Product liability
Encyclopedia
Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make product
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...

s available to the public are held responsible for the injuries those products cause. Although the word "product" has broad connotations, product liability as an area of law is traditionally limited to products in the form of tangible personal property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...

.

Theories of liability

In the United States, the claims most commonly associated with product liability are negligence
Negligence
Negligence is a failure to exercise the care that a reasonably prudent person would exercise in like circumstances. The area of tort law known as negligence involves harm caused by carelessness, not intentional harm.According to Jay M...

, strict liability
Strict liability
In law, strict liability is a standard for liability which may exist in either a criminal or civil context. A rule specifying strict liability makes a person legally responsible for the damage and loss caused by his or her acts and omissions regardless of culpability...

, breach of warranty, and various consumer protection
Consumer protection
Consumer protection laws designed to ensure fair trade competition and the free flow of truthful information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors and may provide additional...

 claims. The majority of product liability laws are determined at the state level and vary widely from state to state. Each type of product liability claim requires different elements to be proven to present a successful claim.

Types of liability

Section 2 of the Restatement (Third) of Torts: Products Liability distinguishes between three major types of product liability claims:
  • manufacturing defect,
  • design defect,
  • a failure to warn (also known as marketing defects).


However, in most states, these are not legal claims in and of themselves, but are pleaded in terms of the theories mentioned above. For example, a plaintiff might plead negligent failure to warn or strict liability for defective design.

Manufacturing defects are those that occur in the manufacturing process and usually involve poor-quality materials or shoddy workmanship
Skill
A skill is the learned capacity to carry out pre-determined results often with the minimum outlay of time, energy, or both. Skills can often be divided into domain-general and domain-specific skills...

. Design defects occur where the product design is inherently dangerous or useless (and hence defective) no matter how carefully manufactured; this may be demonstrated either by showing that the product fails to satisfy ordinary consumer expectations as to what constitutes a safe product, or that the risks of the product outweigh its benefits. Failure-to-warn defects arise in products that carry inherent nonobvious dangers which could be mitigated through adequate warnings to the user, and these dangers are present regardless of how well the product is manufactured and designed for its intended purpose.

Breach of warranty

Warranties are statements by a manufacturer or seller concerning a product during a commercial transaction. Warranty claims commonly require privity between the injured party and the manufacturer or seller; in plain English
Plain English
Plain English is a generic term for communication styles that emphasise clarity, brevity and the avoidance of technical language – particularly in relation to official government communication, including laws.The intention is to write in a manner that is easily understood by the target...

, this means they must be dealing with each other directly. Breach of warranty-based product liability claims usually focus on one of three types: (1) breach of an express warranty, (2) breach of an implied warranty
Implied warranty
In common law jurisdictions, an implied warranty is a contract law term for certain assurances that are presumed to be made in the sale of products or real property, due to the circumstances of the sale. These assurances are characterized as warranties irrespective of whether the seller has...

 of merchantability, and (3) breach of an implied warranty of fitness for a particular purpose. Additionally, claims involving real estate may also take the form of an implied warranty of habitability. Express warranty claims focus on express statements by the manufacturer or the seller concerning the product (e.g., "This chainsaw is useful to cut turkeys"). The various implied warranties cover those expectations common to all products (e.g., that a tool is not unreasonably dangerous when used for its proper purpose), unless specifically disclaimed by the manufacturer or the seller.

Negligence

A basic negligence claim consists of proof of
  1. a duty owed,
  2. a breach of that duty,
  3. the breach was the cause in fact of the plaintiff's injury (actual cause)
  4. the breach proximately caused the plaintiff's injury.
  5. and the plaintiff suffered actual quantifiable injury (damages).


As demonstrated in cases such as Winterbottom v. Wright
Winterbottom v. Wright
Winterbottom v Wright 10 M&W 109 was an important case in English common law responsible for constraining the law's stance on negligence in the nineteenth century.-Facts:...

, the scope of the duty of care was limited to those with whom one was in privity. Later cases like MacPherson v. Buick Motor Co.
MacPherson v. Buick Motor Co.
MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 is a famous New York Court of Appeals opinion by Judge Benjamin N. Cardozo which removed the requirement of privity of contract for duty in negligence actions.-Facts:...

broadened the duty of care to all who could be foreseeably injured by one's conduct.

Over time, negligence concepts have arisen to deal with certain specific situations, including negligence per se
Negligence per se
Negligence per se is the legal doctrine whereby an act is considered negligent because it violates a statute . In order to prove negligence per se, the plaintiff must show that# the defendant violated the statute,...

 (using a manufacturer's violation of a law or regulation, in place of proof of a duty and a breach) and res ipsa loquitur
Res ipsa loquitur
In the common law of negligence, the doctrine of res ipsa loquitur states that the elements of duty of care and breach can be sometimes inferred from the very nature of an accident or other outcome, even without direct evidence of how any defendant behaved...

 (an inference of negligence under certain conditions).

Strict liability

Rather than focus on the behavior of the manufacturer (as in negligence), strict liability claims focus on the product itself. Under strict liability, the manufacturer is liable if the product is defective, even if the manufacturer was not negligent in making that product defective.

The difficulty with negligence is that it still requires the plaintiff to prove that the defendant's conduct fell below the relevant standard of care. However, if an entire industry tacitly settles on a somewhat careless standard of conduct, then the plaintiff may not be able to recover even though he or she is severely injured, because although the defendant's conduct caused his or her injuries, such conduct was not negligent in the legal sense. As a practical matter, with the increasing complexity of products, injuries, and medical care (which made many formerly fatal injuries survivable), it is quite a difficult and expensive task to find and retain good expert witnesses who can establish the standard of care, breach, and causation.

Therefore, in the 1940s and 1950s, many American courts departed from the MacPherson standard and decided that it was too harsh to require seriously injured consumer plaintiffs to prove negligence claims against manufacturers or retailers. To avoid having to deny such plaintiffs any relief, these courts began to look for facts in their cases which they could characterize as an express or implied warranty from the manufacturer to the consumer. The res ipsa loquitur doctrine was also stretched to reduce the plaintiff's burden of proof. Over time, the resulting legal fiction
Legal fiction
A legal fiction is a fact assumed or created by courts which is then used in order to apply a legal rule which was not necessarily designed to be used in that way...

s became increasingly strained.

Of the various U.S. state
U.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...

s, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...

 was the first to throw away the fiction of a warranty and to boldly assert the doctrine of strict liability in tort for defective products, in 1963 (under the guidance of then-Associate Justice Roger J. Traynor
Roger J. Traynor
Roger John Traynor served as the 23rd Chief Justice of California from 1964 to 1970, and as an Associate Justice from 1940 to 1964...

). See Greenman v. Yuba Power Products, 59 Cal. 2d 57 (1963). The importance of Greenman cannot be overstated: in 1996, the Association of Trial Lawyers of America
Association of Trial Lawyers of America
The American Association for Justice , formerly the Association of Trial Lawyers of America is the leading organization for lawyers representing plaintiffs in the United States...

 (now known as the American Association of Justice) celebrated its 50th anniversary by polling lawyers and law professors on the top ten developments in tort law during the past half-century, and Greenman topped the list.

In Greenman, Traynor cited to his own earlier concurrence in Escola v. Coca-Cola Bottling Co.
Escola v. Coca-Cola Bottling Co.
Escola v. Coca-Cola Bottling Co., 24 Cal.2d 453, 150 P.2d 436 , was a decision of the Supreme Court of California involving an injury caused by an exploding bottle of Coca-Cola...

, 24 Cal. 2d 453, 462 (1944) (Traynor, J., concurring). In Escola, now widely recognized as a landmark case in American law, Justice Traynor laid the foundation for Greenman with these words:
The year after Greenman, the Supreme Court of California proceeded to extend strict liability to all parties involved in the manufacturing, distribution, and sale of defective products (including retailers) and in 1969 made it clear that such defendants were liable not only to direct customers and users, but also to any innocent bystanders randomly injured by defective products.

Since then, many jurisdictions have been swayed by Justice Traynor's arguments on behalf of the strict liability rule in Escola, Greenman, and subsequent cases—including nearly all U.S. states, the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

, Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

, and Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

— and have adopted it either by judicial decision or by legislative act. Notably, South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...

, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...

, and the U.S. state of North Carolina
North Carolina
North Carolina is a state located in the southeastern United States. The state borders South Carolina and Georgia to the south, Tennessee to the west and Virginia to the north. North Carolina contains 100 counties. Its capital is Raleigh, and its largest city is Charlotte...

 have soundly rejected strict liability; Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

 continues to officially reject it but under American influence has gradually adjusted certain aspects of negligence and warranty law to make them more favorable to consumers.

Although the Greenman rule was transmitted to most other states via Section 402A of the Restatement of Torts, Second
Restatement of Torts, Second
The American Restatement of Torts, Second is an influential treatise issued by the American Law Institute. It summarizes the general principles of common law United States tort law...

 (published in 1964 after Greenman), the Supreme Court of California
Supreme Court of California
The Supreme Court of California is the highest state court in California. It is headquartered in San Francisco and regularly holds sessions in Los Angeles and Sacramento. Its decisions are binding on all other California state courts.-Composition:...

 refused to adopt Section 402A's "unreasonably dangerous" limitation upon strict liability in 1972. Thus, strict liability in California is truly strict, in that the plaintiff need not show that the defect was unreasonable or dangerous. On the other hand, in California, the defendant is allowed to introduce evidence in a strict products liability action that the plaintiff contributed to his or her own injuries.

Although the Supreme Court of California
Supreme Court of California
The Supreme Court of California is the highest state court in California. It is headquartered in San Francisco and regularly holds sessions in Los Angeles and Sacramento. Its decisions are binding on all other California state courts.-Composition:...

 has since become more conservative, it continues to endorse and expand the doctrine. In 2002 it held that strict liability for defective products even applies to makers of component products that are installed into and sold as part of real property
Real property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...

.

Consumer protection

In addition to the above common law claims, many states have enacted consumer protection statutes providing for specific remedies for a variety of product defects. Statutory remedies are often provided for defects which merely render the product unusable (and hence cause economic injury) but do not cause physical injury or damage to other property; the "economic loss rule" means that strict liability is generally unavailable for products that damage only themselves. The best known examples of consumer protection laws for product defects are lemon laws, which became widespread because automobile
Automobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...

s are often an American citizen's second-largest investment after buying a home.

Product liability in the European Union

Moves towards a strict liability regime in Europe began with the Council of Europe
Council of Europe
The Council of Europe is an international organisation promoting co-operation between all countries of Europe in the areas of legal standards, human rights, democratic development, the rule of law and cultural co-operation...

 Convention on Products Liability in regard to Personal Injury and Death (the Strasbourg Convention) in 1977. On July 25, 1985, the European Economic Community
European Economic Community
The European Economic Community The European Economic Community (EEC) The European Economic Community (EEC) (also known as the Common Market in the English-speaking world, renamed the European Community (EC) in 1993The information in this article primarily covers the EEC's time as an independent...

 adopted the Product Liability Directive 85/374/EEC
Directive 85/374/EEC
The Product Liability Directive, formally Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products is a directive of the Council of the European Union that created a...

. In language similar to Traynor's, the Directive stated that "liability without fault on the part of the producer is the sole means of adequately solving the problem, peculiar to our age of increasing technicality, of a fair apportionment of the risks inherent in modern technological production." However, the Directive also gave each member state the option of imposing a liability cap of 70 million euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...

s per defect.

Rationale for and debate over strict liability

Strict products liability causes manufacturers to internalize costs they would normally externalize
Externality
In economics, an externality is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit...

. Strict liability thus requires manufacturers to evaluate the full costs of their products. In this way, strict liability provides a mechanism for ensuring that a product's absolute good outweighs its absolute harm.

Between two parties who are not negligent (manufacturer and consumer), one will necessarily shoulder the costs of product defects. Proponents say it is preferable to place the economic costs on the manufacturer because it can better absorb them and pass them on to other consumers. The manufacturer thus becomes a de facto insurer against its defective products, with premiums built into the product's price.

Strict liability also seeks to diminish the impact of information asymmetry between manufacturers and consumers. Manufacturers have better knowledge of their own products' dangers than do consumers. Therefore, manufacturers properly bear the burden of finding, correcting, and warning consumers of those dangers.

Strict liability reduces litigation costs, because a plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...

 need only prove causation
Causation
Causation may refer to:* Causation , a key component to establish liability in both criminal and civil law* Causation in English law defines the requirement for liability in negligence...

, not imprudence. Where causation is easy to establish, parties to a strict liability suit will most likely settle, because only damages are in dispute.

Critics charge that strict liability creates risk of moral hazard
Moral hazard
In economic theory, moral hazard refers to a situation in which a party makes a decision about how much risk to take, while another party bears the costs if things go badly, and the party insulated from risk behaves differently from how it would if it were fully exposed to the risk.Moral hazard...

. They claim that strict liability causes consumers to under invest in care even when they are the least-cost avoiders. This, they say, results in a lower aggregate level of care than under a negligence standard. Proponents counter that people have enough natural incentive to avoid inflicting serious harm on themselves to mitigate this concern.

Critics charge that the requiring manufacturers to internalize costs they would otherwise externalize increases the price of goods. Critics claim that in elastic
Elasticity (economics)
In economics, elasticity is the measurement of how changing one economic variable affects others. For example:* "If I lower the price of my product, how much more will I sell?"* "If I raise the price, how much less will I sell?"...

, price-sensitive markets, price increases cause some consumers to seek substitutes for that product. As a result, they say, manufacturers may not produce the socially optimal level of goods. Proponents respond that these consumer opt outs reflect a product whose absolute harm outweighs its absolute value; products that do more harm than good ought not be produced.

See also

  • Asbestos and the law
    Asbestos and the law
    This article concerns asbestos-related legal and regulatory issues. Litigation related to asbestos injuries and property damages has been claimed to be the longest-running mass tort in U.S. history...

     - U.S.
  • Automobile products liability
    Automobile products liability
    Automobile Products LiabilityWhen a person makes a claim for personal injury damages which have resulted from the presence of a dangerous or defective automobile, he asserts a Product Liability claim against the automobile's manufacturer and/or the manufacturer of the component part or system.-...

  • Consumer Product Safety Commission
    Consumer Product Safety Commission
    The United States Consumer Product Safety Commission is an independent agency of the United States government created in 1972 through the Consumer Product Safety Act to protect "against unreasonable risks of injuries associated with consumer products." The CPSC is an independent agency that does...

     - U.S.
  • Consumer protection
    Consumer protection
    Consumer protection laws designed to ensure fair trade competition and the free flow of truthful information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors and may provide additional...

  • Donoghue v Stevenson - Scotland snail case
  • Market share liability
    Market share liability
    Market share liability is a legal doctrine unique to the law of the United States that allows plaintiffs injured by fungible products to apportion liability among the manufacturers according to their share of the market for the injurious product.-Origins:...

     - U.S.
  • McDonald's coffee case - U.S.
  • Product recall
    Product recall
    A product recall is a request to return to the maker a batch or an entire production run of a product, usually due to the discovery of safety issues. The recall is an effort to limit liability for corporate negligence and to improve or avoid damage to publicity...

  • Statute of limitations
    Statute of limitations
    A statute of limitations is an enactment in a common law legal system that sets the maximum time after an event that legal proceedings based on that event may be initiated...

  • Summers v. Tice
    Summers v. Tice
    Summers v. Tice, , is a seminal California Supreme Court tort law decision relating to the issue of liability where a plaintiff cannot identify with specificity which among multiple defendants caused his harm. The case has had its greatest influence in the area of product liability in American...

  • Tort reform
    Tort reform
    Tort reform refers to proposed changes in common law civil justice systems that would reduce tort litigation or damages. Tort actions are civil common law claims first created in the English commonwealth system as a non-legislative means for compensating wrongs and harm done by one party to...

  • Toxic tort
    Toxic tort
    A toxic tort is a special type of personal injury lawsuit in which the plaintiff claims that exposure to a chemical caused the plaintiff's injury or disease.-Different types:...

  • Tombstone mentality
    Tombstone mentality
    Tombstone mentality is an aviation informal term that notes air safety is often improved only after somebody has died, which points out a fatal defect....

  • Wyeth v. Levine
    Wyeth v. Levine
    Wyeth v. Levine, 555 U.S. 555 , is a United States Supreme Court case holding that Federal regulatory approval of a medication does not shield the manufacturer from liability under state law.-Vermont jury trial:...


External links

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