Product Liability

By
Prof. Jyotirmoy Banerjee
Indian Institute of Management, Rohtak
What comes to your mind by the term
PRODUCT LIABILITY?
Product liability refers to the Liability of the
Manufacturer and sellers of defective products
that causes injury to consumers and users.
 Types of Liability

• Negligence (लापरवाही)
• Misrepresentation (बहकाना)
• Strict Liability (सख्त दायित्त्व)
 Product Liability based on Negligence

• Negligence-based product liability is based on the manufacturer’s breach

of the reasonable standard of care and failing to make a product safe.
• Manufacturer must exercise ‘due care’ in
1. Designing Products
2. Manufacturing and Assembling Products
3. Inspecting and Testing Products
4. Placing Adequate warning labels
 Product Liability Based on Misrepresentation

• It occurs when a fraud is committed against consumer or user of

a product
• Fraud must have been made knowingly or with reckless
disregard for safety
 Example of Misrepresentation

For example,
• If a child's bicycle packaging depicts a child riding the bicycle without a helmet, the bicycle
manufacturer could be held liable for misrepresentation if a child were injured as a result of riding the
bicycle without a helmet. When product information fails to warn of risks of the product.
• When a product salesperson overstates what the product can do, the safety of the product, or what the
product can be used for. For example, if a salesperson states that a container is microwave-safe, but the
product explodes after having been microwaved for a long period of time, the manufacturer or retailer could
be held liable for product liability misrepresentation.
 Sec. 82 of CPA, 2019
Application of Chapter

It will apply to every claim for compensation

under the ambit of product liability action by
the complainant, for any
1. Harm caused by defective product
manufactured
2. Harm caused by the services provided
by the service provider
3. Harm caused by the product seller
 Sec. 83 of CPA, 2019
Product Liability Action
• It can be brought by the complainant against a
1. Product manufacturer
2. Product service provider
3. Product seller
• For any harm caused to him on account of any defective product or service
being rendered.
 Sec. 84 of CPA, 2019
Liability of Product Manufacturer
1. Cases in which a product manufacturer shall be liable-
• The product contains a manufacturing defect
• Product is defective in design
• Deviation from manufacturing specification
• If the product does not confirm any form of warranty
• Product fails to contain adequate instruction of correct usage to prevent any harm
• If the product fails to provide a requisite warning regarding improper or incorrect usage

2. Product manufacturer shall be liable in a product liability action even if he proves that he
was not negligent or fraudulent in making the express warranty of the product
 Sec. 85 of CPA, 2019
Liability of a Product Service Provider
1. Cases in which the product service provider shall be liable in a product liability action-
a. The service provider was himself in fault or imperfect or deficient or inadequate in quality,
nature or manner of performance.
b. There was an act of omission or commission or negligence or conscious which caused harm
c. The service provider did not issue any adequate instruction or warning to prevent the harm
d. The service provider did not conform to the express warranty or the terms of the conditions
of the contract
 Example of Product Service Provider

Not All Free Items Are Welcome

• Imagine you bought a bottle of Pepsi and found a packet of gutka floating in it! It happened to Rajesh Rajan from
Ahmedabad when he bought Pepsi from a local store. He sent a legal notice to the company immediately and
approached a Consumer cases Dispute Redressal Forum.
• Moreover, he claimed that there was a deficiency in service that could have caused a health hazard to him. He
demanded compensation of ₹5 lakh for the same.
Court Decision
• The consumer forum passed an order in favor of Rajesh Rajan and directed the company to pay a total of ₹4008
(₹4000 for compensation and ₹8 for the Pepsi he purchased ).
• Rajesh moved the State Consumer Dispute Redressal Commission, asking for higher compensation as ₹4008 was
too low and that he had spent ₹500 on sample testing itself. The State Commission passed an order asking the
company to pay ₹20,000 as compensation and ₹2000 towards costs as it found Rajesh’s argument reasonable.
 Example

Tired of the False Claims Made by Skin and Hair Care Products Yet?
• In 2015, K Chaathu complained against Indulekha (beauty product manufacturers) and Mammootty (an actor
who was the brand ambassador of the company) for putting up misleading ads. The tagline of the soap was
‘soundaryam ningale thedi varum’ which meant ‘beauty will come in search of you. The ads also claimed that
people using the soap will become ‘fair’ and ‘beautiful’ but the 67-year-old didn’t become fair or beautiful.
Funny, right?
Compensation Paid
• Indulekha paid him ₹30,000 in an out of the court settlement while the initial claim of Chaathu was ₹50,000.
When he was asked about this, he said that this case was never about the money but about how these
companies put up advertisements every day with false claims. And it is not okay to let these people get away
with it.
 Sec. 86 of CPA, 2019
Liability of a Product Seller
1. A product seller who is not a product manufacturer shall be liable, if-
• He has exercised substantial control over the designing, testing, packing etc.
• He has altered or modified the product and such alteration is causing harm
• He has made an express warranty of a product independently of any express warranty which was
not made by the manufacturer
• The product has been sold by him and the identity of product manufacturer of such product is not
known
• He failed to exercise reasonable care in assembling, inspecting or maintain such product or he did
not pass on the warnings regarding the danger involved or instruction for proper used while
selling
 Example

• Sometimes online retailers like Amazon, Flipkart, etc. take the help of the argument that
they have merely delivered the product of some seller and hence they were not liable. But
in a California Court decision, this thing was repealed and it was held that online retailers
would be liable for any third-party defects of a product that is sold on its website.
(Refer Bolger v. Amazon.com, LLC)
• Hence, now if there is any defective product, the consumer need not find the third party
but can directly claim compensation from the product retailer.