LEGAL LIABILITY FOR BUSINESS.

Product liability presented by,

M.HIMABINDU

INTRODUCTION:-If your business supplies products to consumers , you need to make sure the products are safe.

Most injuries and illness resulting from products were covered under contract law not tort law.

Case : Macpherson Vs Buick

Macpherson Vs Buick:-Macpherson was thrown out of his buick and

injured when one of the wooden spokes on a

wheel collapsed. Even though buick sub-

contracted the production of the wheel to

another firm and buick sold the car to a

retailer, who in turn sold it to Macpherson, the

court found that buick was liable for damages.

Strict liability standard:-Case : Escola Vs Coca-Cola Bolting Company.

Escola was loading coke bottles into the

Refrigerator When one of the bottles exploded, injuring

her hand.

Judge traynor’s opinion in the case clearly states that

negligence rule should be replaced by a standard that

makes manufacturers liable whenever their products are

defective.

Second Restatement of Torts:According to section 402A , it states that

manufacturers are liable if consumers are

harmed as a result of using a product that is

“unreasonably dangerous” and defective.

The doctrine in this statement is adopted by

all the states in the subsequent decades.

Types of defects:-There are three general types of product

defects.

1. Manufacturing defect

2. Design defect

3. Warning defect

Contractual liability:-Firms are subject to liability under contract

law as a result of warranties that are made

when products and services are sold to

consumers.

1. Express warranty

2. Implied warranty

Responsibilities as a producer , distributor or seller:-

Warning consumers about potential risks.

Providing information to help consumers

understand the risks.

Monitoring safety of the products.

Taking action if a safety problem Is found.

Responsibilities as a producer , distributor or seller:-

Particular care should be taken with high risk

products such as;

1. Toys

2. Fireworks

3. Food

4. Medicines

Product safety:-The main responsibility on product safety falls

on producers. This includes ;

1. Manufacturers

2. Importers

3. Businesses that supply own brand products

4. Businesses that change the safety of a

product. (by customizing/ servicing)

Distributors:-Shops and wholesalers are not normally liable

for harm to consumers as long as they identify

the producer.

But they have the responsibility for safety and

can face enforcement action.

Any one who is harmed by unsafe product can

begin court case up to 3 years-10 years.

Trading standards:-If the products are unsafe the trading

standard officers can ;

1. Order you to stop selling them

2. Go to court and ask for the product to be

destroyed

3. Prosecute you- if convicted you could be

fined or imprisoned.

Defending product liability claim:-

In case of distributor he must be able to

identify the producer.

In case of producer, if default is in production

process he may not admit the liability. Then

he need to prove one of the 6 defenses;

Defending product liability claim:-1. You did not supply the product.

2. You could not reasonably be expected to discover the safety

fault.

3. Safety fault was an inevitable result of obeying other laws.

4. Someone else caused the fault in the course of business.

5. You didn’t supply the product in the course of business.

6. If you make components, then you are not liable only if you

can identify the manufacturer.

Insurance coverage:-Insurance coverage for products liability

generally provided by a firm’s Commercial

General Liability (CGL) insurance policy.

CGL policy provides liability insurance

coverage for property damage and bodily

injuries.

Issues:-Product liability has expanded to the point that

both the safety and compensation objectives of

the liability system have been undermined.

1. Product safety

2. Compensation for injury

3. Regressivity of current system

4. Products liability reform proposals

Preventing product safety problems:-Consider safety at every stage from initial design to selling.

Check whether there are any specific regulations or safety

standards applying to your product that you meet them.

In case of suppliers;

1. Give customers any safety information provided by the

producer.

2. Investigate safety complaints

3. Co-operate with trading standard officers.