In developing your new product concept, keep the

term product liability in the back of your head.  It

can be very expensive if you have to:

• recall your product after launch because of a

defect
• you are being sued because of a defective
product that resulted in personal injury.
• It could be the end of your company
 Products commonly subjected to product liability claims

• Product liability law deals with the placement

of defective product into the hands of the
Defective Products

consumer by the seller of the product.

• The product is therefore unsatisfactory in some

way when it reaches the consumer.

•  Responsibility of the defect rests with all

sellers of the product who are in the dis tribution chain.
 Product
Product generally refers to something tangible,
however, in the context of product liability law, it
has been expanded to include intangible items
such as electric power delivered to your home.
New
Services
Sale
Offered • An important component of product liability is
that there is a sale of the defective product.
Expanding Our
• The injured person does not have to be the
Expertise
purchaser of the product in order to recover
damages … a bystander has just as much right to
recover damages as the purchaser or user of the
product.
The Defect

• In product liability law, defect generally refers to some

problem, weakness comission or error existing in the
product which renders it unsafe. Types of Defects

• Manufacturing Defects
• It is not the mere fact that a defect exists which confers
liability as long as the defect does not present any
• Design Defects
unreasonable danger.  • Warning Defects
• e.g. you only got five sticks of gum rather than the
intended six, …, the mislabeling is an obvious defect but it
• does not render the product unsafe.
Manufacturing Defects

A manufacturing defect exists when the product does not conform to the manufacturer’s
own specification.  From a legal standpoint, this is very easy to prove (e.g. screw in soda
can).  These defects can occur randomly, so a manufacturing defect is not common to all
of the products.

Design Defects
Design defect refers to a defect common to the product itself, and is usually common to
the entire line of products.
• A product may be designed defectively if it is found that it fails to perform safely
according to ordinary consumer expectations.
• A product may be deemed defectively designed if there was a cost-effective
alternative design which could have prevented risk of injury.
• A product can be deemed unreasonably dangerous even though no safer design was
possible, in effect saying it should have never been manufactured.
Design Defects
Warning defects usually involve lack of a written document that accompanies the product.  A
warning defect usually applied to the whole of products.

A manufacturer of microwave dinners for example might omit a warning on the package to
remove the packaging before microwaving the food product, or it will burst into flames.  This
omission makes the product unreasonably dangerous.

How do courts check for defectiveness?

A variety of tests have been used by the courts to establish product defectiveness

• Ordinary Consumer Expectation

• Expert Testimony
• Risk/Utility Analysis
• Unavoidable Unsafe Product
 Main Theories of Product Liability – Legalities
1) Strict Liability
•The liability of manufacturers, for harm caused by their
defective products, without any necessity for the plaintiff
to prove fault on the part of the manufacturer.
•Under strict liability, the issues are product oriented. For
example: Does
the product meet manufacturer specifications? Does the
product provide adequate warnings? Does the product’s
design render it unsafe in comparison to the design of
comparable products. There is no concern for the good or
evil intentions of the manufacturer.
2) Negligence
•Unlike the strict liability situation, a negligence
claim is conduct oriented and
not product oriented. For example: Did the
manufacturer adequately test the product before
placing it on the market ?
Did the manufacturer cut cost corners thereby
making an inferior product?
3) Breach of Warranty 4) International

• Written promise the product will perform (express) Intentional differs from an act of negligence in that –
as the name implies – it requires an element of intent
• Implied representation that product is free of defects (manufacturer knows about a defect but ignores it).
(implied)
 
• The warranty includes the obligation that the product
meets the needs of a particular purpose (implied
warranty of fitness for a particular purpose)
 Responsible Parties

Product liability action rests with all of the parties in the chain of the distribution and marketing of the
product

Intentional differs from an act of negligence in that – as the name implies – it requires an element of intent
(manufacturer knows about a defect but ignores it).

1) The Manufacturer

•The manufacturer can, in principle, be liable under strict liability, negligence and
breach of warranty. The rule not only applies the manufacturer of the finished product, but to the manufacturer
of any component of the finished product if the component was defective when it left the hands of the
component manufacturer.
2) The Retailer
One who puts out as his own product a product that is manufactured by another is subject to the same liability
as though he were the manufacturer.

Although sellers in the distribution chain are theoretically liable, the retailer is not involved in the actual
manufacturing. Nevertheless, if the retailer undertakes inspecting or assembling the product before it is sold,
it must take reasonable care in this assembly or inspection not to be liable.

3) Seller of Used Products

•A person who engages in buying or selling used products is generally not susceptible to strict liability because
the chain of distribution has been broken. If the reseller does something intrusive with the product prior to
resale, he/she may be liable under a theory of
secondary manufacture if what he/she did resulted in a defective condition.
4) The Assembler or Installer

A perfectly fine product may become defective if it is assembled incorrectly. In general, this would confer the
same liability on the assembler or installer. If the assembler puts together a defective product from the
manufacturer - ??? – liability may turn in their ability to detect the defect during assembly or installation.

5) Physician or Medical Provider

In the area of drug and medical device litigation, the physical or medical provider may be held liable on the
basis that they, as trained intermediaries, have a duty to inform the patient of the risks of the products
prescribed, so patient can make an informed decision. The manufacturer relies on the physician to adequately
inform the patient based on the information provided by the manufacturer.
 Verdict

Either by judge or jury, where liability is determined

first, followed by a 2nd trial to decide on damages.

Judgment and Arbitration

Settlement and A third party (arbitrator) listens to the arguments and
renders a decision.
Release
Settlement
Most product liability claims are settled outside of
court – a mutual greement by both parties to terminate
the dispute, usually for a sum of money.
Damages
C O M P E N S ATO RY
Compensate party (money) for
medical expenses, lost
earnings, pain and suffering,
injury to personal property.
PUNITIVE
Involves an award of a
substantial sum of money to the
affected party for the purpose of
punishing the defendant.
NOMINAL
Usually involves a very small
sum of money, to show that the
plaintiff was legally wronged –
most of the time, injuries are
inconsequential.