a person who is involved in re-manufacturing of a product, he is subject to the same rules as applicable on the original manufacturer. (American Society for Quality Product Safety and Liability Prevention Interest Group, 1999) Different states have different rules regarding the product liability of the sellers of the used products. In some states they are held responsible and in some they are not held responsible. Defenses to Product Liability The manufacturer or the seller may take one or more defenses to product liability. A very common defense is the product was misused in a manner that was not foreseeable by the manufacturer. For example if the consumer tries to use his hand blender to break some stone pebbles and some pebbles jump out and injure the consumer, then the manufacturer can argue that using the hand blender for breaking pebbles was not a use that he could have foreseen. The manufacturer can also base his defense on consumer’s own negligence in using the product or in consumer’s own assumption of the risks involved with the usage of the product. In breach of warranty claims also similar defense is applied. In a claim of tortuous misrepresentation, the defense is centered on the justification of the consumer’s reliance on the seller’s statement. If his reliance is not justified, then his claim is not valid. Unavoidably Unsafe Products An unavoidably unsafe product is a category of products whose basic use is defeated if it is made safer. To make a claim for damages caused by unavoidably unsafe products, first of all it needs to be proved that it falls in the category of unavoidably unsafe products. (U.S. Product Liability,website) If it is in that category then even if it has caused any damage it cannot be treated as a defective product. Prescription drugs are normally recognized as unavoidably unsafe. In some courts, all prescription drugs are covered under unavoidably unsafe. They believe that the public demands such drugs even though it may have some risks. Some other courts treat them as any other product and weigh their usefulness and the risk. The courts that treat all prescription drugs as unavoidably unsafe have to treat all medical devices, vaccines and blood samples as unavoidably unsafe. A court may scrutinize the research done on the drug or the device before classifying it under the exception. They may weigh the benefit to human life and health and can also check the FDA certification. Although many of the medical products are found unavoidably unsafe, there are other category of products also that come under this category. Some of the cleaning, dry-cleaning, industrial cleaning products and some beauty products like hair dye, bleach and perm solutions, are unavoidably unsafe. Acetone, benzene and firearms are also covered by it. But gas stoves and cars are not considered unavoidably unsafe. An unavoidably unsafe product may not be dangerous just by nature. It is incapable of being made safer without losing its use. To differentiate between dangerous products and unavoidably unsafe products, there are four criteria:- preparation, marketing, utility vs. risk and alternatives. Preparation If there is a mistake during the manufacturing process of the product and that makes the product unsafe or dangerous then it cannot be classified as unavoidably unsafe product. If it is a prescription drug or a vaccine, it should not be adulterated. If it is not made correctly or if it is ineffective than it cannot be classified as unavoidably unsafe product. If a product cannot be adulterated, it may contain impurities and hence qualify for an exception. For example a blood sample with HIV infection may qualify for an exception. (Law about Product Liability, http://www.law.cornell.edu/) Marketing Appropriate marketing is another requirement for the unavoidably unsafe products. A product sold with faulty directions, or with inadequate warnings may not qualify for a unavoidably unsafe product. For example if a prescription drug is sold without any indication on its usage or potential users, it may not be covered under the unavoidably unsafe products. The same will be applicable if a drug is sold without any warnings of possible adverse reactions, then it is not considered an unavoidably unsafe product. (Law about Product Liability, http://www.law.cornell.edu/) Utility vs. Risk This is a requirement that says that the utility of the product should be greater than the risk of the product. It means that if a drug is sold to cure mild cough, but it can cause death also, then it will not be labeled as an unavoidably unsafe product. It need not be a lifesaving product either to be justified. There are many products in the beauty range and in birth control that outweigh their risk in proportion to their use. (Law about Product Liability, http://www.law.cornell.edu/) Alternatives 3. This means that there was no other way to get the work done in any alternative way by avoiding the risks posed by the product. If there is any other product available to do the same job or to get the same result without the risk, then this product may not qualify as an unavoidably unsafe product. The alternative also needs to qualify as an alternative on the basis of cost, benefit and relative safety. For example in the case of the drug to cure mild cough, another drug without the side effect of threat of death, could be an alterative and hence the drug in question will not be considered unavoidably unsafe. (Law about Product Liability, http://www.law.cornell.edu/) Product Recall Product recall is a request to the manufacturer to recall an entire batch or entire production, if the product is found unsafe to use. A recall limits the liability of a manufacturer for corporate negligence that can cause it huge legal penalties. It also helps them to avoid adverse publicity damage. () The recall itself is costly to the company because they may have to replace the product that they are recalling. They may also have to pay the compensations for the claims made by some users. But ultimately it is mush more costly to lose the brand name and the trust of the consumers. Recently, there was a recall by Toyota. Its Tundra pick up trucks had steering problems that was causing many accidents. Thus Toyota had to recall the model. Every country has its own law for product recall. That defines the situations compelling the recall and also the cost that the manufacturer would bear and the penalties that will be levied if it fails to recall the product from the market. A company may opt for the recall voluntarily also. If there is a compulsory recall then the consumers who have already bought it also have to either dispose it or return it to the manufacturer for either replacement or refund. If they fail to do so then they can also be fined. The amount of the fine could be as much as $ 500. When a company has been informed of the damages caused by its products to the consumers, and the company does not initiate the recall than the government agency can request the company to do so. Procedure of recall Once the authorized body identifies a product that is potentially harmful, or is not made as per the mandatory standards, the manufacturer is notified in writing. It specifies the reasons and gives the necessary steps to be taken. It may ask for a revision or a total recall. Sometimes it may notify the consumers also regarding the recall. The letters sent in such connection mention the subject ‘recall’ prominently. It explains the possible hazards and threat to safety of the consumer. Individualized letters are sent for the consumers, retailers and the distributors. () As an alternate, posters and counter cards are displayed in the retail outlets where the product was being sold. These are supplied by the manufacturing company, with the instruction to the retailer about the how to display them and how long to display them. They are normally displayed in prominent places like product shelves, cash counters, entrances and exists etc. There are specifications on the format and size and colors of the display. Normally a recall notice is displayed for 120 days. () Press releases are also used to notify about product recalls. Other forms of media are also used for this purpose. With the advancement of information technology, websites are a widely used tool for informing people about product recalls. There are some websites that are run by the governments and there are also some sites that are run privately for the benefit of consumers. Claims after Recall The procedure for recall has been designed to make people aware that a particular product has been recalled. If a consumer makes a product liability claim against a product and later that product is recalled from the market, then the consumer has the right to be compensated. If a person uses a product after it has been recalled, and suffers an injury then he cannot ask for compensation under product liability claim. (American Society for Quality Product Safety and Liability Prevention Interest Group, 1999) The consumers are advised to check the information sites and websites for recalled product listings. The government takes adequate steps to ensure that the information is made available to all potential users. Product liability claims are not applicable for such cases where the product was declared for recall. The government can take legal action against the company for not recalling the product but it will not cover the consumer to get a compensation for his failure of information. Conclusion The product liability law protects the rights of the consumer to safeguard them from potential harm of the defective products. To avail these benefits, on must know the finer details of the law and subsequently make a claim. Since the law varies from state to state and from country to country, one must refer to the law under whose jurisdiction they are covered. Reference: 1. American Society for Quality Product Safety and Liability Prevention Interest Group, 1999. The Product Recall Planning Guide. ASQ Quality Press, 2nd ed., Milwaukee, WI. 2. http://vm.cfsan.fda.gov/~lrd/recall2.html 4. http://www.fda.gov/fdac/features/895_recalls.html 5. http://www.fsis.usda.gov/OA/recalls/rec_intr.htm 6. The U.S. Consumer Product Safety Commission, a government site listing recalls in the United States 7. http://www.recalls.com/ a U.S. government website that announces most US government recalls. 8. Matt Seaver, 2003,Gower handbook of Quality management 9. Hunziker, 1994, J.R., Product liability and innovation, 10. Baldwin, 1998, S.,Mc Govern, F.E., Hare, F., The preparation of Product Liability case 11. U.S. Product Liability, http://www.library.findlaw.com/ 12. Thorpe, J.F., 1979, What every engineer should know about Product Liability 13. product Liability, http://www.findlaw.com/ 14. Law about Product Liability, http://www.law.cornell.edu/ 15. Products liability Law, 16. Product Liability Law, http://www.library.theserverside.com/ 17. Product liability law and defective products, http://www.expertlaw.com/ Read More