#15672 - Product Liability - Tort Law

PRODUCT LIABILITY

There are two ways of claiming in tort against a manufacturer for product liability:

1. Common law of negligence (Donoghue v Stevenson);

2. Under the Consumer Protection Act 1987: manufacturers have strict liability for defects.

Statutory claim is limited to damage exceeding 275. Better to claim via CPA, as no fault requirement.

CLAIMS IN NEGLIGENCE

Narrow rule in Donoghue:

• Donoghue v Stevenson [1932]: C claimed against D (manufacturer) for injuries suffered after consuming ginger beer containing the remains of a snail. Lord Atkinson: manufacturers who sell products in the form in which they will reach the ultimate consumer (i.e. which aren’t altered by a third party before consumption) “with the knowledge that the absence of reasonable care in the preparation of the product will result in an injury to the consumer … owes a duty to the consumer to take reasonable care.”

  • Rule: the ultimate user can sue a manufacturer if: (i) the product was sold in the form in which it is designed to reach the consumer; (ii) there is no reasonable possibility of intermediate examination; (iii) knowledge that absence of reasonable care will injure the consumer.

• Grant v Australian Knitting Mills [1936]: C claimed against D manufacturer, when trousers caused a rash rendering him bed-ridden for 17 weeks, in hospital for three months, and nearly killed him. PC: manufacturers were liable in negligence —the presence of a chemical in the garment was a latent defect and there had been no intermediate inspection / alteration.

Negligence protects safety of products, rather than the value or quality which are protected in contract.

Later decisions have made it clear that a manufacturer also owes a duty to anyone injured by the product (bystanders injured by another’s use).

Duty of Care: extends not only to the product, but also to the container/packaging and labels/directions/ instructions that accompany it.

• Watson v Buckley [1940]: manufacturer of hair dye was liable for promoting a product as safe when they had not in fact tested it.

Breach of duty:BreaBottom of Form

BreaB although in theory this is fault-based liability and the burden is on C to prove a breach, in practice, the presence of a defect infers negligence. In Grant the manufacturer had an exceptional record of health/safety —shipped 4.7m other products with no similar injuries. The standard is so high that it may be asked whether this is in fact strict liability.

Intermediate examination/interference:

• Although a requirement in Grant and Donogue, there is no separate requirement that the defect couldn’t have been reasonably discovered by an intermediate third party; it seems the question of an intermediate inspection goes to the question of causation (rather than existence of duty).

• Use of a product by C for a purpose different from that for which D designed it / reasonably could have contemplated it would be used will defeat the claim— this is clear from Grant (see below).

Actionable damage: personal damage, loss to other property, and consequential loss can all be claimed. No liability for pure economic loss, unless manufacturer has assumed responsibility under HB:

• Muirhead v Industrial Tank Specialities [1986]: C wished to hoard lobsters and sell them at times of high demand. He purchased tanks for this purpose. The tanks failed and the lobsters died. C sued ITS (the company he purchased the tanks from was insolvent) for: (i) loss of the lobsters; (iii) loss of profits. CA: C could claim for the lobsters and consequential losses but could not claim for PEL —PEL could only be recovered under HB where there was an assumption of responsibility. No such assumption of responsibility will be found where goods are supplied from manufacturer distributor purchaser under a normal chain of contracts.

• Hamble Fisheries v Gardner [1999]: C purchased an engine for a fishing vessel from D through an intermediary boat builder. D received reports the engines had suffered failures. C suffered such a failure while at sea and claimed for economic loss (no injury / other property damage). CA: no economic loss was recoverable as D had not assumed responsibility for C’s affairs (under HB). Recognised, in principle, a manufacturer could be liable for a failure to warn of a known defect.

• No recovery when the only damage suffered is harm to the defective product itself (although C will usually have a claim in contract).

Causation / volenti / CN: There must be a causal link, in Grant Lord Wright held: “the man who consumes or uses a thing which he knows to be noxious cannot complain in respect of whatever mischief follows because it follows from his conscious volition in choosing to incur the risk or certainty of mischance.” Although on such facts, the D would have a defence of volenti. There may also be circumstances where, contributory negligence is appropriate.

Circumstances where claims are only available in negligence:

1. Those not classified as ‘producers’ under the terms of the CPA 1987;

2. Kinds of loss which are not remediable under the CPA (the Act only accounts for harm to persons and damage to private property);

3. Damage to property not intended for private use;

4. Expiration of special limitation period under the Act.

CONSUMER PROTECTION ACT 1987

Enacted as implementation of the EC ‘Product Liability’ Directive, which was intended to prevent producers in countries where product liability rules are less strict from having a competitive advantage.

• This goal failed because: (i) it is only concerned with damage done to persons / property by a product ‘intended for private use or consumption’ —does not touch commercial property; (ii) Member States had latitude as to which bits were implemented; (ii) did nothing to harmonise remedies.

Who can be liable under the Act?

There is a hierarchy of possible defendants under the Act

• s.2(2)(a) Producer: this is defined as:

  • s.1(2)(a) manufacturer:

    • s.1(2) in cases where a product causes damage as a result of a failure of a component part, the manufacturer of that part and the assembler of the whole can be treated as ‘producers’

      • s.1(3): a person who supplies a product comprising other products shall not be treated as the producer of those components merely because he supplied the whole.

    • s.2(5): where multiple persons are liable under the Act, liability in joint and several.

• s.1(2)(b) person who won or abstracted the product: this covers mining / raw materials.

• s.1(2)(c): Essential characteristics attributable to an industrial or other process having been carried out —e.g. agricultural produce is covered.

• s.2(2)(b) Person who has held himself out to be the producer: E.g. by putting his name on the product (think own-brand supermarket products). Here D must appear as being the producer.

• s.2(2)(c): Importer of product into Member State from a place outside the EU in order to supply it to other persons: this goes some way toward relieving Cs of problems of suing a foreign producer.

  • s.2(3): if the importer fails to identify a producer, then that supplier will be liable.

• s.2(3) Supplier: Non-tortious suppliers avoid liability by naming the person who supplied the goods to them under s.2(3) to allow C to follow the chain of parties until the manufacturer is found.

• s.2(3)(b) request to identify must be made by C within a reasonable time of the damage occurring.

• s.2(3)(c): if the supplier fails to identify within a reasonable time then the supplier will be liable.

What is a product?

• s.1(2): a product is any good / electricity and includes a product which is comprised in another product

• s.45: goods include: movable objects, substances, growing crops, ships, aircrafts, vehicles etc.

What is a defect?

s.3: a product is defective if the safety of the product is not such as persons are generally entitled to expect.

• s.3(2)(a-c): ‘safety’ covers: (i) the manner in which / purposes for which the product has been marketed, “including any instructions for, or warnings with respect to, doing or refraining from doing anything with or in relation to the product”; (ii) what might reasonably be expected to be done with it / to it; (iii) the time when the product was supplied by its producer to another

  • This last factor means a product will be judged according to standards at the time it was put into circulation —it will not be defective merely because a later product is more safe).

Warnings / instructions: a standard product may be perfectly safe if used properly, but unsafe if used improperly / for an improper purpose. Products will not be defective for reasons of improper use. Where risk is not obvious, the product may be defective if not accompanied by adequate warnings / instructions.

Standard of safety public is entitled to expect:

• A v National Blood Authority [2001]: Cs were infected with Hepatitis C after receiving blood transfusions —at the time, there was no way of detecting whether the blood was infected. Burton J: found for Cs:

  • The relevant question is what the public’s legitimate expectations were, rather than what they in fact expected. Rejects D’s argument that the public don’t expect blood to be 100% clean, their legitimate expectation is not that tests will have been carried out, rather that the blood is safe.

  • Avoidability is not a circumstance to be taken into account in determining public expectation— if it were, it would let fault in through the back door

  • Distinction between standard and non-standard products: The defective blood bags were non-standard products and so the question is whether the risk that...