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Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
Legal liability for business
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Legal liability for business

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risk management and insurance

risk management and insurance

Published in: Economy & Finance, Business
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  • 1. Product liability presented by, M.HIMABINDU
  • 2. INTRODUCTION:- If your business supplies products to consumers , you need to make sure the products are safe. Most injuries and illness resulting from products were covered under contract law not tort law. Case : Macpherson Vs Buick
  • 3. Macpherson Vs Buick:- Macpherson was thrown out of his buick and injured when one of the wooden spokes on a wheel collapsed. Even though buick sub-contracted the production of the wheel to another firm and buick sold the car to a retailer, who in turn sold it to Macpherson, the court found that buick was liable for damages.
  • 4. Strict liability standard:- Case : Escola Vs Coca-Cola Bolting Company. Escola was loading coke bottles into the Refrigerator When one of the bottles exploded, injuring her hand. Judge traynor’s opinion in the case clearly states that negligence rule should be replaced by a standard that makes manufacturers liable whenever their products are defective.
  • 5. Second Restatement of Torts: According to section 402A , it states that manufacturers are liable if consumers are harmed as a result of using a product that is “unreasonably dangerous” and defective. The doctrine in this statement is adopted by all the states in the subsequent decades.
  • 6. Types of defects:- There are three general types of product defects.1. Manufacturing defect2. Design defect3. Warning defect
  • 7. Contractual liability:- Firms are subject to liability under contract law as a result of warranties that are made when products and services are sold to consumers.1. Express warranty2. Implied warranty
  • 8. Responsibilities as a producer ,distributor or seller:- Warning consumers about potential risks. Providing information to help consumers understand the risks. Monitoring safety of the products. Taking action if a safety problem Is found.
  • 9. Responsibilities as a producer ,distributor or seller:- Particular care should be taken with high risk products such as;1. Toys2. Fireworks3. Food4. Medicines
  • 10. Product safety:- The main responsibility on product safety falls on producers. This includes ;1. Manufacturers2. Importers3. Businesses that supply own brand products4. Businesses that change the safety of a product. (by customizing/ servicing)
  • 11. Distributors:- Shops and wholesalers are not normally liable for harm to consumers as long as they identify the producer. But they have the responsibility for safety and can face enforcement action. Any one who is harmed by unsafe product can begin court case up to 3 years-10 years.
  • 12. Trading standards:- If the products are unsafe the trading standard officers can ;1. Order you to stop selling them2. Go to court and ask for the product to be destroyed3. Prosecute you- if convicted you could be fined or imprisoned.
  • 13. Defending product liability claim:- In case of distributor he must be able to identify the producer. In case of producer, if default is in production process he may not admit the liability. Then he need to prove one of the 6 defenses;
  • 14. Defending product liability claim:-1. You did not supply the product.2. You could not reasonably be expected to discover the safety fault.3. Safety fault was an inevitable result of obeying other laws.4. Someone else caused the fault in the course of business.5. You didn’t supply the product in the course of business.6. If you make components, then you are not liable only if you can identify the manufacturer.
  • 15. Insurance coverage:- Insurance coverage for products liability generally provided by a firm’s Commercial General Liability (CGL) insurance policy. CGL policy provides liability insurance coverage for property damage and bodily injuries.
  • 16. Issues:- Product liability has expanded to the point that both the safety and compensation objectives of the liability system have been undermined.1. Product safety2. Compensation for injury3. Regressivity of current system4. Products liability reform proposals
  • 17. Preventing product safetyproblems:- Consider safety at every stage from initial design to selling. Check whether there are any specific regulations or safety standards applying to your product that you meet them. In case of suppliers;1. Give customers any safety information provided by the producer.2. Investigate safety complaints3. Co-operate with trading standard officers.

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