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Product Liability, Employer Liability, Vicarious Liability Notes

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TUTORIAL 5 PRODUCT LIABILITY, VICARIOUS LIABILITY AND EMPLOYERS' LIABILITY

1. Product Liability

i) Negligence Donoghue v Stevenson [1932] AC 562: See week 1. Lord Atkin: "A manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination, and with the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumer's life or property, owes a duty to the consumer to take that reasonable care". Grant v Australian Knitting Mills [1936] AC 85: P contracted a disease due to a woollen jumper that contained excess sulphur and had been negligently manufactured. Privy Council allowed a claim in negligence against the manufacturer, D. Lord Wright: Tortious liability of the manufacturer is unaffected by contracts or who owns the thing at the time of retailing. However, the Donoghue principles only apply to hidden dangers and NOT where a person knows of the danger, since in the latter the damage "follows from his own conscious volition in choosing to incur the risk or certainty of mischance." Muirhead v Industrial Tank Specialities [1986] QB 507: P bought pumps for keeping its lobsters alive from X, manufactured by D. They were faulty and the lobsters died. P sued D for causing pure economic loss. CA rejected this since, for pure economic loss, there has to be a special degree of proximity (i.e. a special relationship) + reliance +
assumption of responsibility. There was not sufficient proximity between a purchaser and a manufacturer in pure economic loss cases. Goff LJ: For pure economic loss, the purchaser can only sue the immediate vendor and not a manufacturer. Junior Books is distinguished as giving an exceptionally close relationships on its own facts. There was also reliance. Therefore it is not an authority for the proposition that the manufacturers or TPs are commonly liable for economic loss. Hamble Fisheries v Gardner [1999] 2 Lloyds Rep. 1: X manufactured dodgy engines and their engines were sold by retailers to P. D bought X's business. The dodgy engines caused economic loss to P who sued D for not warning them that the engines were dodgy, as D had discovered. CA held that neither a manufacturer nor a person who took over a manufacturer. The question is "whether there was a special relationship of proximity imposing a duty on the defendant to safeguard the plaintiffs from economic loss" (Tuckey LJ) and this was not the case here (the purchaser and manufacturer had no dealings with one another). In general manufacturers owe no duty to remote purchasers to avoid

causing them economic loss. Only exceptionally could a manufacturer assume such a duty.

ii) Strict Liability Consumer Protection Act 1987, Part 1 and ss 45, 46: Part 1: S.1 The act's aim was to incorporate directive 85/374/EEC into national law and the courts should interpret the act accordingly (s.1(1)). "Producer", in relation to a product, means the person who manufactured, won or abstracted it; "product" includes products which are parts or components of other products. S.2 (2) Where damage is caused by a defect in the product, (a) the producer, (b) a person who puts his name or mark or trade mark on it, or (c) any person who has imported the product from outside the EU shall be liable. S.2(3) A supplier of the product will be liable where a defect causes damage, if: the complainant asks the supplier to identify 2 parties to whom s.2(2) applies; and that request is made within a reasonable period after the damage occurs and at a time when it is not reasonably practicable for the complainant to identify all those persons themselves; and the supplier fails, within a reasonable period after receiving the request, either to comply with the request or to identify the person who supplied the product to him. S.3 There is a "defect" if the safety of the product is below that which the purchaser is entitled to expect, including risks of damage to property OR person. To determine what people are entitled to expect the court should take all circumstances into account including marketing, warnings, instructions, the purpose of the product, and the time of sale. It is irrelevant that at another time a safer product was made. S.4 The sued party (D) can escape liability if he shows that: the defect is attributable to compliance with an EC law; or that D never supplied he product to another; or that D supplied it but not in the course of business and that 2(2) doesn't apply to him or only does so other than in the course of business; or that the defect did not exist in the product at the relevant time; or that the state of scientific and technical knowledge at the relevant time was not such that a producer of products of the same description as the product in question might be expected to have discovered the defect if it had existed in his products while they were under his control; or where D's product was only part of the overall product and it was the design of the overall product that caused the damage. NB "relevant time" = time pf supply if 2(2) applies. If not, it refers to the last time someone to whom 2(2) did apply supplied it. Re electricity, relevant time = moment of generation S.5 Damage can be to property or to person. A person isn't s.2 liable if their product was a component of the main product. A person isn't s.2 liable if the property damaged isn't

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