Introduction: Product liability is a crucial aspect of consumer protection law, ensuring that manufacturers, suppliers, and service providers are held accountable for defective products that cause harm. In the European Union, the United Kingdom, and India, specific legislations and landmark cases define the framework for such liability. This article explores the legal standards, significant rulings, and consumer remedies available in these regions, providing a comprehensive understanding of product liability actions.
EUROPEAN UNION
In EU, the Product Liability Directive was adopted in 1985. It seeks to establish a strict liability regime for defective products in EU. Members of the EU have adopted the directive through national legislations. Under Article 4 of the Directive, the injured person has to show the damage they suffered and prove a causal relationship between the defective product and the damage. The standard of evidence varies in different countries. A product is defective if it does not provide the safety that a person is entitled to expect as defined under Article 6 of the Directive.
In Boston Scientific Medizintechnik GmbH v AOK Sachen-Anhalt-Die Gesundheitskasse and Betriebskrankenkasse RWE, it was held that if the consumer is at risk because the product’s function is dangerous, if the user is vulnerable or if there is an abnormal potential of damage, then the safety standard is also to be increased.
UNITED KINGDOM
The UK passed the Consumer Protection Act 1987 to introduce product liability and consolidate amendments made to the existing Consumer Protection Act 1978. Section 2 of the Act, 1987 imposes strict liability on the manufacturer or supplier of a product.
CASE 1
Baker v KTM Sport motorcycle UK Ltd
The Court stated that it is not required for the plaintiff to prove the defect causes. In the present case, the product was regularly used, and the plaintiff carried out proper maintenance and servicing. Therefore, the galvanic corrosion must be a defect in the design or manufacture. Thus, the defendant was liable.
CASE 2
Wilkes v Depuy International Ltd
The Court made the following observations:
(i) The level of safety is an objective standard based on a person’s general expectation rather than a legitimate expectation of the public.
(ii) The emphasis should be to determine if there was a defect or not and not on identifying the harmful characteristic which caused the injury.
(iii) Relevant factors for determining defect include – cost and the risk-benefit balance of a product, ease of and extent of mitigating risk, the product’s compliance with applicable standards and producer’s specification.
CASE 3
Colin Gee v Depuy International Ltd
The Court made the following observations:
(i) The concept of ‘defect’ is strictly objective and subjective to examination.
(ii) As per Section 3, the burden falls on the claimant to prove a defect to show that the product was below the safety standards.
(iii) If an injury can arise even if the product meets the safety standard under Section 3, then there is greater specificity about how the product is unsafe. It needs to be established that the product is unsafe due to an abnormal feature.
CASE 4
Claire Busby v Berkshire Bed Co Ltd
The plaintiff purchased a bed from the respondent, which led to an injury by falling off the end of the bed. She claimed that a defect caused the accident, the alleged defect was that there was a one-degree slope in the bed which had caused the plaintiff to lose their balance and get injured. The Court while dismissing the claim of breach of contract and negligence made the following observations. The Court held that the product’s level of safety would be based on the test of ‘what a person would generally be entitled to expect. Although the respondent had not manufactured the bed, they had branded the beds as their own and therefore were liable.
Product Liability in India according to CPA 1986
While it did not use the term ‘product liability, consumers were able to seek a remedy through the twin concepts of ‘defect’ and ‘deficiency’. Where Section 2(1)(f)and 2(1) g of the CPA 1986 define ‘defect’ and ‘deficiency’, respectively. Further, Section 2(1)(f)& 2(1)(g) of the CPA 1986 implicates that any violation of standards prescribed under any consumer welfare legislation or any contract amounts to the product or service is defective under the CPA 1986.
Judicial View of Product Liability Under CPA 1986
1. Anand Kumar Bansal v Premier Ltd.
The Consumer Commission relied on Black’s Law Dictionary to define the term ‘manufacturing defect’ as “a deviation from design specifications during production resulting in a product’s defect, frailty or shortcoming.”
2. Gopal Aggarwal v. Metro Motors
The Consumer Commission observed that if the manufacturing defects were claimed, the car must have been sent to an accredited laboratory per procedure. This procedure cannot be circumvented by saying it is a mere technicality.
3. C.N. Anantharam v. Fiat India Ltd. and Ors.
A complaint was filed regarding noise from the engine and the gearbox wherein the Supreme Court directed that if the independent technical expert is of the opinion that there are inherent manufacturing defects in the vehicle, the petitioner will be entitled to a refund of the price of the vehicle and the lifetime tax and EMI along with interest @ 12% per annum and costs.
4. Hindustan Motors Limited v. Ashok Narayan Pawar and others
The case was regarding a defect in car in lieu of which the Court ordered that in case they had stopped manufacturing this car, in that eventuality, they would pay the current price of the car, along with 9% interest from the date of the incident, till its realization. If they choose to give him a new car, they are also liable to pay compensation in the shape of interest @ 9% p.a., from the date of the incident, till its realization.
Product Liability Under Consumer Protection Act 2019
The term “product liability” derives the accountability on the part of the product manufacturer/seller in case of default. The underlying rationale behind product liability is that if a consumer is harmed by a defective product or by deficient services concerning that product, then the product manufacturer or product service provider or product seller is responsible for such harm. Chapter VI of the CPA 2019 applies to all product liability actions. It lays down the components of a product liability action when a product manufacturer, product service provider, or product seller can be held liable and the exceptions to a product liability action.
But this chapter does not cover any defect in the product itself. Consequently, if the consumer wants to take action for the defective product, he needs to take the same under Section 2(10) of the CPA 2019.
Section 83 of CPA 2019 provides that an action may be brought by a complainant against a product manufacturer/product service provider/product seller, before a District Commission/ State Commission/National Commission, as the case may be, for any harm caused to him on account of a defective product.
There are three ingredients of a product liability action i.e.,
- firstly, there must be harm caused to the complainant;
- secondly, the harm must be caused due to a defective product; and
- thirdly, the defect should have been caused by a product manufacturer or product service provider of product seller.
(a) Liability of product manufacturer:
Section 2(36) of CPA 2019 lays the definition of the Product manufacturer. A product manufacturer shall be liable in a product liability action, if
1. the product contains a manufacturing defect; or
2. the product is defective in design; or
3. there is a deviation from manufacturing specifications; or
4. the product does not conform to the express warranty; or
5. the product fails to contain adequate instructions on correct usage to prevent any harm or any warning regarding improper or incorrect use.
(b) Liability of product service provider
The “product service provider” refers to a person who provides any service in respect of such product. In the context of product liability, ‘service’ as per Section 2(42) refers to services carried out to a product. Any person engaging in any activity that places a product for a commercial purpose is a product seller. It also includes a person involved in the sale or construction of houses. However, it does not include who sells the immovable property or who provides professional services or someone who only acts in a financial capacity and is not a manufacturer, wholesaler, distributor, retailer, direct seller or electronic service provider or a person who leases a product who did not have a reasonable opportunity to discover any defects in the product under a lease arrangement.
The liability of a product service provider can arise in multiple scenarios as derived under Section 85 of CPA 2019.A product service provider can be held liable if they provide any deficient or negligent service; then they are liable, or if the product service provider performs the service in a manner which violates any provisions of any law for the time being in force; or fails to provide proper instructions or warnings to prevent harm; or if the service does not conform to the express warranty.
(c) Liability of product sellers
The term ‘product seller’ is broadly defined under Section 2(37) CPA 2019 as it is an inclusive definition. For instance, it includes a person who manufactures products and sells them.
A product seller can be held liable only if the product seller is a product manufacturer. If a product seller is also a product manufacturer, then the product seller shall also be held liable u/s 84 as a product manufacturer. The liability arises in multiple scenarios, such as, if the product seller has substantial control over the designing, testing, manufacturing, packaging, labelling etc., of the product; or product seller alters or modifies a finished product and the harm is caused to the consumer because of such changes, then they are liable. If product seller independently makes an express warranty to the consumer and the product does not adhere to such express warranty, then they are liable; or in case if the product manufacturer cannot be identified or cannot be served with a notice or warrant, then the product seller is liable. If proper instructions or warnings about how to use a product is not provided then product seller shall be held liable.
(d) Exceptions to product liability action
Section 87 of the CPA 2019 provides an exception to a product liability action that can be broadly classified into two categories: Exceptions to Product Seller and Exceptions to Product Manufacturer.
Exceptions to Product Seller: A product liability action cannot be brought against the product seller if, at the time of harm, the product was misused, altered, or modified.
If the product was misused or alterations were made before they were harmed, then no action can be brought. The rationale is that the harm would be caused by the alterations made and not due to the product being defective.
Exception to Product Manufacturer:
1. In any product liability action based on the failure to provide adequate warnings or instructions, the product manufacturer shall not be liable if—
(a) The product was purchased by an employer for use at the workplace, and the product manufacturer had provided warnings to such employer;
(b) The product was sold as a component to be used in another product, and the product manufacturer gave necessary warnings to the purchaser of such element or material, but the harm was caused to the complainant by the use of the end product in which such component or material was used;
(c) The product was one which was legally meant to be used or dispensed only by or under the supervision of an expert or a class of experts, and the product manufacturer had employed reasonable means to give the warnings or instructions for the usage of such product to such expert or class of experts; or
(d) The complainant, while using such product, was under the influence of alcohol or any prescription drug which a medical practitioner had not prescribed.
2. A product manufacturer shall not be liable for failure to warn about a danger obvious or commonly known to the user or consumer taking into account the characteristics of such product.
Suppose an employer purchased the product for use in their workspace, and they have been given instructions by the manufacturer on how to use it. In that case, the manufacturer is not liable for any harm. The rationale is that the employer must convey those instructions to any person using that product. The manufacturer cannot be held liable if the employer fails to convey such instructions.
Remedy available with Consumer
As per Section 37(1), at the first hearing of the complaint or at any later stage, the District Commission can refer the dispute for mediation under Chapter V of the CPA 2019 with parties’ consent. If a settlement is reached through mediation, then the mediator sends the settlement report as per Section 80(2) to the District Commission, who can then pass an order recording the dispute settlement as per Section 81(1). If a settlement cannot be reached through mediation, then the mediator submits a report as per Section 80(3) to the District Commission which then continues to hear the dispute as per Section 81(3).
While a complainant can file a case before the District Commission, as per Section 18(2), the Central Consumer Protection Authority (CCPA) can also file complaints before the District Commission or intervene in any proceedings if the matter relates to consumer rights.
The remedies which the District Commission, State Commission and National Commission can grant are given under Section 39, Section 49(1) and Section 59(1) respectively. As per Section 39(e), the District Commission can pass an order directing the product manufacturer, product service provider or product seller to pay compensation to the complainant.
As per Section 2(35), a product liability action is a civil claim for compensation for harm caused and not for the product itself. This is independent of any criminal liability which can be imposed under the CPA 2019 on a contravening party for violation of Section 90 (punishment for products containing adulterants) and Section 91 (punishment for spurious goods) where CCPA can take cognizance of the said offence before appropriate Court.
If in any cases while deciding of the product liability action if a complainant alleges that there is a defect in the goods which cannot be determined without proper testing, then a sample of the good may be obtained and sent to a laboratory for testing. The complainant is required to deposit the fees of the testing before a sample is sent. The laboratory conducts test to determine if the good is defective or not and submits a report to the District Commission with 45 days. The findings of the laboratory can be challenged by either party in the form of written objections.
Conclusion: Product liability laws in the EU, UK, and India provide robust frameworks to protect consumers from defective products. Through stringent regulations and landmark court decisions, these regions ensure that manufacturers, suppliers, and service providers are held accountable for the safety of their products. Understanding these laws helps consumers seek appropriate remedies and promotes higher standards of safety and quality in the market. As the legal landscape continues to evolve, staying informed about these regulations is essential for both consumers and businesses.
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