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Liability is an obligation that legally binds an individual or company to settle a debt. When one is liable for a debt, they are responsible for paying the debt or settling a wrongful act they may have committed. For example, if John hits Jane's car, John is liable for the damages to Jane's vehicle because John is responsible for the damages.

Liability Insurance. Any type of insurance policy that protects an individual or business from the risk that they may be sued and held legally liable for something such as malpractice, injury or negligence. Liability insurance policies cover both legal costs and any legal payouts for which the insured would be responsible if found legally liable. Intentional damage and contractual liabilities are typically not covered in these types of policies. Liability insurance is very important for those who may be held legally liable for the injuries of others, especially medical practitioners and business owners. A product manufacturer may purchase product liability insurance to cover them if a product is faulty and causes damage to the purchasers or any other third party. Business owners may purchase liability insurance that covers them if an employee is injured during business operations. There are many different types of insurance policies available, but liability insurance is one of the most popular because it costs much less than many other options. For example, in regard to auto insurance policies, liability insurance costs far less than full coverage. The reason for this is because full coverage insurance must pay for both your vehicle and any other vehicle involved in a collision, as well as property damage and medical expenses due to injuries to you or another party. On the other hand, liability insurance is only responsible for the other party's losses. There are different types of liability insurance, including general liability, which works in much the same way as auto liability insurance, but covers businesses. General liability protects a company from third party claims. Aside from general liability, there is also D & O liability, employer liability, and professional liability insurance.

D & O liability stands for "directors and officers" liability and is intended to cover the acts or omissions of those in the director or officer position. An entire company should not be held liable for the statements, actions, failure to act, or other mistakes that are the responsibility of an officer or director. Employer liability is also known as worker's comp, and it is a mandatory form of liability insurance coverage that all businesses must carry. While it sounds like it is intended to protect the employee, which it does to some degree, it is actually protection for the employer in case of injury, job related illness, or other damages for which the employee might sue the company. Professional liability is similar to malpractice insurance, although the coverage may not be as comprehensive as some malpractice policies in different fields. The purpose for professional liability insurance is to protect those seen as professionals or "experts" in a given field, who may not be protected by general liability due to their expertise. When one is seen as a professional, he is held to a higher standard and is therefore often considered to hold greater liability towards his clients. Consequently, he needs more coverage than general liability insurance offers. The simplest definition of liability insurance is insurance which protects a person or entity from claims initiated by another party.

The responsibility of a manufacturer or vendor of goods to compensate for injury caused by defective merchandise that it has provided for sale. wholesalers. distributors. manufactured. in India. though was enacted to protect the interest of consumers but the same was. When individuals are harmed by an unsafe product. also called ―products liability‖. in respect of product liability in India. they may have a Cause of Action against the persons who designed. essentially. Manufacturers and others who distribute and sell goods argue that product liability verdicts have enriched plaintiffs' attorneys and added to the cost of goods sold. and vendors for injury to a person or property caused by dangerous or defective products.PRODUCT LIABILITY In India. or furnished that product. Product liability insurance protects your business assets from legal proceedings for injury or property damage to third parties caused by your business activities or the products you supply. 1969 (hereinafter referred to as the ―MRTP Act‖) d) The law of Torts. some consumers have hailed the rapid growth of product liability litigation as an effective tool for Consumer Protection. 1930 c) The Monopolies and Restrictive Trade Practices Act. 1986 b) The Sales of Goods Act. while holding manufacturers. In the United States. governed by: a) The Consumer Protection Act. earlier. sold. and retailers responsible for putting into the market place products that they knew or should have known were dangerous or defective. distributors. The legislation. The goal of product liability laws is to help protect consumers from dangerous or defective products. . have been constantly evolving. e) special statues pertaining to specific goods The laws relating to product liability. Civil Product liability in India is. by way of judicial interpretations and amendments. Manufacturers‘ product liability insurance is particularly important due to the large numbers of people in contact with their products on a daily basis. Product liability law. The law has changed from caveat emptor ("let the buyer beware") to Strict Liability for manufacturing defects that make a product unreasonably dangerous. governs the liability of manufacturers. to become one of the most important socio-economic legislations for the protection of consumers.

00/. a technical fault. In Wheels World vs. on account of non availability of car for a period of 4 years. which implies that an action imposing penal liability can be simultaneously initiated along with a claim under civil law. The provisions of these enactments are preventive in form. apart from the civil liability. 1952 to formulate a number of standards for different products by ISI The Bureau of Indian Standards Act .with interest @ 18% per annum from 2/7/1988 to 7/5/1992. 000/-. The Courts. butter. also imposes criminal liability in case of non-compliance with the provisions of each of the below mentioned Acts. 1940 The Indian Penal Code. complained to the respondent about deficiency in service in not repairing.. The Food Safety and Standards Act. 2006 is the most recent legislation which comprehensively deals with food and safety standards which are to be complied with by manufacturers and 1 MANU/CF/0280/2002 . 000/-. drugs. 000/. The Indian Standards Institution (Certification Marks) Act . Further interest. 55.construed narrowly. 1986 Each of the aforesaid Acts provides for imposition of fine and/or imprisonment in case of supply of defective products or adulterated consumables. 82. which was deposited by the Respondent on account of stay of imprisonment. 1860 The Standards of Weights and Measures Act. in India. thereby frustrating the object sought to be achieved. Pradeep Kumar Khurana1 the complainant. at the same rate for the same period. 1937 for marking and grading of commodities like vegetables. 1956 The Agricultural Produce (Grading and Marking) Act. though the relief envisaged is an action for breach in civil or criminal court. was awarded as compensation.towards costs and. The said Acts are in addition to and not in derogation of any other laws in force. however. A sum of Rs. free of charge. 30. The trend. last but not the least. was also awarded on an amount of Rs. which occurred during warranty period. has changed in the recent times with the Courts adopting a pro-consumer approach. 1954 The Food Safety and Standards Act. was also awarded to the petitioner. Some of these are special Acts pertaining to sale of specific goods such as food. etc. a doctor by profession. cosmetics etc. in favour of the complainant for his suffering.         The Foods Adulteration Act. both professionally and otherwise. 2006 The Drug & Cosmetics Act. The product liability law. have now started awarding compensation and damages which are more punitive than compensatory in nature. 50. an amount of Rs. in his new Montana car and then not delivering the same for a period of 4 years. being the price of the car as well as an amount of Rs. in India.

upon defaulters. The period of limitation as per Section 468 of the Criminal Procedure Code is 6 months if offence is punishable with fine only . Maruti Udyog Ltd Ors2 the Complainant alleged that the car sold by the opposite party was not only accidental but the price. fine of 1000 rupees or both). in respect of product liability. The federal Uniform Commercial Code (UCC) addresses breach of warranty product liability claims. and false property marks ( one year imprisonment. For example.producers. but there are also many laws states have enacted to deal with these claims and common law plays a large part as well. extending upto Rs. of fine. Product Liability Law (Defective Products Law) falls under personal injury/tort law and is closely related to litigation law. fine or both). Provisions of IPC are also attracted to provide punishment to offenders for false weights and measures . distributors and retailers) of products which have defects that harm consumers causing injury or loss. in the case of Smt. the said officers of the opposite party were released on bail and were directed to replace the disputed car with a new car. 1940 also provides for criminal liability for manufacturers and producers of medicinal products or cosmetics etc. adulteration of goods ( food. Uma Deepak v. There are four legal theory categories by which a plaintiff may base his/her damage recovery for a product liability claim: 2 (2003) CPJ 90(MRTP) . It refers to the claims against any parties along the chain of manufacture (designers. The Court. manufacturers. weight or measure which does not conform to the standards established by or under the said Act and breaches the mandatory declaratory requirements on a package. The provisions of the Standards of Weights and Measures Act. for the same. Subsequent thereto. 1976 are attracted in case of any false packaging. directed arrest of the Directors as well as the manager of the dealers/agents who sold the said defective car to the complainant and remanded them to judicial custody. on the other hand. Ten Lakhs and/or imprisonment. The Drugs and Cosmetic Act. drugs etc -6 months imprisonment. was also overcharged. and one year if offence is punishable with upto one year imprisonment and three years if offence is punishable with imprisonment of above one year and upto three years. The provisions of Indian Penal Code (IPC). in response to the allegations made by the complainant. non-compliance of which imposes a liability. If any mandatory declaration is found missing on the package a fine of up to 2000 rupees shall be levied as per Rule 39 of the Standards of weights and measures packaged commodity rules. are attracted when the element of cheating and fraud can be attributed to such defects. which do not adhere to the prescribed standards.

 Negligence – the party responsible for the defect failed to exercise ordinary reasonable care and this resulted in the defect which caused harm. Generally. however. . There are three types of defects for Product Liability Claims:  Design Defects – present before the product is made. This warranty can be expressed in the packaging or labeling of the product. error or weakness in the product. which deals more explicitly with a specific function of a product and the buyer‘s reliance on the seller‘s expertise in offering or suggesting the specific product to fulfill that purpose. there must be duty of care in existence and the plaintiff must be able to exhibit that the alleged responsible party owed him/her this duty. but concealed this information or marketed the product in a deliberately misleading manner. when the defect is part of the design of the product. on the instructions enclosed with the product. it was manufactured properly. Additionally. which guarantees that the product is realistically suitable for the purpose for which it is sold and is reasonably safe. it is necessary to prove negligence in order to maintain a cause of action. A defective product is a product that causes harm. a manufacturer has a requirement to produce goods free from defective and unreasonably dangerous conditions. injury or some other type of damage. its marketing or use. or implied warranty of fitness for a particular purpose. injury or some type of loss due to a flaw. Breach of Express or Implied Warranty (controlled by contract law) – an express warranty is one that is actually stated.  Strict Tort Liability – In general tort law.  Intentional Misrepresentation or Fraud – the retailer or manufacturer was aware of a dangerous defect in the product. An implied warranty is one that law applies automatically to a product. When a product‘s defect violates information presented in the warranty. the damaged party may be able to pursue a defective product claim. on marketing material for the product and/or in any advertising for the product. with strict liability the plaintiff only need show that the product is defective and that the injury or harm he/she suffered was caused by this defect. but the design itself is faulty. and proof of negligence is not necessary. These laws are usually categorized in one of two ways: implied warranty of merchantability. either orally or in writing. whether the retailer or manufacturer states it expressly or not.

 Failure to Warn (also referred to as defective marketing claims) – the manufacturer did not provide adequate warnings. or the use of substandard or defective materials. These defects occur during the construction or manufacturing phase and can result from loose. which resulted in injury. instructions or product labels with respect to a real or potential hazard or danger. sloppy or improper assembly. Manufacturing Error/Defects –when the product does not conform to design specifications or performance standards or it differs in some fundamental way from other units from the same product line. . warped or missing parts.

In other words. or failure to exercise. or representation made concerning the quality or type of the product. and the defect rendered the product unreasonably dangerous. and strict tort liability. ordinarily by drawing attention away from the hazards of its use. Misrepresentation in the advertising and sales promotion of a product refers to the process of giving consumers false security about the safety of a particular product. proper or ordinary care. a plaintiff's cause of action may be based on one or more of four different theories: Negligence. An action lies in the intentional concealment of potential hazards or in negligent misrepresentation. which states that an injured person can sue the negligent person only if he or she was a party to the transaction with the injured person. Misrepresentation. An injured party must prove that the item was defective. Historical Development The history of the law of product liability is largely a history of the erosion of the doctrine of privity. bystanders. and only a party to that contract could sue for its breach. The law assumes that a seller gives certain warranties concerning goods that are sold and that he or she must stand behind these assertions. It means that an individual who had a legal obligation either omitted to do what should have been done or did something that should not have been done. A manufacturer can be held liable for negligence if lack of reasonable care in the production. who in turn sold it to the . breach of Warranty. Breach of warranty refers to the failure of a seller to fulfill the terms of a promise. For example. Negligence refers to the absence of. the defect proximately caused the injury. or assembly of the manufacturer's product caused harm. design. a manufacturing company might be found negligent if its employees did not perform their work properly or if management sanctioned improper procedures and an unsafe product was made. Strict liability involves extending the responsibility of the vendor or manufacturer to all individuals who might be injured by the product. or others with no direct relationship to the product may sue for damages caused by the product.THEORIES OF LIABILITY In most jurisdictions. The key to recovery on the basis of misrepresentation is the plaintiff's ability to prove that he relied upon the representations that were made. Misrepresentation can be argued under a theory of breach of express warranty or a theory of strict tort liability. a defendant's duty of reasonable care arose only from the contract. Injured guests. This meant that a negligent manufacturer who sold a product to a retailer. even in the absence of fault. claim.

the term imminently dangerous was construed to mean especially dangerous by reason of the defect itself and not necessarily dangerous per se.Y.. has been followed in almost all jurisdictions. In a few cases. For example.2d 69 (1960) . drink. In this case.. The MacPherson case quickly became a leading authority. exception to the privity rule did not extend beyond food.plaintiff. 12 P. Because this is essentially the test for negligence. cosmetics) so that the warranty in these cases extended to the ultimate consumer. 382. Ford Motor Co. Soon privity of contract was not required where the seller fraudulently concealed the defect or where the products were inherently or imminently dangerous to human life or health. an exception to the privity rule developed for cases involving products intended for human consumption (food. A concealed defect coupled with some sort of "invitation" by the defendant to use the product was enough. a manufacturer's statement in literature distributed with an automobile that the windshield was "shatterproof" constituted an express warranty to the purchaser that the windshield would not break (Baxter v. The privity doctrine dominated nineteenth-century law. The decisions then began to expand these exceptions.J. It held that lack of privity is not a defense if it is foreseeable that the product.. 111 N. The seminal case of MacPherson v. broadened the category of "inherently" or "imminently" dangerous products so as to effectively abolish the privity requirement in negligence cases. In warranty. Increasing public sympathy for victims of industrial negligence also contributed to the demise of the rule. yet courts created exceptions to avoid denying an injured plaintiff a remedy. 3 4 217 N. the privity requirement was abandoned during the 1930s. drugs) and eventually also for products intended for "intimate bodily use" (e. beverages. Inc4. The plaintiff was usually without a remedy in tort because it was the manufacturer and not the retailer whose negligence caused the harm.2d 409 [Wash. and a coffee urn that exploded would be considered imminently dangerous. if negligently made. Some courts dropped the Fraud requirement. in part because warranties were thought to be an integral part of the sales contract. Bloomfield Motors. The Henningsen decision. a defective scaffold. 161 A.g. which also invalidated the manufacturer's attempted disclaimer of Implied Warranty liability. the exception swallowed the rule. 456. Buick motor co3. In the case of express warranties. Beginning in the early twentieth century. which could be said to be made to the public generally. and the privity rule in negligence cases soon was ignored. and similar products until Henningsen v. the New Jersey Supreme Court abolished the privity limitation generally and held that the implied warranties run to the foreseeable ultimate user or consumer of the product. But with respect to implied warranties. 168 Wash. For example. 358. a similar privity limitation was imposed.Y.E. products intended for human consumption. was effectively insulated from liability. 1916) 32 N. 1050 (N. 1932]). such as poisons or guns. is likely to cause injury to a class of persons that includes the plaintiff..

2d 897 . These and other 5 6 24 Cal. in 1963. 59 Cal6. The seller is proscribed from misrepresenting the safety or character of the product and must disclose all defects. The best-known judicial exposition of this view was California Supreme Court Justice Roger John Traynor's concurring opinion in Escola v. Finally. as of 2003. strict liability provides needed safety incentives. The manufacturer must also furnish adequate warnings and directions for use with the product. Coca Cola Bottling Co. including a manufacturer who carelessly makes a defective product. implied warranty of merchantability. These individuals owe a duty of care to anyone who is likely to be injured by such a product if it is defective.. strict liability can be accomplished through a series of actions for breach of warranty. 2d 453.. Product liability law is concerned with three types of warranties involving the product's quality or fitness for use: express warranty. and implied warranty of fitness for a particular purpose. Yuba Power Products. the duty to exercise care involves all phases of getting a product to the consumers or users. that person's family members. and assembled carefully. and the manufacturer of a product induces consumer reliance on the expectation of the product's safety and should be made to stand behind the product. the California Supreme Court adopted strict tort liability for defective products. in Greenman v. various legal writers and a few judges discussed the creation of strict liability in tort for defective products. Inc. The product's container or packaging must be adequate. including the initial buyer. Additionally. the manufacturer is in the best position to either prevent the harm or insure or spread the cost of the risk. 150 P. The product must be designed in such a way that it is safe for its intended use. strict liability swept the country and was. 377 P. made from the appropriate materials. A number of justifications have been advanced for strict liability: negligence is often too difficult to prove. Breach of Warranty Warranties are certain kinds of express or implied representations of fact that the law will enforce against the warrantor. of Fresno5. Negligence The duty to guard against negligence and supply a safe product applies to everyone in the chain of distribution. and the vendor who should exercise greater care in offering products for sale. the law in all but a few states. It must be inspected and tested at different stages. Within a short time. any bystanders. and persons who lease the item or hold it for the purchaser. the company that uses the product to assemble something else without discovering an obvious defect.2d 436 (1944) 2d 57.From 1930 to 1960..

at least in part. 9 (U.C. assuming that the buyer tells the seller. and accompany the transfer of title to goods unless expressly and clearly limited or excluded by the contract. in addition to the privity limitation. chiefly that the product be fit for the ordinary purposes for which such goods are sold9. which becomes part of the bargain. § 2-313). the buyer may file suit. an earlier purchase of the same kind of product. § 2-314). which every state has adopted.8 The implied warranty of merchantability requires that the product and its container meet certain minimum standards of quality. that he needs a high-speed computer to manage inventory and payroll functions for his business. These defenses are most appropriate in cases in 7 8 (U. the requirement that the buyer has relied upon the warranty. § 2-315). For example. § 2-719 (3)).C. The action for breach of one of these warranties has aspects of both tort and contract law. . This requirement includes a standard of reasonable safety. An express warranty can be created in one of three ways: through an affirmation of fact made by the vendor of the goods to the purchaser relating to the goods.C. Once the seller recommends a particular computer to handle these requirements. which is made part of the basis of the bargain. These include the requirement that the seller receive reasonably prompt notice of the breach as a condition to his or her liability. The implied warranty of fitness for a particular purpose imposes a similar requirement in cases in which the seller knows or has reason to know of a particular purpose for which the goods are required and in which the buyer is relying on the seller to select or furnish suitable goods. 10 (U. or claims made in publicity or on tags attached to the product. If the computer cannot adequately process the inventory and payroll. However. the seller is making an implied warranty of fitness.warranties are codified in the Uniform Commercial Code (UCC). and the ability of the seller to limit or disclaim entirely the implied warranties. Its greatest value to the injured product user lies in the fact that liability for breach is strict.C. The seller then warrants that the goods are fit for that particular purpose10. a sample. with respect to damages for personal injury.C. No negligence or other fault need be shown.C.C. Implied warranties are those created and imposed by law. the UCC states that any such contractual limitations or exclusions are "prima facie unconscionable" and cannot be enforced. a computer supplier. An express warranty is created when a salesperson states that the product is guaranteed to be free from defects for one year from the date of the purchase.7 An express warranty can be words spoken during negotiations or written into a sales contract. and through a sample or model. by way of a description of the goods.C. However. certain contract-related defenses have impaired the remedy's usefulness. which is made part of the basis of the bargain. (U.

For example. Defects A critical issue in a product liability lawsuit is whether the product contains a defect. Strict Liability The rule of strict liability applied in product liability suits makes a seller responsible for all defective items that unreasonably threaten the personal safety of a consumer or the consumer's property. The standard is that if the advertisement is directed toward the public at large and . It extends beyond warranty or negligence law. The trend has been away from strict enforcement of these defenses in personal injury cases in which the action is closer to a tort action. A manufacturer who creates the demand for goods through print and broadcast media has the responsibility to determine that the product has the qualities represented to the general public. In addition. something other than the product itself can cause it to be defective. product displays.which a product's failure causes economic loss. Design defects exist when a whole class of products is inadequately planned in such a way as to pose unreasonable hazards to consumers. The principle of proper labeling includes claims made in sales brochures. caustic chemicals should be packaged in appropriate containers. The vendor is liable if he or she regularly engaged in the business of selling such products. because a seller is strictly liable to users or purchasers of the product who are not in privity with the seller. A production defect arises when a product is improperly assembled. which is an imperfection that renders a product unsafe for its intended use. For example. products manufactured in conformity with the intended design would be defective. Dangerous products should carry warning labels that explain how they should be used. and what steps can be taken in an emergency involving the product. instructions. an automobile manufacturer's design of a vehicle with the fuel tank placed in such a position that it will explode upon low-speed impact can be classified as defective. In that case. under what circumstances they are likely to cause harm. frames of automobiles that are improperly welded to the body at the assembly plant would be classified as a production defect. For example. and public advertising. The vendor is liable even if he or she exercised care in handling the product and if the consumer bought the product somewhere else and had no direct dealings with the vendor. or warnings on a product or its container also make a product defective. which reach the consumer without any substantial changes having been made in their condition. Some courts allow injured consumers to sue even if they have not read a certain label or advertisement. Improper labeling.

particularly if the product involved is only an indirect or remote cause. No liability is extended to a manufacturer if a plaintiff was disappointed because he or she had unreasonable hopes for a particular product. even if it is not the purpose for which it was sold. no one expects to find defective brakes in a new automobile. For example. however. However. For example. many manufacturers print warnings about common-sense hazards to provide added protection from a lawsuit. A consumer who ignores hazards will not succeed in an action alleging product liability. If the manufacturer cannot do so. the plaintiff must prove that the product was defective when it left the hands of the defendant and that the defect was the cause of injury. he has the obligation to adequately warn users and buyers of the dangers that exist. even if they found that the plaintiff misused the pot by handling it too roughly. that dynamite explodes. or that electrical appliances should not be used in the shower. but a consumer should be aware that care is needed. Frequently. Causes of Injuries The issue of causation of injuries can be complicated. A defendant is not necessarily liable if he is responsible for the last cause or the immediate cause of the injury. . When the evidence indicates that an injury might have been precipitated by several causes. a defect might not be inherent in the product. then the manufacturer must stand behind that claim for every member of the public. Regardless of the theory of liability. a person who was injured by a cooking pot that fell apart when the person removed it from the stove might not have to show that a defect in the pot handle was the only possible explanation for the accident. Risks A manufacturer has the duty to make the product as safe as possible. or one of a number of causes. The jury could still properly consider whether a defect was a concurring cause of the accident. the question becomes whether the cause for which the defendant is liable was a substantial factor in bringing about the injury. The concept of a reasonably safe product extends to all dangers likely to arise when the product is being used normally or in a way that can be anticipated. In some instances. a manufacturer might foresee that someone is likely to stand on a table and might be required either to make it sufficiently strong and stable for people to do so without sustaining injury or to warn customers not to stand on it. For example.makes claims that a normal consumer would take into consideration when deciding to make a purchase. These issues are ordinarily questions of fact to be decided by the jury. An average adult need not be warned that knives cut. a consumer's expectations are clearly reasonable but are not met.

The classic example is children's clothing. The theory is that the consumer has assumed the risk. Courts used to reject claims based on allergic reactions. A seller is not held strictly liable for providing the public with a product that is needed and wanted in spite of the potential risk of danger. The duty to warn consumers of unavoidable dangers presents special problems if certain individuals are likely to suffer allergic reactions. however. This rule applies. an individual must be at least as careful as a reasonably careful person. which generally must be at least somewhat flame-resistant. The litigation . because children are less able to appreciate the danger of accidental fires. reasoning that the product was reasonably safe and that the injury was caused by a defect peculiar to the individual. the public can still obtain products that are unavoidably unsafe. silicone breast implants. Unavoidable Dangers Although manufacturers and sellers have a duty to take precautions and provide adequate warnings and instructions.Traditionally. In addition. A consumer who clearly misuses a product cannot recover if an injury results. however. only to obvious defects and does not establish a duty for consumers to scrutinize every product they purchase. groups of plaintiffs have filed consolidated lawsuits against the manufacturers of certain products. one judge is appointed to handle all cases involving claims against such a manufacturer. and tobacco products have encountered this type of multiparty litigation. with manufacturers providing careful instructions on use and clear warnings about possible symptoms that suggest an allergic reaction. Increasing recognition has been given. a person who disregards a printed warning that nail polish remover is for external use only cannot blame the manufacturer for making an imperfect product if he or she ingests it. to a more realistic standard—the occasionally careless consumer. the consumer is precluded from recovery if he or she continues to use a product that is obviously dangerous. Multiparty Litigation Since the 1970s. The makers of contraceptive devices. Courts are now less interested in how obvious a danger is and more concerned with discovering how serious the risk is and how readily it could have been avoided. asbestos. Prescription drugs illustrate this principle because all of them have the potential to cause serious harm if used unreasonably. In many states. That approach has been abandoned. For example. Whether a consumer has assumed responsibility for using an obviously dangerous product or misused a relatively safe product depends on who the user is likely to be. The law considers an allergy to be a reaction suffered by a minority of people that is triggered by exposure to some substance.

process can prove costly for defendants because they may have to defend themselves in many different states. The resulting verdicts or negotiated settlements can also be very expensive to companies. .

LEGAL BACKGROUND It is necessary to have an understanding of the legal aspects having a bearing on product liability insurance. This section modifies the common law maxim of ‗buyer beware‘. These are s follows:  Under section 15 of the Sale of Goods Act the seller has a responsibility to ensure that the goods sold corresponded with the description and.  On the other hand.  A guarantee given by the seller may include not only the replacement of the defective product but also indemnity to the buyer against any loss. not only correspond with sample in quality. the seller may contract out of his liability by incorporating a disclaimer. An injured party who is not a party to the contract may. The insured may be a manufacturer. This position applies only as between the parties to the contract. This would be liability assumed under contract or agreement which is excluded under the products liability policies. Liability for these claims therefore. have a claim against the seller but the claim will have to be based on negligence. in certain contracts. arises under contract and some of the provision of the Indian Sale of Goods Act is relevant. injury or damage suffered by the buyer.  Section 17 provides that in contracts of sale by sample the goods shall. .  It is important to note that the actions under Sale of Goods Act for breach of condition or warranty need not be based on negligence. the provision applies whether the seller is a manufacturer or not. that the goods in addition corresponded with sample. but shall also be free from defects.  The buyers too. damage injury caused by the defective product. that they are merchantable quality. Again. of course.  Section 59 confers on the buyer the right among other things. the seller has an obligation to ensure that the goods are fit for which they are required by the buyer and if. a wholesaler or a retailer and claims for injury or damage may be made against any one or two or all of them by purchase of the goods. if the sale is by sample.  According to section 16. the goods are bought by description. Whether the seller is liable or the buyer is liable will have to be determined with reference to the actual circumstances of the sale. may endeavour under the terms of purchase to transfer to the seller all liability for loss. The law does not prohibit such disclaimers as long as : a) The disclaimer is brought clearly to the notice of the buyer before the sale is effected : and b) The disclaimer is not contrary to public policy. to claim damages for breach of contract.

000 and punitive damages of $2. or two times the economic and non-economic damages. Some states have passed laws that provide manufacturers with the right to defend themselves by showing that their product met generally acceptable safety standards when made. 116 S. The Supreme Court ruled unanimously the punitive damages award was excessive. Gore11. the Court devised three factors to assist trial judges in determining whether a jury's punitive damages award were excessive: (1) the degree of reprehensibility of the defendant's conduct. The case involved an automobile purchaser who brought action against a foreign automobile manufacturer. (2) the disparity between the harm or potential harm suffered by the plaintiff and the punitive damages award. In the same year. which relieves manufacturers of the task of attempting to make a perfect product. American distributor.000. President bill clinton vetoed a bill that would have limited punitive damage awards to $250. Businesses have also attempted to set maximum amounts that persons can recover for Punitive Damages. Ed. families of the ability to fully recover for injuries caused by defective products. In 1996. Consumer advocates have opposed such laws because they allow manufacturers to avoid liability. 2d 809 (1996) . whichever amount was greater. 559. An injured consumer cannot recover on the theory that the product would have been safe had the manufacturer incorporated safety features that were developed after the product was made. In this case. The advocates argue that these laws discourage innovation because higher safety standards are set as improvements are made. Ct..S. Occasionally. stating that it would deprive U. the federal government will move to preempt an entire area of product liability law from state control in 11 517 U. product liability law is governed by state law. contending that the shifting legal standards make them vulnerable to even the most suspect claim.000. Some states have capped awards for punitive damages. 1589.PRODUCT LIABILITY REFORM Businesses have sought relief from state legislatures and Congress regarding product liability. and (3) the difference between the punitive damages award and the civil or criminal penalties authorized or imposed in comparable cases.000. the Supreme Court imposed its own version of product liability reform with BMW v. and dealer based on the distributor's failure to disclose that the automobile had been repainted after being damaged prior to delivery. This assertion is known as the state-of-the-art defense. The BMW case showed that there were limits under the Constitution to the amount of punitive damages that could be imposed.S. An Alabama circuit court entered a judgment in the case of Compensatory Damages of $4. 134 L. Federal Preemption of State Product Liability Law For the most part.

The Court noted the rule of state law imposing duty to install airbag would have presented an obstacle to variety and mix of safety devices and gradual passive restraint phase-in sought by the DOT standard. American Honda Motor. in which the Court ruled against an injured motorist who brought a defective design action against the automobile manufacturer under District of Columbia tort law.S. Under field pre-emption. promulgated under National Traffic and Motor Vehicle Safety Act. For implied Preemption. contending that the manufacturer was negligent in failing to equip the automobile with a driver's side airbag. An example of this is the Federal Biomaterials Access Assurance Act. the Supreme Court has recognized two subcategories: field pre-emption and conflict pre-emption. requiring manufacturers to place driver's side airbags in some but not all 1987 automobiles. 1913. Ed. 12 529 U. when the supplier is a manufacturer of medical implants under the act. when the supplier is a seller of medical implants. 120 S. Inc12. a court will have to decide whether an area of product liability is affected by a federal law that does not expressly preempt product liability suits but may indicate the federal government wished such suits to be preempted. a 1998 law that protects suppliers of materials for implantable medical devices from "unwarranted" suits by laying out the permissible basis of biomaterials supplier liability. a state statute is superseded when a federal statute wholly occupies a particular field and takes away state power to supplement it. Conflict pre-emption occurs when compliance with both the federal and state statute is impossible. when the supplier sold materials that did not meet contractual specifications of the manufacturer. Under the act. 2d 914. 2.. The Court ruled the law suit was preempted in that it actually conflicted with department of transportation (DOT) standard. Ct. and the state law stands as an obstacle to the legislative objectives of Congress. or 3. (2000) . a biomaterials supplier may only be held liable in three situations: 1.order to protect a certain group of manufacturers. An example of conflict preemption was Geier v. More problematically. 861. 146 L.

even if he did not manufacture it. one must also:      show that the products were faulty when they were supplied to the seller. quality control and product returns have good quality control and record-keeping systems What is covered? Product liability insurance covers the individual against damages awarded as a result of damage to property or personal injury caused by your product. such as product faults the quality control system . An individual is legally responsible for any damage or injury that a product you supply may cause. claimants may try to claim from him first.or the processor. the manufacturer is liable . Product liability insurance also covers the individual against unforeseen circumstances.PRODUCT LIABILITY INSURANCE In product liability insurance terms. show that the seller gave consumers adequate safety instructions and warnings about misuse show that the seller included terms for return of faulty goods to the manufacturer or processor in any sales contract he gave to the consumer make sure that the seller supply contract with the manufacturer or processor covers product safety. refurbished or changed it imported it from outside the European Union cannot clearly identify the manufacturer the manufacturer has gone out of business Otherwise. a product is any physical item that is sold or given away Products must be 'fit for purpose'. However. Responsibilities If the seller supplies a faulty product. He will be liable for compensation claims if:      business' name is on the product business had repaired. where the product involves parts from multiple manufacturers.

if one simply makes an inferior product. or even get insurance.couldn't trace. However. up to date and well maintained . Before issuing a policy the insurer will want to know that:    manufacturing or services are carried out in line with industry best practice staff are adequately trained equipment and systems are appropriate. Bad workmanship is not covered. he may be unable to make a claim.