In this article, we look at some of the issues that may arise in connection with product liability claims.
Product liability claims commonly occur as a result of defective product design, usually where the product is inherently dangerous, or in circumstances whereby there has been defective manufacture or quality control failures. Defective manufacture may affect a few items or, perhaps, a specific production batch which fails to conform to its corresponding specification.
Claims may also come up where the accompanying product information (or warnings) is alleged not to have sufficiently highlighted potential hazards or, indeed, where there is injury or damage after the business had been notified that a particular product was unsafe yet it has done nothing about it.
Product liability claims are usually based on breach of contract, negligence or fault and/or strict liability for a defective product (based on Directive 85/374/EEC on liability for defective products). Note that claims may be pleaded in the alternative under these headings. The burden of proof in terms of establishing causation sits with the complaining party, with an obligation to prove the damage, the defect and the causal relationship between them.
Contractual Liability - a claim for breach of a condition or a warranty depends on whether or not there is a contract, the content and extent of the term under consideration and whether there has been a breach of that term. Where a claim is in a business to business scenario there may, of course, be limitations or exclusions on liability as well as contractual indemnities to consider.
With consumers, note that consumers may be able to claim for breach of an implied term in a contract for sale (liability for a product failing to be of adequate quality, regardless of whether the company is at fault). Bear in mind, however, that consumers may only claim in contract against the retailer who had sold them the product in question.
Negligence - a claim in negligence may be brought against a manufacturer or indeed any other entity in the relevant supply chain. The reasonableness of the defaulting party’s acts or omissions is at the heart of the issue, with a focus on – as applicable – any failings in the design, production or marketing of the product by that party.
Strict Liability – this would be a claim based on a breach of Directive 85/374/EEC, relating to liability for damage caused by a defect in the product. This liability is strict, which means that a claim may be brought whether or not the producer of the relevant product is at fault. Strict liability disregards considerations of reasonableness and points the spotlight on objective criteria pertaining to the product’s safety.
A product is construed as defective where it lacks the safety that a person is entitled to expect, taking all the circumstances into account, including: the presentation of the product, the use you could reasonably expect to put it to and the time when the product was put into circulation. Additional elements must be borne in mind, including: (i) the product information and warnings included with or provided for the product; (ii) the labelling information; (iii) any marketing material and any statements which may have been made by sales representatives.
The primary responsibility in respect of product liability is attributed to the entity that has produced the defective product in question. This may be the manufacturer of a finished product, the producer of any raw material used in the product, the manufacturer of a component part or an importer of products into the EU. Note, however, that other entities may have been involved in the production process (by virtue of inclusion of the entity’s name, trade mark or other distinguishing feature on the product) may also attract liability.
Businesses are advised to ensure that their contractual terms protect their positions in this regard, to the extent possible. Limits and exclusions of liability should also be built in, as far as they are legally enforceable. Further, product liability risks may be mitigated by giving the following points consideration:
- Bear in mind the potential causes of action and be aware of likely areas of exposure to liability;
- Understand the implications of product liability litigation and regulatory offences;
- Familiarise yourself with the business’ liability insurance cover;
- Put in place a crisis management procedure;
- Learn about the kinds of documents which may require to be disclosed in any resultant litigation and manage the document retention and destruction policy of the business.