Product Liability

Product liability refers to a manufacturer or seller being held liable for placing a defective product into the hands of a consumer. Responsibility for a product defect that causes injury lies with all sellers of the product who are in the distribution chain. In general terms, the law requires that a product meet the ordinary expectations of the consumer. When a product has an unexpected defect or danger, the product cannot be said to meet the ordinary expectations of the consumer. There is no federal product liability law. Typically, product liability claims are based on state laws and brought under the theories of negligence, strict liability, or breach of warranty. In addition, a set of commercial statutes in each state, modeled on the Uniform Commercial Code, will contain warranty rules affecting product liability. Defective or dangerous products are the cause of thousands of injuries every year in the U.S. “Product liability law” is the set of legal rules concerning who is responsible for defective or dangerous products but they are different from ordinary injury law. This set of rules sometimes makes it easier for an injured person to recover damage.

Product Defects: Responsible Parties

For product liability to arise, at some point the product must have been sold in the marketplace. Historically, a contractual relationship, known as “privity of contract,” had to exist between the person injured by a product and the supplier of the product in order for the injured person to recover. In most states today, however, that requirement no longer exists, and the injured person does not have to be the purchaser of the product in order to recover. Any person who foreseably could have been injured 

by a defective product can recover for his or her injuries, as long as the product was sold to someone.

 Liability for a product defect could rest with any party in the product’s chain of distribution, such as:

● The product manufacturer;

● A manufacturer of component parts;

● A party that assembles or installs the product;

● The wholesaler; and

● The retail store that sold the product to the consumer.

● For strict liability to apply, the sale of a product must be 

made in the regular course of the supplier’s business. 

Thus, someone who sells a product at a garage sale 

would probably not be liable in a product liability action

Types of Product Defects

Under any theory of liability, a plaintiff in a product liability case must prove that  the product that caused injury was defective and that the defect made the product unreasonably dangerous. There are three types of defects that might cause injury and give rise to manufacturer or supplier liability:

Design Defects – Present in a product from the beginning, even before it is manufactured, in that something in the design of the product is inherently unsafe.

Manufacturing Defects – Those that occur in the course of a product’s manufacture or assembly.

Marketing Defects – Flaws in the way a product is marketed, such as improper labeling, insufficient instructions, or inadequate safety warnings.

Unavoidably Unsafe Products

By their nature, some products simply cannot be made safer without losing their usefulness. For example, an electric knife that is too dull to injure anyone would also be useless for its intended purpose. It is generally believed that, as to such products, users and consumers are the best equipped to minimize risk. Thus, while a product might not be deemed unreasonably dangerous, manufacturers and suppliers of unavoidably unsafe products must give proper warnings of the dangers and risks of their products so that consumers can make informed decisions regarding them.

Common Defenses to Product Liability

Claims

A defense often raised in product liability cases is that the 

plaintiff has not sufficiently identified the supplier of the product that allegedly caused the injury. A plaintiff must be able to connect the product with the party(ies) responsible for manufacturing or supplying it. There is an exception to this rule, known as the “market share liability” exception, which applies in cases involving defective medications. Where a plaintiff cannot identify which of the pharmaceutical companies that supply a particular drug supplied the drug he/she took, each manufacturer will be held liable according to its percentage of sales in the area where the injury occurred.

Need Help With a Product Liability Claim?

Product liability actions are quite complex, and establishing legal fault often requires the assistance and testimony of experts. Additionally, every state has its own laws and specific statutes that will affect product liability action.

If you or a loved one has suffered an injury caused by a potentially defective product, an experienced product liability attorney will be able to answer your questions and protect your interests. Learn more about state-specific laws on our products liability legal answers page.

Product Liability Law In India

 India does not have a general product liability statute, but there are several general laws that protect consumers from defective products. The CPA has provisions for a complaint to be filed in relation to goods that are hazardous to life and safety (in contravention of any standards imposed by law) or otherwise defective. The Act also defines ‘defect’ to mean ‘any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard that is required to be maintained by or under any law for the time being in force or under any contract, express or implied, or as is claimed by the trader in any manner whatsoever in relation to any goods’. There are other specific statutes that contain provisions relating to product safety, standards and regulations such as:

1.         The Food Safety and Standards Act. 2006;

2.         The Drugs and Cosmetics Act 1940;

   3.    The Drugs and Magic Remedies (Objectionable  Advertisements) Act 1954 and the Drugs and Magic Remedies (Objectionable Advertisements) Rules 1955;

   4.    The Legal Metrology Act 2009 and the 

   5.    Legal Metrology (Package Commodities) Rules    2011;

   6.    The Indian Contract Act 1872

   7.    The Essential Commodities Act 1955;

   8.    The Agricultural Produce (Grading and Marketing) Act 1937;

   9.    The Bureau of Indian Standards Act 1986;

  10.   The Insecticides Act 1968;the Standards of Weights and Measures Act, 1976;

  11.   The Energy Conservation Act 2001;

  12.   The Insurance Regulatory and       Development Authority of India Act 1999;the Railway Claims Tribunal Act 1987; and the Electricity Act 2003.

A general duty is also imposed under the Sale of Goods Act whereby the sale is subject to implied conditions as to quality or fitness, merchantable quality and conformity with the sellers’ description. In some cases of goods being sold without warranty or other standard conditions in favour of the purchaser, the courts may occasionally resort to custom or trade practice to determine the normal antecedents of a sale in the relevant product. The Competition Act 2002 came into force after some amendments in May 2009. The Act amended the CPA to insert references to the unfair trade practices (deriving from the thereby repealed Monopolies & Restrictive Trade Practices Act 1969), which are defined in section 2(r) of the CPA, covering any form of false or misleading representation, statement or advertisement, these are actionable through the usual consumer complaint process. The proposed Consumer Protection Bill 2018 contains Chapter VI creating a new statutory product liability that derives from

• Personal injury, death, or property damage caused to the consumer resulting from defects in the manufacture, construction, design, formula, preparation, assembly, testing, service, warning, instruction, marketing, packaging, or labelling of any product, making the manufacturer or producer liable; and • Manufacturing defects, deviations from manufacturing norms, lack of proper instructions and warnings and failure to conform to an express warranty. The proposed Consumer Protection Bill 2018 also appears to be directed at changing the law in favour of consumers by increasing the list of causes-of-action set out under what constitutes a complaint. It has introduced ‘a claim for product liability action against the product manufacturers, product seller or product service provider’ and also widens the concept of purchase to include online transactions.

Product Liability under the Consumer Protection Act, 2019

 Sections 82 to 87, appearing in Chapter VI of CPA 2019, provide an all-encompassing scheme which would apply to every claim for compensation under a product liability action. CPA 2019, expressly or by necessary implication, does not indicate that these new provisions of product liability will also apply to product liability actions already pending before various consumer fora. However, since these provisions create new rights and liabilities, there is a presumption in law that they are prospective in operation CPA 2019 defines product liability as “the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating thereto”. A product liability action can be filed against a ‘product manufacturer’ or a ‘product service provider’ or a ‘product seller’, as the case may be. CPA 2019 defines each of these expressions in very wide terms to bring within their fold every possible aspect of a product liability claim. CPA 2019 also delineates the situations in which they will be held liable.

Liability of a product seller

(i)   he has exercised substantial control over the designing, testing, manufacturing, packaging or labelling of a product that caused harm;

(ii)   he has altered or modified the product and such alteration or modification was the substantial factor in causing the harm;

(iii)  he has made an express warranty of a product independent of any express warranty made by a manufacturer and the product failed to conform to such warranty

(iv)  the product has been sold by him and the identity of product manufacturer of such product is not known, or if known, the service of notice or process or warrant cannot be effected on him or he is not subject to the law which is in force in India or the order, if any, passed or to be passed cannot be enforced against him;

(v)  he failed to exercise reasonable care in assembling, inspecting or maintaining such product.

Liability of a product manufacturer

(i)  the product contains a manufacturing defect;

(ii) the product is defective in design;

(iii) there is a deviation from manufacturing specifications;

(iv) the product does not conform to the express warranty;

(v) the product fails to contain adequate instructions of correct usage to prevent harm or any warning regarding improper or incorrect usage.

Exceptions to a product liability action

(i) The product was misused, altered or modified at the time of harm. Curiously, as per this exception, there cannot be a product liability action against a product seller. This is somewhat intriguing, since this exception should equally apply to a product manufacturer or a product service provider.

(ii)  In any product liability action based on the failure to provide adequate warnings or instructions, the product manufacturer will not be liable, if-

 •The product was purchased by an employer for use at the workplace and the product manufacturer had provided warnings or instructions to the employer; or

•The product was sold as a component or material to be used in another product and necessary warnings or instructions were given by the product manufacturer to the purchaser of such component or material, but the harm was caused to the complainant by use of the end product in which such component or material was used;

 •The product ought to have been used only by or under the supervision of an expert; or

•The complainant, while using the product, was under the influence of alcohol etc.

(iii)  A product manufacturer will not be liable for failure to instruct or warn about a danger which is obvious or commonly known to the user of such product.

Even prior to CPA 2019, in most product liability actions, one or more of the above defenses were taken. These defenses now have statutory recognition. CPA 2019 does not say that the defences set out are the only defenses to any product liability action. It, however, remains to be seen how the courts will interpret these provisions. Interestingly, consumer courts in India, being generally inclined to favour the evidence of a consumer, treat technical defences adopted by manufacturers with some disdain and rarely allow reliance upon long-winded warranty clauses especially if they are incorporated by reference into a manufacturer’s standard warranty (see General Motors v Major Gen B S Suhag 2008 decision of the NCDRC). The NCDRC has also laid down, in this regard, that section 2(1)(e)(v) of the CPA clearly implies that if standard prescribed under some law are not maintained, the product shall be construed to be hazardous (see Asia Tea Company and Ors v On behalf of Commissioner, Civil Supplies and Consumer Protection Department, Consumer Association of India (I (2017)CPJ461(NC).

Occasionally the consumer courts treat a complainant’s case with suspicion when it is apparent that the product has already been well used and without complaint (see Royal Enfield case cited in question 11 and General Motors India Pvt Ltd v GS Fertilizers (2013 decision of the NCDRC)).

Expiry of the warranty period may not prevent a court from awarding damages when the cause of action is stated to have occurred during the warranty (see Ashok Leyland Ltd v Gopal Sharma & Ors (II (2014) CPJ 394 (NC)) and, in some cases, the consumer forum may even extend the warranty for the period of distress (see Balaji Motors v Devendra and Another II (2013) CPJ 534 (NC). In Maruti Udyog Ltd v Susheel Kumar Gabgotra and Ors (AIR 2006 SC 1586 ), the complainant filed a complaint alleging that the new car he bought from the respondent was faulty and therefore the respondent was liable to replace it. The state commission and a division bench of the Jammu & Kashmir High Court directed the respondent to replace the car with a new one. In the appeal before the Supreme Court, the appellant contended that both the Commission and the High Court erred in holding that there was an admission to replace the car or admission of any manufacturing defect. The warranty condition clearly refers to the replacement of the defective part and not of the car. The Supreme Court, while reversing the decision of the High Court, held that the warranty conditions are expressly stated, it was not a case of silence of a contract of sale as to warranty and therefore the High Court was not justified in directing replacement of the vehicle.

Causation requires a direct link between the product defect and the injury caused. A possible novus actus interveniens (outside act or intervention of a third party) can be asserted as a defence to demonstrate that the causal link between the loss caused and the defendant’s area of responsibility is broken (in K Madhusudan Rao v Air France, Revision Petition No. 3792 of 2008 decided by the NCDRC on 1 April 2010, a case was successfully defended relying on this principle since a theft of a passenger’s valuables in a hotel lobby could not be pinned upon the airline that had arranged for the hotel on account of a cancelled flight). Similarly, a product defect must be treated as a sine qua non or causa causans for the injury and not a contributing factor.

The law in this regard evolves from a few unfortunate cases such as one involving a defective unserviced escalator, which caused the death of a minor (Geeta Jethani and Others v Airports Authority of India [III, 2004 CPJ 106 NC]). In re Karuna Ketan Biswas v Airports Authority of India and Ors II (2013)CPJ37(WB) (decided on 30 May 2013 by the SCDRC West Bengal), the Airports Authority of India was held not liable for deficiency in their services but was directed to compensate the complainant by way of an ex gratia payment of 50,000 rupees. Although the manufacturer (Otis) was made a party to the litigation, it was not held liable, owing to the lapsed warranty and maintenance contract, so that the owner-operator of the escalator was held to be negligent.

The doctrine of res ipsa loquitur may be invoked to transfer the burden of proof onto the manufacturer (see Ashok Leyland Ltd v Gopal Sharma & Ors [II (2014) CPJ 394 (NC)]. In such cases, it could be argued that maintenance should only be required to ensure that the machinery functions at its optimum capacity, but the manufacturing process should be such that there are built-in safety mechanisms (such as an auto-cut mechanism in case of an escalator or emergency brakes in a lift) to prevent the machine from becoming hazardous, and in the absence of such safety mechanisms, there could be an automatic presumption of defect in the manufacturing process following an accident that caused death or injury (see Geeta Jethani v AAI).

Once it is assumed that the product is defective, then the manufacturer must establish that the defect (or other failure owing to bad maintenance) could not have arisen from the manufacturing process. In a manufacturing defect case, the plaintiff still bears the burden of proving that the product in question was faulty or defective. Often the manufacturer’s design or marketing standards can be used to show that the product was defective, but proving how or why the flaw or defect occurred can be difficult for the complainant. Ordinarily, the burden of proof to demonstrate that a product caused a specific injury would be on the claimant, but there have been several instances of defects leading to an unreasonable number of visits to the workshop (see TELCO in question 11) or where engine replacement was necessary during the warranty period (see Honda Siel Cars in question 12). The burden of proof to show any defect in goods is on always on the person who alleges the deficiency, and the cost of getting the product tested must ordinarily be borne by the party alleging the defect (see Jai Prakash Verma v JK Lakshmi Cement Ltd II (2013) CPJ 54 (NC)).

Conclusion

When compared to the earlier Act of 1986, CPA 2019 is far more comprehensive and in tune with the consumer protection regimes elsewhere around the world. The introduction of a product liability regime is a welcome change and will streamline product liability actions. There is a clear shift in principle of buyer beware to seller beware. Even though some aspects are unclear, the new regime is set to change the legal landscape of India pertaining to product liability. The ease of approaching consumer forums and the strict regime will only push consumers to experiment with these provisions to a new high. Product manufacturers, sellers and service providers will need to ensure that they have done their due diligence properly to be compliant with the various requirements under different legislations. A checklist of such compliances backed with proper legal and technical advice would go a long way in protecting their interest and the interest of the consumers.