BIPL - Product Liability and Business Lesson

Product Liability and Business

If a person is injured by a product because it is unsafe or dangerous, then the manufacturer of that product may be sued for damages incurred by the injured party. Product liability laws vary from state to state but there are basic theories that apply throughout the country. Before we examine these theories, let's look at a brief history of product liability law to see how it evolved.

Theories of Product Liability - Breach of Warranty

A warranty is a claim or promise made about a product, and as such has its roots in contract law. The law assumes that the seller of a product is providing some type of warranty for the product he sells. Product liability focuses on breach of one of three types of warranty: expressed, implied for merchantability, and implied fitness for a particular purpose.

Expressed Warranty - Manufacturers may make specific claims about a product such as "this saw will easily cut branches up to three inches thick." Expressed warranties can be created in a number of ways. These warranties may be created by statements made by the seller, either verbally or in writing. Expressed warranties can also be created by what is NOT said by the seller when keeping quiet creates a false impression about the quality of the product. An expressed warranty may be created by the product samples shown to the buyer, as well as by marketing and advertising claims. While historically express warranties could only be enforced if there was a contract between the buyer and seller, more courts are recognizing that it is enough that the warranty was made and the person claiming the breach relied upon the warranty.

Implied Warranty of Merchantability - Implied means that a warranty is understood and does not have to be spoken or written. This warranty is the minimum any product carries. It implies that the product, under ordinary circumstances, is fit to be sold. In this warranty is also the implication that the product is reasonably safe. This expectation is common to all products, unless expressly disclaimed by the manufacturer.

Implied Warranty of Fitness for a Particular Purpose - If the seller has reason to know that a product was needed for a specific purpose and furnishes goods for that purpose, then the implied warranty of fitness for a particular purpose is created. For instance, if you headed to your favorite sporting goods department and ask the clerk for a fishing pole for deep sea fishing, the pole they offer you should perform suitably in the ocean, or you would have a warranty claim.

Theories of Product Liability - Negligence

In order to prove negligence, an injured party must prove that the seller owed them a duty of care, there was a breach of that duty, the breach was the actual cause of injury, the breach was the proximate cause of the injury, and the injury is quantifiable. Negligence, then, is the failure to use ordinary care to prevent injury to someone who uses a product. Ordinary care is what a reasonable person would do based on the circumstances at the time.

The duty to exercise care is the obligation of everyone along the chain of supply that takes the product from conception to market. The product must be designed to be safe for its intended use, it must be tested at various stages of manufacture to insure safety, it must be made from adequate, safe materials and its packaging must be adequate. Finally, the instructions must be sufficient to allow the product to be used safely. Furthermore, those along the chain of distribution owe this obligation to anyone likely to be injured by the product: the buyer, a family member, or a passerby.

Theories of Product Liability - Strict Liability

When there is no breach of warranty and no negligence can be proven, an injured party may be able to sue based on strict liability. Under strict liability the injured party must prove that a product was defective and that the defect caused the injury. A defective product may occur in one of three ways:

Design Defects - When the design of a product makes it unreasonably dangerous, the product has a design defect. In the 1970's Ford Motor Company manufactured a Pinto that had the gas tank in the rear. The position of the gas tank made the Pinto prone to bursting into flames if the car was hit in the rear, a clear example of a design defect.

Manufacturing Defects - When a product does not meet the specifications it was designed to have or differs in some way from other units in the same product line, it has a manufacturing defect. This type of defect may take the form of improper assembly, broken parts, missing parts, or even use of substandard materials.

Failure to Warn - If a warning is required for a product's safe use and the manufacturer knows this, a duty to warn is established. If the manufacturer fails to issue these warnings on the packaging, instructions, or advertising, it may allow the courts to deem the product unsafe and apply strict liability rules to the case.

Theories of Product Liability - Consumer Protection

In our first topic, we learned how Upton Sinclair's book The Jungle shone a spotlight on food safety in the meat packing industry. Following the printing of the book, President Theodore Roosevelt sent federal inspectors into the meat packing plants in Chicago and their findings resulted in the passing of the Pure Food and Drug Act and the Meat Inspection Act. Writers continued to be in the forefront of advancing consumer protection. Rachel Carson's Silent Spring told of the dangers of the pesticide DDT and the Environmental Protection Agency was created. Ralph Nader wrote Unsafe at Any Speed and the National Traffic Safety and Motor Vehicle Act forced car manufacturers to create safer vehicles.

Today consumer protection agencies exist in every state, acting as a watchdog for the consumer. Crusaders such as Sinclair, Carson, and Nader are responsible for much of the protection the American consumer takes for granted today. Consumer protection law regulated the private relationships between the consumer and business, ensuring the rights of consumers as well as well as promoting competitive free trade and truthful exchange of product information.

Check out the Georgia Governor's Office of Consumer Protection and see how it works to protect Georgia citizens. The U.S. Consumer Product Safety Commission (CPSC) has the responsibility of protecting consumers from unreasonable risk of serious injury or death from consumer products. This includes alerting the public to products recalled due to unreasonable risks. Products that are found to have caused harm or that are likely to cause harm are recalled in the interest of consumer safety. 

Managing Product Liability Risk

Self-Assessment - Liability

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