Product Liability

Liability in Negligence I

Originally, compensation was only available for defective products on the basis of a breach of contract. This meant that the claimant must have been the purchaser of the product and it must have been a term of the contract that it would not be defective. This would have been an implied term at common law and under the Sale of Goods act unless altered.

A manufacturer of a product is potentially liable for loss and damage caused by a defective product. There are two separate bases of liability. Both may arise in the same legal proceedings. The first is based on principles of negligence. The other is based on EU wide legislation, designed to harmonise the basis of compensation for defective product liability throughout the EU.

If a manufacturer produces goods that are sold in a form which does not allow the opportunity of prior inspection and examination to the ultimate user, it may be liable for injury and damage caused by its negligence. Repairers, assemblers, suppliers, installers and retailers may have similar duties, depending on the circumstances and the nature of the goods.

Liability in Negligence II

In the famous case of Donoghue v Stevenson, the so-called “snail in the bottle” case, it was recognised that there is a general duty of care to one’s neighbour. The duty is to take care not to cause injury, damage or loss to other persons, who will foreseeably suffer injury, loss or damage by reason of the failure to meet the requisite standard of care. In that case, a manufacturer of ginger beer in a dark bottle was liable to a person who became sick after drinking from a bottle, which contained the remnants of a dead snail.

As well as containing the most famous statement of the principle of liability for negligence, the case also established a narrower principle that when a manufacturer produces a product which is sold to an end user without the possibility of intermediate inspection then the manufacturer will be liable if, by reason of its negligence, the product causes personal injury, loss or damage to the end user.

Retailer I

Where a product is sold, there is usually an express or implied term in the sale contract between buyer and seller that it is of merchantable quality. In a contract with a consumer, this implied obligation cannot be removed or reduced. In non-consumer contracts, the obligation may be modified or removed, but only to the extent that it is fair and reasonable.

Where there is a contract, the position is regulated by the contract. However, the terms of the contract will only apply to the parties to the contract. Where a product is defective, the retailer will generally be liable for breach of the contract. The contract claim is a more limited claim for the direct and inevitable loss arising from the defect. Such a claim is usually for the loss of the product itself, rather than for personal injury.

Retailers owe a duty of care to those who may be injured by products they sell.   This is in addition to the contractual and Sale of Goods Act implied warranties. The retailer’s duty in negligence is limited to types of goods and scenarios in which it is in a position to take responsibility for some aspect of the safety of the products, e.g. in the storage of food. This duty of care may arise, for example, where out of date stock, dangerous if a retailer sells goods which have obvious dangers are risks that he or he may be liable.

If the retailer is sued, he generally has a right against the wholesaler under his purchase contract. Parties up the distribution chain through the wholesaler to the manufacturer may be joined in the legal proceedings for contribution and indemnity.  The manufacturer or others responsible for a defective or faulty product may be sued directly on a tort basis. They may also be liable under a guarantee.

Manufacturers and Suppliers Negligence

A manufacturer is liable for defective and dangerous products. Manufacturers have a duty to take care towards those who may be foreseeably injuries or damage by the products. The duty is owed to anyone who uses the product. It is therefore not limited to the person who purchases the product.

The manufacturer or other person sued may be able to join another, such as a supplier, for contribution and /or indemnity. For example, a manufacturer may have relied on his supplier who sold a defective component.

The principle also applies to repairers, installers, assemblers and suppliers. Builders may be liable for supplying houses with dangerous defects. The duty may apply to retailers to a limited extent. They are under a duty of care in respect the safety of the person of persons whom they supply and other end users.

Nature of Duty

The manufacturer’s duty is usually more extensive than that of intermediaries and retailers. The nature of the duty depends on the goods concerned. The duty is proportionate to the nature of the product. For example, in the case of food, the duty is higher than in the case of other products which are not ingested.  Equally, a person in control of dangerous substance, whether a supplier manufacturer or seller has a high duty of care to ensure that persons who acquire it from him do not suffer injury or loss.

Unlike the position with a breach of contract, the duty is owed to consumers and other persons who foreseeably used the product. The Civil Liability Act provides that where negligence in respect of a thing causes loss or damage, the possibility of examination after purchase does not exclude the duty. It may be taken as evidence of negligence.

Warnings

The presence or absence of warnings may be critical to the issue of liability in a product liability case. In some cases, manufacturers have been held liable by reason of their failure to warn of certain risks. In order to establish liability, it is necessary to convince the court that the presence of the warning, would have been likely to prevent the accident. Several cases failed because the claimants were unable to prove that the accident would not have occurred if a warning label was attached.

There were several cases where flammable cotton night clothes caught fire in the vicinity of open fire and gas heaters and caused injury. In some cases, the manufacturers were held liable for failing to warn of the risks regarding the flammability of clothing.

There are many instances, where legislation requires product labelling (e.g. food labelling requirements).  A manufacturer or supplier may be liable for failure to warn notwithstanding that there is no specific legal obligation to label or warn. If a manufacturer becomes aware that a product is used in a particular way, there may be a duty to bring this to the attention of end users.

The courts have been reluctant to impose tort liability on manufacturers and suppliers where products are defective but are not dangerous. For a period in the 1980s and 1990s, the courts appeared willing to allow a liability in such cases. However ultimately, the courts stepped back from this approach on the basis that this would come close to substituting negligence liability for the law of contract.

Products Liability Directive

The Products Liability Directive is EU wide legislation designed to harmonise the law and provide minimum rights in relation to liability for dangerous products.  The purpose of the legislation is to make a producer (and/or certain other) liable to compensate users for injury and damage caused by defective products without proof of fault or lack of care. Liability is not based on negligence or fault but on the fact that the defect has caused the user/claimant damage.

The EU directive was implemented in Ireland in 1991. In some cases, the fault based common law rules may be more favourable. A claim may be made on the same facts on the basis of the Directive and/ or common law liability for fault. The legislation gives a claimant who has suffered personal injury or damage to property by reason of a defective product, a claim against the producer and certain other parties.

Producer

A “producer” is widely defined. It includes manufacturers and producers of components. it also includes importers who import products into the EU, provided that they are imported for commercial purposes. It includes businesses holding themselves out as producers. If the producer cannot be identified, the supplier will be treated as the producer unless it notifies the claimant within a reasonable time of who supplied the product to it.

The producer includes

• the manufacturer or producer of the finished product;
• the manufacturer or producer of raw materials or components;
• a processor in the case agricultural products;
• a person putting his name, mark or feature on the product or using it in relation to the product or holding himself out as producer; or
• an importer of the product into the EU.

Defective Product

A product is defective when it fails to provide the safety which a person is entitled to expect under all the circumstances, taking account the presentation of the product, the uses to which it might reasonably be expected to be put and the time when the product was put into circulation. A product should not be considered defective, for the sole reason that a better product was subsequently put into circulation.

The product must be of a type ordinarily used for private consumption and must have been so used by the injured person. The use to which the product may put may extend beyond normal use. However, there are limits to the uses to which it would be reasonable that a product might be put.

Products may weaken and wear out over time. It may be the case that due to an inherent defect in the product, the process is premature. Misuse alone by the claimant will not necessarily exempt a producer from liability. It may be relevant in terms of contributory negligence and a consequent reduction in liability to compensate.

Establishing Liability

It must be shown that the loss or damage was caused by the product. It is not necessary to prove that the producer was at fault. A product is a movable item which may be a whole product or part of another product. The legislation applies to products put into circulation after 1991. The legislation includes agricultural products and manufactured products. It does not include real property such as houses or buildings.

A product is defective if it fails to provide the safety expected. Liability is not unconditional.  There must be a defect which is dangerous. Subsequent improvements may not necessarily be relied on as setting standards.

The product must fail to reach the safety levels which can reasonably be expected having regard to the presentation of the product, and what ought reasonably to be expected of it at that time it was put into circulation. The presentation of the product refers to the manner in which it is marketed.

The duty to warn may apply and may negate what would otherwise constitute liability on the part of the producer. In some cases, a warning will discharge the obligation of the producer to ensure that its products are safe. If the product is used in an unreasonable or unpredictable way, liability is less likely. Even if there is liability, there may be contributory negligence which reduces the defendant’s liability.

The product is judged by the standards of the time it was put into circulation. Time is also relevant in the context of changing standards. What might be an acceptable risk at one time may not be at another. This principle applies to the state of technology and knowledge. The principle also applies in the context of food, perishable and other products with a limited shelf life.  There is a defence in relation to the state of the art at the relevant time.

Claiming for Product Liability

Damage in the context of a product liability, refers to death, personal injury or damage to other items of property other than the defective property itself.  The product must be of a type ordinarily intended for private use and consumption.

Personal injury is any disease and impairment of physical or mental condition. This covers pain, suffering and mental shock. There is no limit on recovery for personal injury.

The level of property loss must be more than €445. Where damage exceeds this amount, only the excess is recovered.

Identifying Defendants

If the producer cannot be identified by taking reasonable steps, each supplier is treated as a producer unless he informs the injured person within a reasonable time after a request of the identity of the producer or the person who supplied the goods to him. Steps must be taken to identify the producer within a reasonable time after the damage is incurred when it is reasonably practicable for the person to identify the producer.

Other European Union legislation has significantly facilitated the consumer in suing foreign-based manufacturers in its own home country. This is seen as desirable to support the EU common market in goods and services.  The legislation ensures that the consumer will have a target within the European Union to claim against. He will generally be entitled to take legal action in his own state and enforce it against the producer, exporter etc., under the EU Judgments Regulation.

Potential Defences

The following defences are may be available

• the producer did not put the product into circulation;
• having regard to the circumstances, it is probable that the defect did not exist at that time the product was put into circulation or that the defect came into being afterwards;
• that the product was neither manufactured by him for sale or any form of distribution for an economic purpose nor manufactured or distributed by him in the course of his business;
• the defect arises on compliance with a national or EU law or standard;
• that the state of scientific knowledge at the time the product  was put into circulation was not such as to enable the defect to be detected;
• in the case of the manufacturer of a component or the producer of a raw material, that the defect is attributable entirely to the design of the product in which the component has been fitted, or the raw material has been incorporated or to the instructions given by the manufacturer of the product.

Time Limits

There are three years in which to make a claim. The three years runs from the date of the damage or the date the claimant could reasonably have become aware of the damage, the defect and the identity of the producer. If a claim is not brought within ten years of when the product was put into circulation, the right to claim ceases.

The ten-year rule overrules the special benefits which persons who are under age or suffer mental capacity enjoy in relation to time limits for claims. The purpose is to enable the producer to have no further risk after a ten year. This is the case even though many products have a useful life in excess of 10 years.

Contributory Liability

Where damage is caused by a defect but is partly by due to the fault of the person injured or another, the usual rules in relation to contributory negligence apply. There is a modification of the general rule by which where one person is at fault, and another is not, financial liability is not to be apportioned to the person who is not at fault. This rule is changed in the context of product liability because there is a no-fault basis of liability.

Non-Exclusion of Liability

Producers of products may not provide terms by contract, excluding or limiting liability under the legislation. An indemnity and exemption clause in a contract between producers and wholesaler is valid. However, this will not affect or limit the liability of the producer to the consumer.