Product Liability

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Introduction

The Consumer Protection Bill’s Chapter IV addresses “product liability,” a much-needed provision of the CPA of 1986. It refers to the duty of a product manufacturer or seller of any product or service to compensate a customer for any harm caused by a faulty product produced or sold or by a failure in related services. However, any damage caused by a violation of warranty terms, as well as any commercial or economic loss, would be excluded. A plaintiff may file a product liability lawsuit against a product manufacturer, a product service provider, or a distributor who significantly influences the product’s design, testing, or modification.

In the new Consumer Protection Act of 2019, the concept of product liability was added. The obligation of a product producer or seller of any product or service to compensate a consumer for any harm caused by a defective product created or sold or a deficit in connected services is known as product liability. 

The old Act only addressed physical injuries, but the new Act also addresses mental anguish or emotional distress caused by a product. For example, if a product does not harm one but harms one’s property, and as a result, he suffers emotional distress, he can file a claim against the product’s manufacturer. And if the product manufacturer were not included in the product’s sale, the manufacturer would be held responsible. This rule would also extend to e-commerce sites. The accident, death, mental anguish, loss of consortium, or any other harm should be caused by the faulty good. The manufacturer will be held to a higher level of responsibility. The damage must be genuine and exclude any financial loss. Looking at this new definition of product liability, we can see that the government is now pressuring manufacturers to produce decent goods so that customers are covered, which is a significant change in the new Act.

 Product Liability Law In USA ( Comparison between USA and Germany)

Product liability issues should be considered by German enterprises selling their products in the United States. Manufacturers, distributors, suppliers, retailers, and others who make commodities available to the public can be held liable for damage caused by those products under US product liability law. Manufacturers, dealers, suppliers, retailers, and those who produce goods available to the public may be held liable for accidents caused by such products under U.S. product liability law. The manufacturer or someone else in the supply chain may be held accountable if a faulty or unreasonable unsafe product harms a buyer, consumer, or bystander. Product liability cases brought by individuals or groups of individuals can be expensive and time-consuming. 

 Types of liability:

The claims of the consumers are based on (i) negligence, (ii) warranty violation, or (iii) strict liability.

The specifications in the production process become more stringent as the risk of bodily harm increases. The customer must establish a manufacturer’s breach of duty as well as the cause of specific harm.

A warranty is an express or implicit agreement between a manufacturer or distributor and a customer regarding the suitability of the goods. Express warranties can be established using a salesperson’s comments, literature included with the goods or promotional materials. If the vendor fails to fulfill the terms of the promise, argument, or representation regarding the product’s quality or form, the warranty is breached. Implied warranties exist even if no such claims are made. Unless the seller expressly rejects this, a seller implicitly warrants that a commodity is merchantable and fit because he knows the buyer will utilize it.

Strict liability holds a manufacturer or retailer liable for any injury incurred by a faulty product that poses an unreasonable risk to the customer, client, or property. Unlike warranty statements, it makes no difference whether the customer or consumer has a link to the manufacturer. Unlike negligence claims, there is no requirement to show that the maker behaved with reasonable prudence plaintiff merely needs to show that the goods were faulty when they left the defendant’s hands and that the defect harmed the consumer, who must be a reasonably anticipated user.

 Types of defects

The various kinds of defects are as follows ;

a.       Manufacturing defect: The buyer must prove that the product was unsafe for its intended use due to construction or manufacturing defect.

b.      Design defect: A design defect implies that the product was made correctly, but the design poses a risk to users. Because a design error is a problem in the manufacturing process, it usually affects the entire product line rather than a single piece.

c.      Failure to warn: The manufacturer’s responsibility is frequently to warn the user about a potentially harmful use or to provide instructions on how to use the product properly. In most cases, such cautions are provided in the labeling or instructional materials. Furthermore, if a flaw is identified after the product has been sold, the producer must always notify consumers. In general, US legislation is significantly stronger than German law when it comes to product warnings. While German courts typically do not require a warning because the product’s intrinsic hazard is considered self-evident, American courts are more consumer-friendly.

Defenses

The manufacturer may raise a variety of defenses to avoid liability. For example, he could claim that the consumer tampered with or misused the product or assumed the risk. Also, contributory negligence or a lack of proximate cause of injury are two other common defenses. 

Damages

In The United States and Germany, the various forms of liabilities and flaws are indistinguishable, and most of the differences in our practice are seen in the area of damages. Consumers who have been affected by a product can seek damages in the same league as those accessible in Germany. They may also be reimbursed for non-economic damages like pain and suffering, as well as monetary losses such as medical bills and property damage. Non-economic damages in the United States, on the other hand, are frequently significantly more significant than in Germany. More importantly, in the United States, punitive damages may be awarded. Punitive damages are meant to penalize the tortfeasor and dissuade him and others from engaging in similar activity in the future rather than to pay the harmed consumer. As a result, the manufacturer must engage in malicious, evil, or particularly reckless behavior. Punitive damages are not often (in fact, they are rarely) awarded, but when they are, they can be enormous.

Case Laws:

In India, product liability lawsuits have been decided using the doctrines of negligence and strict liability. Historically, however, statutes have been quiet on the issue of seller or manufacturer liability for defective goods and services.

Henningsen v. Bloomfield Motors

In Henningsen v. Bloomfield Motors, Inc (1960), An automobile was bought by the plaintiff from the dealership of the defendant. The plaintiff’s wife was involved in an accident after the steering failed ten days after delivery. The plaintiff filed a lawsuit against the dealer and the car manufacturer. A condition in the plaintiff’s warranty, according to the dealer, absolved the defendant of any liability for personal harm. For 90 days or 4000 miles, the guarantee only covered the repair of damaged parts. However, Henningsen was awarded monetary damages by the court. It was determined that the sale of any object included an implied warranty of safety. Furthermore, because Henningsen’s wife incurred damages, the defendant could not argue that it was not accountable. According to the court, the warranty covered “every anticipated use of the products.”

Liebeck v Mc Donald’s Restaurants

Sheila Liebeck was severely burned after spilling a cup of McDonald’s coffee in her lap. Liebeck was in the hospital for eight days. Her medical therapy lasted two years and included skin transplants.

Liebeck offered her a $20,000 payment to cover her medical bills and lost wages. The matter went to trial after McDonald’s declined to accept an offer of US$800. Liebeck’s legal team was successful in proving that McDonald’s was liable since its coffee was served at a scorching 180°F to 190°F temperature. Coffee was served at a lower temperature of 140 degrees Fahrenheit in other establishments.

In 1994, a jury awarded Liebeck $2.86 million in punitive damages as well as $160,000 in medical costs. The so-called “Hot Coffee Case” became the most divisive product liability case in American history. Finally, the trial judge decreased the final settlement, and the parties agreed on a discrete amount. 

Conclusion

The Consumer Protection Act, 2019 is significantly more extensive and in accordance with global consumer protection laws than the previous Act of 1986. The implementation of a product liability framework is a good reform that will aid in the streamlining of product liability lawsuits. The buyer beware principle has clearly given way to the seller beware principle. Despite certain ambiguities, the new regime is expected to change India’s product liability legal environment. The ease of approaching consumer forums, combined with the strict rule, will only encourage consumers to test these provisions to new heights. Product manufacturers, sellers, and service providers will need to complete their due diligence correctly to meet various legislative requirements. A checklist of such requirements, backed by appropriate legal and technological guidance, would go a long way toward safeguarding their and consumers’ interests. 

The article has been written by Shruti Bose, a student of Christ (Deemed to be University), Lavasa.

The article has been edited by Shubham Yadav, a 4th-year student at Banasthali Vidyapith, Jaipur.

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