Risk-utility test
Encyclopedia
In legal disputes
regarding product liability
, a risk-utility test is used to determine whether a product's design or warning is defective, thereby making the manufacturer liable
for injuries caused by its product.
The manufacturer is held liable under the risk-utility test if the probability of injury times the gravity of injury under the current product design is more than the cost of an alternative reasonable design plus the diminished utility resulting from modifying the design. More simply, the court considers if the economic costs (determined from likely lawsuit
s) are higher than the cost of changing the product design (ex: installing a plastic guard) plus the loss of use of the product (ex: the new guard makes it harder to use the product). Generally, the simplest way to think of the risk-utility test is the Hand Formula
applied to products.
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
regarding product liability
Product liability
Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause...
, a risk-utility test is used to determine whether a product's design or warning is defective, thereby making the manufacturer liable
Legal liability
Legal liability is the legal bound obligation to pay debts.* In law a person is said to be legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. See Strict liability. Under English law, with the passing of the Theft...
for injuries caused by its product.
The manufacturer is held liable under the risk-utility test if the probability of injury times the gravity of injury under the current product design is more than the cost of an alternative reasonable design plus the diminished utility resulting from modifying the design. More simply, the court considers if the economic costs (determined from likely lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
s) are higher than the cost of changing the product design (ex: installing a plastic guard) plus the loss of use of the product (ex: the new guard makes it harder to use the product). Generally, the simplest way to think of the risk-utility test is the Hand Formula
Calculus of negligence
In the United States, the calculus of negligence, or Hand rule or Hand formula, is a term coined by Judge Learned Hand and describes a process for determining whether a legal duty of care has been breached . The original description of the calculus was in U.S. v...
applied to products.