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Product Liability Notes

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Product Liability

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Generally
? Development: prior to Donoghue, liability restricted due to privity but Lord Macmillan asserted priority of negligence over privity rule ? liability regularly imposed on manufacturer since Donoghue? calls for strict liability as in US + Pearson Commission recommendation ?EC issued Directive 85/374/EEC requiring harmonisation of product liability laws ? UK adopted a form of strict liability for PL.
? Consumer Protection Act 1986- additional liability on manufacturer where damage is caused by defect in the product.
? Liability extends to consequential damage only (property/PI) - no assessment with ref. to purchase price, value or damage done to the product.
? Damage to 'commercial property' isn't covered (s2(3) CPA) Justification for Imposing Strict Liability 1) Efficiency based considerations based upon insights of economic analysis producers are able to spread the risk of damage through adoption of insurance/pricing + are best placed to minimise the risk of damage by taking precautions at design/manufacturing stages of production
? But could challenge by saying they load excessive costs of precaution on manufacturers, stifling innovation and possibly leading towards 'insurance crisis'
? Validity of economic argument for harmonisation of PL through a directive has been questioned -prior, all MS had laws concerning PL and it was far from clear what effects upon producer prices would come from moving to general strict liability regime. Even on assumption that it might have significant impact on prices, Dir. as drafted is unlikely to level out the conditions of competition, since it doesn't seek to harmonise remedies available to consumers in various MS.
? Level of damages payable is left up to MS - it is possible, not obligatory, to impose a maximum limit of 70mln. Euros.
? Directive allows MS to include/exclude agricultural products &game (UK included the former in 2000).
? MS can make provisions for own 'state of art' defence where producer will be exempt if it's shown that defect couldn't have been discovered given the state of scientific/technical knowledge at the time it was put into circulation.
? It permits but doesn't require the use of contributory negligence as a defence. 2) Stapleton's 'moral argument-if, in seeking financial profit, enterprise causes certain types of loss, it should be legally obliged to pay compensation to the victim' ? this idea links most areas of strict liability in tort, although it doesn't explain all aspects of modern PL law Justification for the 1985 Directive
? Preamble argues a different liability regimes b/w MS may distort the market by subsidising producers in some states & penalising others, so liability w/out fault on the part of producer is the sole means for adequately solving the problem, peculiar to the age of increasing technicality & fair apportionment of risks inherent in modern technological production. Objects of PL a) compensation of consumer b) consumer protection - public & individual safety: behaviour control: regulation c) need to balance economic policy d) wealth redistribution?a very stretched out one?
CPA 1987

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