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.
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.
Product liability in the United States Theories of liability
In the United States, the claims most commonly associated with product liability are negligence,
strict liability, breach of warranty, and various consumer protection 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 of Torts: Products
Liability distinguishes between three major types of product liability claims:
manufacturing defect, design defect,
a failure to warn.
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.
Design defects occur where the product design is inherently dangerous or useless 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, this means they must be dealing with each other directly.
Breach of warranty-based product liability claims usually focus on one of three types:
breach of an express warranty, breach of an implied warranty of merchantability, and 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.
The various implied warranties cover those expectations common to all products, unless
specifically disclaimed by the manufacturer or the seller.
Negligence A basic negligence claim consists of proof
of a duty owed,
a breach of that duty, the breach was the cause in fact of the plaintiff's
injury the breach proximately caused the plaintiff's
injury.
and the plaintiff suffered actual quantifiable injury.
As demonstrated in cases such as Winterbottom v. Wright, 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. 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 and res ipsa loquitur.
Strict liability Rather than focus on the behavior of the manufacturer,
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, 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 fictions became increasingly strained.
Of the various U.S. states, California 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.
See Greenman v. Yuba Power Products, 59 Cal.
2d 57.
The importance of Greenman cannot be overstated: in 1996, the Association of Trial Lawyers
of America 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., 24 Cal.
2d 453, 462.
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 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.
In the 40 years after Greenman, the highest courts of nearly all U.S. states and territories
followed California's example in imposing strict liability on manufacturers, distributors,
and retailers for defective products.
In a landmark 1986 decision, the U.S. Supreme Court embraced strict liability for defective
products by adopting it as part of federal admiralty law.
Meanwhile, although the Greenman rule was transmitted to most other states via Section
402A of the Restatement of Torts, Second, the Supreme Court of California 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 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.
However, strict liability is not limitless.
In 2012, the Court held that manufacturers are liable under strict liability and negligence
only for defects in their products, as distinguished from other products that could potentially
be used with their products.
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
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 automobiles are often an American citizen's second-largest
investment after buying a home.
Product liability outside of the United States In the rest of the world, legislatures took
the lead in imposing strict liability for defective products.
The judiciaries of several countries rejected attempts by creative lawyers to persuade them
to adopt the Greenman holding, including Canada and South Africa.
In Europe, a movement towards strict liability began with the Council of Europe Convention
on Products Liability in regard to Personal Injury and Death in 1977.
On July 25, 1985, the European Economic Community adopted the Product Liability Directive.
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 euros per defect.
The Directive only imposed strict liability upon manufacturers or importers, and deviated
significantly from the U.S. model by refusing to impose strict liability on purely domestic
distributors or retailers.
The legislatures of many other countries outside the EEC subsequently enacted strict liability
regimes based on the European model, including Israel, Brazil, Peru, Australia, Russia, Switzerland,
Argentina, Japan, Taiwan, Malaysia, South Korea, Thailand, and South Africa.
China first enacted a Product Quality Law in October 1993 in an attempt to impose strict
liability, but the law was badly drafted and was quite weak.
After numerous product scandals throughout the 2000s, China finally enacted a much stronger
Tort Liability Act in December 2009, followed by a Statute on the Choice of Substantive
Law in Foreign-Related Civil Relationships in April 2011, which enables Chinese consumers
injured by foreign-made products to request that Chinese courts apply the law of the defendant's
place of business.
While these two laws are still relatively ineffective against large Chinese manufacturers
who are state-owned enterprises, they will enable Chinese consumers to seek some compensation
from non-state companies as well as foreign manufacturers.
Rationale for and debate over strict liability Strict products liability causes manufacturers
to internalize costs they would normally externalize.
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, 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 need only prove causation,
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.
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, 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
Automobile products liability Consumer Product Safety Commission
Consumer protection Donoghue v Stevenson - Scotland snail case
Market share liability - U.S. McDonald's coffee case - U.S.
Product recall Statute of limitations
Summers v. Tice Tort reform
Toxic tort Tombstone mentality
Wyeth v. Levine References
External links Congressional Research Service Reports regarding
Product Liability Product Liability in Israel - Overview
Product Liability Forum - British Institute of International and Comparative Law