Introduction to Product Liability-Module 1 of 5

Module 1: Introduction to Product Liability

Introduction

Product liability is the liability of manufacturers and sellers of products for harm caused by the products they sell. Historically, the principle of caveat emptor (Latin for “buyer beware”) meant that sellers had very little legal responsibility for products once they were sold. If a buyer wanted a guarantee regarding the quality and safety of the product, such protections had to be stipulated in a contract between buyer and seller. Unless the buyer could show fraud or misrepresentation, the seller would generally not face liability for defective products.

However, in the modern era of specialized large-scale manufacturing and technological sophistication, the law recognizes that consumers are at a disadvantage when it comes to evaluating the condition of goods offered for sale.  Manufacturers and retailers are in a better position to inspect and understand the quality and reliability of merchandise in the marketplace. In light of this reality, courts and state legislatures have assigned liability to those engaged in the business of selling or distributing products for the manufacture and sale of defective products.[1]

Types of Defects

There are three recognized categories of defective products. Each has a distinct definition of what is considered a defect, and each employs its own standards for determining liability. However, they all operate on the principle that if a user of a product is injured in the normal course of using the product and the harm was the result of a defect in the product, the victim has grounds for a products liability suit.

The first type of defect is a manufacturing defect. When a product is manufactured improperly, and injury results from the defect, the victim of the harm can seek to recover damages from the manufacturer. Evidence of a manufacturing defect can be demonstrated by showing that the product was not designed according to specification or is otherwise unreasonably dangerous.[2]

The second category of defective products is design defects. A product can be legally defective even if it is designed according to specifications if the design itself makes the product unreasonably unsafe, and an alternative design would have reduced the risk to the consumer.[3]

Finally, a product can be considered defective due to a failure to warn consumers of foreseeable risks posed by the product. This form of product liability is actionable when the risk could have been avoided by providing adequate instructions or warnings regarding the use of the products.[4]  

Warranties

Another ground for a claim of product liability is breach of warranty. A warranty is a representation by the seller that the goods on offer have certain qualities. If the goods fail to live up to the promise of the seller, the purchaser can successfully sue for breach of warranty.[5] Note that a warranty for goods does not require that the seller explicitly make claims about the nature of the products. Under certain conditions, warranties for the quality of the goods are implied by the fact of the goods being offered for sale or by other attendant circumstances.[6]

Manufacturing Defects

The most basic type of product liability claim arises when a product is defective because something goes wrong in the manufacturing process. A defect can be almost anything, from using a component that is too large or too small, too rigid or too weak, to an improper assembly of the component pieces. If it is an error in the process, and the product poses a risk to users as a result, it is considered a manufacturing defect.

To bring a products liability case against a manufacturer, a plaintiff must prove three things. First, that the product in question was defective; second, that it had the defect at the time it left the defendant’s control; and third, that the harm suffered was a result of this defect.[7]

Since manufacturing processes are often highly specialized enterprises, courts may require expert testimony to establish the elements of a claim based on a manufacturing defect.[8]

However, products can be imperfect in many ways, and to different degrees. There are varying standards that courts use to determine whether a product is considered defective for liability purposes.

Departure from Design Specifications

One pervasive definition of a manufacturing defect is that a product departs from its intended design.[9]  Under this test, a plaintiff proves that a product is defective by comparing the product as sold to the way it was designed to be produced. Practically, this can be done by showing that the product did not conform to technical specifications. To take an example, a plaintiff who claimed to be injured by a faulty wrench entered the blueprints for the wrench into evidence. These blueprints set forth highly specific measurements for the manufacture of the wrench, including the dimensions and thickness of particular parts. The plaintiff was able to meet the burden of showing a defective product by demonstrating that the wrench he purchased departed from these design specifications by a significant measure. [10]

Since it is not always possible to obtain formal specifications, courts have allowed a broader, ‘deviation from the norm’ test to prove a manufacturing defect. If a product does not match the quality of identical products when the products are highly standardized and mass produced, this can serve as evidence of a defect. The existence of such a defect can be proven based on comparison with other products of the same manufacturer, or the same product produced by another manufacturer.[11] In this way, a properly manufactured product can be evidence of a defect in another product which has the same design but was manufactured differently.

Note that a deviation from design can be used to demonstrate that a product is defective and that it had this defect when it left the control of the defendant. However, the plaintiff still must demonstrate that this defect caused the injury in question.

            Malfunction theory

One limitation to the deviation from design test arises when the product that caused the harm is damaged or destroyed in the process. In these cases, the plaintiff and the plaintiff’s experts cannot compare the product in question against its proper design. To address these circumstances, a second test for product defect has been developed. This test relies on inferring the existence of a defect from the circumstances of the product malfunction rather than directly from physical evidence of the product itself.

This is called the malfunction theory. According to this approach, if a plaintiff can show that he or she was using the product normally at the time of injury, then there is no need to prove the existence of a specific defect in the product.[12]  A case that is instructive for how the malfunction theory works involves a fire that destroyed a motorhome. Since the vehicle was completely consumed, there was no physical evidence to inspect that could directly attest to a defect. However, the court ruled that under the circumstances, the existence of a defect could be established through circumstantial evidence.

Specifically, the court noted the following factors that argued in favor of inferring the existence of a malfunction. First, there was no evidence that the vehicle had been misused or damaged prior to the fire. Second, the vehicle was relatively new, with little wear and tear, so that it is unlikely a fire would be ignited during normal use unless there was a defect in the manufacture.           Finally, even though the plaintiff could present no direct evidence of a defect, the plaintiff’s expert identified a number of specific manufacturing defects which could have caused the motorhome to ignite.[13]

In another case, a soda manufacturer was found liable for injuries suffered by a waitress when a glass bottle she was holding exploded in her hand. Even though she could not demonstrate direct evidence of a defect, the court relied on the fact that a glass soda bottle does not ordinarily explode in one’s hands unless the bottle has a defect.[14] These are the types of factors that courts will examine to determine when the malfunction theory can be used by the plaintiff to meet the burden of demonstrating the existence of a manufacturing defect.

Strict Liability and Negligence in Manufacturing Defects

To prevail in a product liability suit for a manufacturing defect, the plaintiff must prove that a defectively manufactured product caused harm. However, in most cases, she need not prove that the defect arose due to a lack of care or poor quality-control in the manufacturing process.

When it comes to manufacturing defects, sellers are said to be strictly liable for the products they sell, and so are liable regardless of whether the victim can demonstrate fault on the part of the defendant. The strict liability standard stands in contrast to the alternative negligence standard, which remains the controlling test in other areas of product liability law.

Negligence

In its earlier form, products liability was an extension of the negligence principle in torts. In tort law, people have a duty to exercise due care when their actions can foreseeably lead to harming others. If they breach this duty, they can be held liable for the damages caused by their actions.  

The court relied on this rule of negligence in the well-known case of Macpherson v. Buick. When the plaintiff’s car collapsed due to defectively manufactured spokes, he sued the car-maker for damages. The court rejected Buick’s argument that it could not be held liable because it had no contractual obligations to the plaintiff. Instead, the court held that, by offering products for sale in the marketplace, the manufacturer had a duty of care to foreseeable users of their product.  Since the car was negligently manufactured, and the defective spokes made driving the car perilous, the car-maker breached this duty, and could be held liability for the consequences. [15] Under the negligence standard, if a manufacturer fails to exercise due care in the manufacture of a product, the manufacturer is liable for damages caused by his or her negligence.[16]

Strict Liability

Today, with regard to manufacturing defects, most jurisdictions have rejected the negligence standard in favor of strict liability. In a landmark products liability case, Greenman v. Yuba Power Products, the defendant was injured while using a power tool. Plaintiff’s experts argued that the injury was a result of defective screws in the power tool. However, there was no clear evidence of negligence on the part of the manufacturer.

Still, the court held the manufacturer liable on the grounds that the product was placed on the market with the knowledge that it would be used without further inspection. The court interpreted this as an implied guarantee that the product was not defective, and so found the manufacturer liable even without evidence of negligence. [17] This rule has been generalized on the principle that offering goods for sale carries with it an implicit representation regarding the condition of the product. So, a party that sells a product with a manufacturing defect which makes it dangerous is liable for damages, even if all possible care was exercised in manufacturing the product.[18]

There are a few reasons for the shift from the negligence standard to strict liability. First, as the production of goods became more specialized, it became more difficult for users of goods to demonstrate that the products were manufactured negligently. Also, courts recognized that modern manufacturers are in a better position to inspect the quality of goods offered for sale than are ordinary customers. So, they imposed a standard of strict liability to give incentives for producers to take steps to ensure that their products will be safe for users. Over time, the rule of strict liability for manufacturing defects has become standard across almost all jurisdictions.[19]

Note that strict liability does not apply to all cases of defective products. It does not apply to people who only occasionally may offer something for sale. To hold a defendant strictly liable, the seller must be one who is engaged in the business of selling or distributing this type of product.[20] However, strict liability does attach to all parties in the chain of commerce involved in bringing the product to market. This includes product retailers who offer the product for sale even if they had no role in manufacturing the product and had no ability to inspect it prior to sale. Second, the product must reach the customer without substantial changes from the condition in which it was sold.[21] Modifications after sale can preclude liability for injuries.

Note also that the rule of strict liability only applies to cases of manufacturing defects.[22]  Other areas of products liability law, such as design defects and failure to warn, require a showing that the defendant acted unreasonably under the circumstances. Unlike for manufacturing defects, plaintiffs in these cases can argue against liability claiming their actions met an appropriate standard of conduct.

Used Goods

Another area where the negligence standard remains is used goods. The law assumes that consumers expect that previously used products are more likely to contain defects than new ones. So, most jurisdictions agree that even if the defective product was purchased from a retailer who regularly engages in such sales, the proper standard for used goods is negligence rather than strict liability.[23]

However, this rule is not absolute. Whether strict liability or negligence applies can depend on the context. If a used product is marked for sale ‘as-is’, and it is significantly cheaper than a new product would be, the buyer should understand that the product is being offered without the usual protections against defects. The circumstances are different, however, if used goods offered for sale are marketed as being refurbished or remanufactured, or as nearly new. Consider a rental car company that advertises its cars as being new models with low mileage. In cases such as these, even though the products have been previously used, since the buyer can expect the products to be as free from defects as new ones, the seller may be strictly liable.[24]

In the following modules, we’ll look at product liability based on other theories, including defective design, failure to warn and breach of warranty.