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LL299 – Full Unit Dissertation
Word Count: 14,966 (excluding Bibliography)
Referencing Style: OSCOLA
Should There Be a Regime of Strict
Liability for Harm Caused By
Services, Specifically the Medical
Profession, in the Manner of Strict
Liability for Harm Caused by
Products?
2
Table of Contents
Abstract ......................................................................................................3
Introduction ...............................................................................................4
I. Analysing Strict Liability Through a Comparison of the Models of
Wrongs and Costs......................................................................................6
What is the Purpose of Tort Law? ............................................................6
Theory of Strict Liability........................................................................9
Model of Wrongs ..............................................................................11
Model of Costs...............................................................................14
Products Liability Regime ..........................................................15
Arguments Justifying the Strict Liability Regime ...................22
II. Medical Malpractice ..........................................................................30
Costs.....................................................................................................30
Problems Currently Found Within Clinical Negligence ..................34
III. Proposal to Introduce a Strict Liability Regime for Services .......37
Arguments for an Extension of a Strict Liability Regime .....................39
Consequences of Imposing a Strict Liability Regime......................46
IV. Strict Liability and its Application to Services ..............................48
Conclusion ...............................................................................................52
Bibliography ............................................................................................54
3
Abstract
This paper examines whether a regime of strict liability for harm caused by services should
be implemented with reference to the models of wrongs and costs. I use both models as the
starting point to determine the extent to which they are consonant with a regime of strict
liability for services. Depending on how the standard of conduct is interpreted, the model of
wrongs does not recommend a model of strict liability whilst the model of costs does. By
looking at the current products liability regime in place as an example, I find that there are
many similarities in the reasoning as to why the model of costs recommends a strict liability
regime. Analysing the current issues in medical law, the most pertinent problem found is the
large costs of medical negligence cases which are a significant drain on the NHS’ resources.
I find that there is a problem found with the current regime of fault liability for services,
whereupon I use the model of costs to recommend that a regime of strict liability should be
implemented that applies to all service provisions. Finally, the paper discusses how a regime
of strict liability for services can be implemented in English tort law. I propose that we look
at both the US tripartite and the CPA definitions implemented in products liability law to be
used as an amalgamated model to implement a very similar regime for services.
4
Introduction
Towards the end of the twentieth century and the beginning of the twenty-first century, there
has been a move away from fault-based liability for defective products. Current English law
has a regime of strict liability in place for any product that is deemed to be ‘defective.’
However, one of the increasingly common concerns is whether such a profound difference
should be found between ‘goods’ and ‘services’ and whether there should be an expansion of
liability in place that renders people who offer a ‘defective’ service strictly liable to their
consumers or customers. Currently, the courts have rejected any extension of such liability.
To examine whether there should be a regime of strict liability for harm caused by services,
section I begins by examining the purpose served by the rules of tort law by referring to the
model of wrongs, as advocated by Weinrib1 and Gardner2 and the model of costs, which
theorists like Calabresi3, Coase4 and Shavell5 advocated. Depending on how the standard of
conduct is formulated, the model of wrongs presents us with two different conclusions as to
whether a strict or fault based liability regime should apply to services; it would recommend
that a service provider can only be held liable if he were careless or negligent. The model of
costs, however, would recommend a regime of strict liability; regardless of who is at fault,
the cheapest cost avoider must always be the one who bears the cost.
1
Ernest J. Weinrib, 'Corrective Justice In A Nutshell' (2002) 52 The University of Toronto Law
Journal.
2
John Gardner, 'What Is Tort Law For? Part 1. The Place Of Corrective Justice' (2010) 30 Law and
Philos.
3
Guido Calabresi, 'Does The Fault System Optimally Control Primary Accident Costs?' (1968) 33
Law and Contemporary Problems.
4
R. H. Coase,'The Problem Of Social Cost.' (1960) 3 The Journal of Law and Economics.
5
Steven Shavell, 'Liability For Harm Versus Regulation Of Safety' (1984) 13 J LEGAL STUD.
5
Next, I use the products liability regime, both in the UK and the US, as an example to
examine the justifications for a regime of strict liability in place for ‘defective products’. I
find the US tripartite definition of ‘defect’ more clearly defined but the CPA definition more
consumer friendly; thus when attempting to define what a ‘defective service’ will entail, I
will use a combination of both as my guidance. I end section I by finding that the strict
liability regime has been a welcome introduction for products liability law.
In section II, I analyse the current fault-based regime in place and problems found in the
context of medical services; the large costs of medical negligence cases are a significant drain
on the NHS’ resources.
In section III, I begin by examining, and subsequently dismissing, the reasons the courts have
given to refusing an extension of a strict liability regime to products. I show how the
arguments provided as justification for a strict liability regime for products can also apply to
services; just as the manufacturer of a product is the best placed and thus the cheapest cost
avoider, the same logic would apply to service providers. I then look at some of the potential
consequences of imposing a strict liability regime for services.
The final section of the essay discusses how a regime of strict liability for services can be
implemented in English tort law. Given the similarities found between the justifications for
implementing a strict liability regime for products and services, I propose that the current
regime for products liability law be used as a model to implement a very similar regime for
services.
6
I
Analysing Strict Liability Through a Comparison of the Models of Wrongs and Costs
What is the Purpose of Tort Law?
Put at its simplest, the purpose of tort law is to determine how a community ought to allocate
the costs of harm-causing events. It also provides us guidance regarding who should pay for
the cost of an accident. As a result, there are four theories that propose principles for
allocation of accident costs: deterrence, cost efficiency, corrective justice and distributive
justice.6 Stephen Perry proposed some justifications as to why tort law can be seen as being
divided into two main categories. The first category comprises theories that are ‘based on
individual moral rights’7 whilst the second category is to:
[L]ook upon civil liability as a means for advancing one or more public policies such
as general social compensation, wealth distribution, loss-spreading or the attainment
of economic efficiency through deterrence’.8
Briefly examining the theories, the deterrence model states that one’s capacity to avoid an
accident is important. However, there are a few difficulties that arise – namely that there are
many ways to deter people from causing harm and secondly, sometimes we, as a society, do
not wish to deter people from causing harm. For example, a patient will go to a doctor with a
type of cancer that is still possible to treat, but only through chemotherapy; subjecting that
patient to the chemotherapy will result in some harm to the person which some may object to.
6
Jules Coleman, 'Theories Of Tort Law' (Plato.stanford.edu,2003)
<http://plato.stanford.edu/entries/tort-theories/ >Accessed 13 April 2015.
7
Stephen Perry,'The Moral Foundations Of Tort Law' (1992) 77 Iowa Law Journal, p.2.
8
Ibid.
7
However, it would be counter-productive if chemotherapy were suddenly outlawed for the
purpose of circumventing the incidental harm-causing event.
The cost efficiency model (model of costs) tells us that the costs and benefits of allocation are
important. This model advocates looking at the ‘bigger picture’ and minimising the social
cost of accidents by allocating costs of harm-causing events in the way that produces the
most benefits to everyone. It is important to highlight that the model does not rule out each
person’s individual rights, but rather, advocates that each person’s resources belongs to a
community of ‘one’ that we wish to maintain and preserve. Furthermore, with the model of
costs, we are not concerned with the person with the ‘deepest pockets’ per se, but rather the
person who is able to pay the least amount of money; they are the ones that should bear the
responsibility on their shoulders.
The corrective justice model (model of wrongs) informs us that rights are important and that
if someone violates someone else’s rights, then a ‘wrong’ is being committed against that
person; the job of tort law is to correct that wrong. The idea of personal responsibility seems
to ring true with our ‘inner beliefs and morals’ but it also presents us with a problem: doctors
assume responsibility for their patients care when treating or operating on them but one may
question whether that should also be the case with very risky and complex operations or
procedures. Should doctors be held liable and made to pay potentially crippling amounts of
money to compensate their patients for an action or procedure that was very high risk in the
first place? What if the doctor did everything in their power to ensure nothing went wrong,
but even then, something did – should a doctor be held strictly liable? That is one of the
questions this essay will attempt to answer.
8
The final model which Coleman9 discusses is distributive justice, in which one’s social
standing is significant. However, this theory encounters a problem when the difficulties
associated with methods of resource distribution within the community are considered.
Sometimes, someone’s mistakes leading to harm-causing accidents are a consequence of the
social structure. A GP, employed by the NHS, in a small clinic in a small town in the
countryside, should maybe not be held completely responsible for their actions, simply
because of their social standing and position.
All of these theories examine when society and the State may hold someone responsible for
the cost of an accident. We can implement a good theory of tort law based on the idea of
responsibility; as such, responsibility should depend on the circumstances of our choices.
Thus one’s capacity to avoid the accident can be discussed with reference to costs, rights and
social structure. For the purposes of this essay, I will focus on the two main models of tort:
the models of wrongs and costs. The question being proposed is whether tort law serves to
correct wrongs or to minimise the social cost of accidents. My answer is that tort law should
serve both purposes, as best as possible. When one allocates the cost of an accident to a
person, one should, in tort law, be able to justify that allocation to the person carrying the
burden.
Generally, and with regards to the medical profession, the questions that must be asked
before an answer on whether a strict liability regime should apply are: what is required from
doctors? Is it that they do not cause harm or to take care not to cause harm? If so, how much
care is reasonable? Moreover, is it ever justified to make doctors (or the NHS) pay for
accidents they took all reasonable care to avoid? Further, should a doctor be held personally
9
Coleman, 'Theories of Tort Law' (n 6).
9
liable for the consequences of an accident that they have caused? With regards to the last
question, English tort law currently says yes, through a fault-based negligence system.
Throughout the course of this essay, I will examine, with reference to the models, whether a
move to a strict liability regime to services is viable. I will eventually conclude that a strict
liability regime should be applied to services that, similarly to the products liability regime,
fall below the consumer’s ‘reasonable expectations.’10
The Theory of Strict Liability
A strict liability regime is in place when one’s duty is not to injure ‘full stop’ whilst a fault
liability regime is in place when one’s duty is not to injure ‘negligently, recklessly or
intentionally.’ The main difference between the two regimes is that ‘fault liability can be
undermined by justification,’11 whereas, with a regime of strict liability, even if you behave
‘impeccably,’ you can still be held liable.
Currently, there is a strict liability regime in place for products and the question this essay
seeks to answer is whether there should be a strict liability regime in place for services.
Before assessing whether it would be feasible to introduce a strict liability regime for
services, there must be an account to explain when it is acceptable to impose a regime of
strict liability. Negligence needs a rule of strict liability as a general backstop because a
regime of fault-based liability by itself is not enough as a standard of responsibility.
10
Consumer Protection Act1987.
11
Coleman, 'Theories of Tort Law' (n 6).
10
Epstein12 believed that the model of wrongs requires a regime of strict liability because he
viewed harm-causing events and accidents as an invasion of rights. However, some theorists
were critical of Epstein’s theory and viewed causation as being over-inclusive. Negligence
only explains why few people are causally involved and responsible but not why everybody
is. Weinrib13 and Coleman14 believed that corrective justice prohibits a regime of strict
liability. Weinrib stated that to figure out whether a regime of fault-based or strict liability
should be implemented, the question should be asked of what each person requires of the
other. He believed that due care is the most a society has the right to ask of others.
Furthermore, he thought that strict liability restricted a lot of people’s freedom to pursue their
ends. Coleman goes further by stating that tort law should not always rely on the model of
wrongs because outcomes are never normatively significant in themselves. He goes on to
state that one must show that causing some outcomes disturbs some normative relation but
sometimes, when the costs are too high, there should be a regime of strict liability in tort. A
difficulty found in the theory of corrective justice arises here; the question must be asked as
to why it is that we look to whether participation in harm production affects society’s
normative relationships. Rather, why is it not the question of where each person in society is
placed? Weinrib and Epstein discuss a world where the only issue that matters are people’s
individual rights but sometimes, a person’s rights is not the most important thing. Rather,
some believe that we should instead look to the model of costs and who the cheapest cost
avoider is when trying to answer the question of who should be found liable.
12
Richard A. Epstein, 'A Theory of Strict Liability' (1973) 2 The Journal of Legal Studies.
13
Weinrib, ‘'Corrective Justice In A Nutshell' (n 1).
14
Jules Coleman, 'The Morality of Strict Tort Liability' (1976) 18 William & Mary Law Review, 259.
11
Calabresi and Hirschoff were advocates of the model of costs.15 They believed that the person
best placed to work out and act on whether the benefit of the activity is worth the risk of an
accident should be the person who must bear the costs. For Calabresi, negligence is not a
requirement of liability, because liability should depend on an agent’s placement, not the
character of their conduct. The obvious difficulty with this theory is that the mere fact that
someone is the cheapest cost avoider does not show us why dealing with the cost is that
person’s problem. Sometimes a person will reasonably not want to worry about certain
problems and at times the cheapest cost avoider will not necessarily be the cheapest cost
bearer because they would not be well-placed to deal with the consequences of the harm.
Model of Wrongs
Some theorists argue that tort law’s function is to ‘rectif[y] the injustice inflicted by one
person on another’16 and to correct wrongs inflicted by one person on another. Weinrib
discusses the ‘rectificatory function’ that corrective justice implements ‘by correcting the
injustice that the defendant has inflicted on the plaintiff.’17 This thus creates ‘a connection
between the remedy and the wrong’18 and ‘the idea that correlativity informs the injustice, as
well as its rectification, is a central insight of the corrective justice approach to the theory of
liability.’19 He goes on to dismiss other factors, such as economic wellbeing, as a normative
factor that can be considered to apply to both parties. For example:
15
Guido Calabresi and Jon T. Hirschoff, 'Toward A Test For Strict Liability In Torts' (1972) 81 The
Yale Law Journal, 1055.
16
Ernest J. Weinrib, 'Corrective Justice In A Nutshell' (n 1) p.2.
17
ibid, p.3.
18
ibid.
19
ibid.
12
A factor that applies to only one of the parties – the defendants having deep
pocket[s] or being in a position to distribute losses broadly – is an inappropriate
justification for liability because it is inconsistent with the correlative nature of the
liability.20
Ergo, any discussion about whether a regime of strict liability should be implemented should
address the question of whether a wrong has been committed.
Next, the model of wrongs dictates that one must assess whether the defendant has committed
a wrong and if found to be affirmative, then what their duty to ‘right that wrong’ is. When
discussing whether a regime of strict liability should be imposed, one must ask whether a
wrong has been committed; a wrong has been committed if the defendant breaches a certain
standard of conduct expected of him.21 Consequently, the question of whether the defendant
has committed a wrong revolves around the question of how the standard of conduct is
formulated. The standard of conduct can thus be formulated in two different ways. I will
illustrate this with an example of a doctor negligently misdiagnosing or treating a patient
leading to some sort of harm being suffered. The first formulation would be that doctors
should not injure any patients whilst treating them full stop. This formulation would lead to
the absurd conclusion that the doctor would be in breach of the standard of conduct
regardless of whether he took the utmost care whilst treating his patient or if he was negligent
in his treatment. If this were the formulation that one would adopt for the standard of
conduct, then the corrective justice model would point towards a regime of strict liability for
services. However, it is submitted that this would be absurd because it is well established that
20
ibid. p.4.
21
Applying the duty of care standard,as enunciated in the case of Donoghue v Stephenson [1932]
UKHL 100.
13
‘sometimes unintentional harm comes to patients as a result of a clinical decision or a clinical
procedure’.22 Alternatively, the second formulation would be that doctors should not
carelessly injure their patients whilst treating them. Under this formulation, the doctor would
not have breached his standard of conduct if he took all due care whilst treating his patient.
Returning to our example, if the patient was undergoing a complex brain surgery, it is
reasonable to say that even if all due care were taken, a surgery of a very complex nature can
easily go wrong. Under the second formulation, the doctor would only be held liable if he
were careless or negligent in his treatment. As such, under this formulation of the standard of
conduct, the corrective justice model would point towards a regime of fault-based liability for
harm caused by services.
Consequently, the model of wrongs presents us with two different conclusions as to whether
a strict liability regime should apply to services based on how we interpret the standard of
conduct. Some, like Gardner23, are happy with the idea of imposing obligations of result
where someone is held liable for breach of standard of conduct regardless of whether they
behaved impeccably or were careless. Weinrib24, on the other hand, would disagree with
whether strict liability was ever justifiable under the model of wrongs because he simply
would not agree with obligations of result holding someone to a standard that they sometimes
cannot meet, as illustrated in the surgery example. Thus, the only situation when the model of
wrongs can impose liability on the doctor and oblige him to ‘rectify the injustice’ inflicted
22
Making Amends - A Consultation Paper Setting Out Proposals For Reforming The Approach To
Clinical Negligence In The NHS (1st edn,2003)
<http://webarchive.nationalarchives.gov.uk/20130107105354/http:/www.dh.gov.uk/prod_consum_dh/
groups/dh_digitalassets/@dh/@en/documents/digitalasset/dh_4060945.pdf> Accessed 13 April 2015.
23
John Gardner, 'What Is Tort Law For? Part 1. The Place Of Corrective Justice' (n 2).
24
Ernest Weinrib, 'Toward A Moral Theory Of Negligence Law' (1983) 2 Law & Philosophy.
14
upon the patient is when he is careless or negligent in his treatment of the patient but not
when he exercised the utmost care and still caused an unavoidable harm.
Model of Costs
In contrast, the model of costs shows that the aim of tort law is not to correct injustices but to
minimise the social cost of preventing and dealing with accidents. Consequently, the theory
claims that the person who is best placed to deal with the costs of the accident should be the
one to ‘shoulder the responsibility’. This is the basis of Coase’s paper on cost efficiency: that
tort law is not about wrongs and rights but rather, about social costs.25 Coase argues that we,
as a society, must ensure that we meet the cost of accidents in the most economically efficient
way. The cost efficiency model claims that when we think about possible damages, we
should not just factor in the costs to the victim but also factor in the costs to the defendant
taking precautions to avoid the accident. Coase says that, under this model, we must identify
the competing activities at stake because protecting or promoting one activity may deter
another. He describes the ideal situation where parties can strike a mutually beneficial deal
but sometimes, we may encounter a problem. Returning to the example of the doctor treating
a patient, the competing interests present would be the patient’s desire to be cured and the
doctor’s desire not to harm his patient.26 After identifying the ‘competing activities’ at stake,
we must consider whether we should use regulatory rules or tort rules or a combination of
both to balance the competing interests.27 As mentioned earlier, the cost efficiency model is
most interested in the person best placed to shoulder the cheapest costs. As such, it is evident
that the standard employed by the model of costs is one of strict liability, given that
25
R. H. Coase,'The Problem of Social Cost.' (n 4).
26
It may also be that the patient is simply going to the GP for a routine check-up and wants to ensure
the doctor correctly identifies and diagnoses any disease/problem the patient may have.
27
Steven Shavell, 'Liability For Harm Versus Regulation Of Safety' (n 5).
15
regardless of who is at fault, the person who must always bear the costs is the cheapest cost
avoider.
Thus, to consider whether the model of costs should be used to apply a regime of strict
liability for services, we must consider who the cheapest cost avoider would be. In order to
do so, I will use the products liability regime as an example to examine the justifications for a
regime of strict liability in place for ‘defective products.’
Products Liability Regime
The default position in English tort law is one of fault liability and for any strict liability
regime, a special argument to justify the implementation of such a regime must be broached.
As pointed out above, the model of costs would posit a reversal of that picture where the
cheapest cost avoider should always be the one who bears the responsibility for liability.
Consequently, the model would recommend that the default regime applied in tort law should
be one that is strict in its nature.
Before the Consumer Protection Act was implemented in 1987, if a consumer wanted to sue
as a result of a defective product, they had two possibilities they could pursue. They could
sue the seller of the product, under S 14 of the Sale of Goods Act 1979, if he had bought the
product from someone; the seller would be held strictly liable if the product was not fit for
purpose or was not of a satisfactory quality. They would be held liable for ‘any and all’
foreseeable losses that the claimant suffered as a result of the defective product. They could
also sue the manufacturer in negligence.28 However, the manufacturer would only be held
28
As,perhaps the most famous case in English law demonstrated,: Donoghue v Stephenson [1932]
UKHL 100.
16
liable for the defective product only if he was at fault and it was reasonably foreseeable that
the claimant would suffer some harm to his person or property.29
The Consumer Protection Act 1987, which implemented the EEC Council Directive
85/374, gave claimants a third avenue of recourse. It is interesting to note that at the time, the
objective of the Directive was to harmonise the differing products liability laws across the
EU because ‘existing divergences may distort competition and affect the movement of goods
within the [EU’s] common market’.30 Unlike with a fault-based negligence regime, there is
no requirement of a duty of care under the CPA. Section 2 imposes civil liability in tort for
damage caused wholly or partly by a defect in a product. This includes producers, ‘own-
branders’, component producers and first importers into the EC.31 Importantly, suppliers are
not liable under the CPA, but have a duty to disclose producers and ‘where two or more
persons are liable by virtue of this Part for the same damage, their liability shall be joint and
several’.32
Section 1 defines how a product is to be construed under the Act as being some sort of
good33 or piece of information34. Section 3 defines a defect as being present when ‘the safety
of the product is not such as persons generally are entitled to expect’.35 Relevant factors in
that assessment include the manner and purposes of marketing of the product; the product
29
Nicholas J McBride and Roderick Bagshaw, Tort Law (4th edn, Pearson Education 2013). pp.381-
382.
30
Preamble to EEC Council Directive 85/374.
31
CPA 1987, S 2(2).
32
ibid, S 2(5).
33
Examples include ships, aircrafts,vehicles etc.
34
Brocklesby v US (1994) 753 F 2d 794 – where a landing chart was held as being a ‘good’ - the US
was sued because a plane did not land in the correct place according to a landing chart.
35
CPA 1987, S 3(1).
17
‘get-up’; marks, warnings and indications about proper or improper use36; expected use of the
product37 and time of supply38. This is substantially different to the tripartite definition of
‘defect’ in the US Restatement of Torts.39
Before discussing the UK case law, I will briefly comment on the US tripartite definition of
‘defect.’ Under US law, a product is defective when, at the time of sale or distribution, it
contains a manufacturing defect, is defective in design, or is defective because of inadequate
instructions or warnings:
A product
(a) Contains a manufacturing defect when the product departs from its intended
design even though all possible care was exercised in the preparation and marketing
of the product;
(b) Is defective in design when the foreseeable risks of harm posed by the product
could have been reduced or avoided by the adoption of a reasonable alternative design
by the seller or other distributor, or a predecessor in the commercial chain of
distribution, and the omission of the alternative design renders the product not
reasonably safe;
(c) Is defective because of inadequate instructions or warnings when the foreseeable
risks of harm posed by the product could have been reduced or avoided by the
36
CPA 1987, S 3(2)(a).
37
ibid, S 3(2)(b).
38
ibid, S 3(2)(c).
39
American Law Institute, Restatement (Third) of Torts: ProductsLiability (1988).
18
provision of reasonable instructions or warnings by the seller or other distributor, or a
predecessor in the commercial chain of distribution, and the omission of the
instructions or warnings renders the product not reasonably safe.
Thus, for example, if a consumer were to show that there was a defect in a product’s design,
under the US standard, they would have to demonstrate that there was an alternative design;
they would also have to navigate through a number of different processes such as, hiring
experts to show that there was a different design present. As such, the US test is much more
demanding especially when it comes to design and is much less consumer friendly compared
with the EU test, where a consumer only has to prove what can be expected of safety at the
end of the process.
In practice, there have been very few cases that have applied the ‘legitimate expectations
test’40. McBride and Bagshaw describe the legitimate expectations test as ‘unhelpfully vague’
given that there ‘seems to be no right answer to the question of how safe we are entitled to
expect products to be’.41 They go on to state that if:
[A] product has feature X or lacks feature Y, [it] cannot mean that it is defective for
the purposes of S 3 if people generally expect the product to have feature X or people
generally would not expect that product to have feature Y. But if people generally had
no expectations as to whether a particular product would have feature X or lack
feature Y, then the courts seem to have taken the view that they should find that the
40
A v National Blood Authority (No 1) [2001] 3 All ER 289; B and others v McDonalds Restaurants
Ltd [2002] All ER (D) 436; Richardson v LRC Products [2000] 59 BMLR 185; Worsley v Tambrands
Ltd [1999] EWHC 273 (QB).
41
McBride and Bagshaw, Tort Law (n 24) p.384.
19
presence of feature X or the absence of feature Y in a product rendered the product
defective if it would be consistent with the policy of the Act.42
As such the European test for a defect, whilst being more consumer friendly, is perhaps not
as clearly defined as the US tripartite definition. Thus, when considering whether a strict
liability regime should apply to services43, I will use an amalgamation of the US tripartite
definition and the CPA’s definition of ‘defect’ as my guidance to defining what a ‘defective
service’ will entail.
The case of A v National Blood Authority,44 where the claimants contracted hepatitis C from
blood transfusions, illustrates this point nicely. The court held that the factors that should not
affect the assessment of a defect were: the social benefits of making the product available, the
cost of precautions and the ‘avoidability’ of the risk posed by the product. Accordingly,
dangerous products (such as knifes) were not defective for that reason and because the public
knowledge of risks could tell against ‘defectiveness.’ These three factors were later tested in
a number of later cases. In B v McDonalds Restaurants Ltd45, McDonalds was not held to be
liable because the public knowledge of the risks, which in this case was that if the coffee
spilt, it would at least scald the plaintiff, undermined the claim against the design of the
‘McCoffee cups’. In Richardson v LRC Products46, it was held that no producer would ever
hold themselves to be 100% effective. Here, there were legitimate concerns about the
problems of latex used in manufacturing condoms and whether they would be 100%
42
ibid. p. 384.
43
Section IV of this paper.
44
(No. 1) [2001] EWHC QB 446.
45
[2002] EWHC 490 (QB).
46
(2000) 59 BMLR 185.
20
effective. Also, in Worsley v Tambrands Ltd47, it was held that it was necessary to ‘balance
the rarity and the gravity’48 of the case; the consumer had suffered from a ‘toxic shock
syndrome’ that occurs to a non-negligible amount of women who use tampons. The claimant
argued that the warning that was found in the leaflet must have been reproduced on the
outside packaging of the box itself, something the court rejected. As the case of Abouzaid v
Mothercare49 illustrates, the inquiry into whether a ‘standard product’ is defective under the
CPA is not as constrained as it would be if the claim was brought in negligence. In this case,
the claimant failed in his claim in negligence because it was held that at the time the sleeping
bag was manufactured, it was not foreseeable that marketing a sleeping bag with that kind of
design would result in an injury to the claimant in that manner. However, the claim brought
under the CPA was held to be defective because the sleeping bag could have been designed
to a higher safety standard.
Section 5 of the CPA provides for the sort of damage that can be sued under the Act.
Damage is taken to mean ‘death or personal injury or any loss of or damage to any property
(including land)’.50 One can only claim for property damage if it exceeded £27551 52 and the
property must have been mainly intended for private use.53 54 Recoverable damage also
47
[2000] PIQR 95.
48
ibid, Per Ebsworth J,at [102].
49
(UK) Ltd, Times, Feb 20, 2001.
50
CPA 1987, S 5(1).
51
ibid, S 5(4).
52
If damage is below that, then the claimant should apply through common law of negligence.
53
As such, businesses cannot claim using the CPA.
54
CPA 1987, S 5(3).
21
excludes purely economic losses suffered from the defective product and excludes loss of the
product itself.55
Section 4 provides the defences for manufacturers which include: the product not being
supplied to another56 or not being supplied in the course of business57; the defect not existing
at the time or that the producer complied with government regulations58. Furthermore,
component suppliers were not to be found liable if the defect was solely attributable to the
finished article as opposed to the component that was supplied59. Finally, there is the
‘development risk’ defence, in which there is no liability if the risk could not have been
discovered at the time of supply.60 The presence of the development risk defence is important
given that it could potentially present significant obstacles and undermine the CPA regime. It
is especially important to note the difference in language between the Directive that
introduces the regime and the CPA, which implements the EEC Directive61. Art 7(e) of the
Directive states that a producer shall not be liable if he proves that ‘the state of scientific and
technical knowledge at the time when he put the product into circulation was not such as to
enable the existence of the defect to be discovered’. Whilst, S 4(1)(e) of CPA 1987 talks
about the defects that the producer could be expected to discover, given the available
scientific knowledge. As such, the CPA rule is more business-friendly whilst the Directive is
more lenient towards the consumer. The view from the European Court of Justice62 is that
55
This is in line with the common law – as such, you can sue in contract law.
56
CPA 1987, S 4(1)(b).
57
ibid, S 4(1)(c).
58
ibid, S 4(1)(d).
59
ibid, S 4(1)(f).
60
ibid, S 4(1)(e).
61
EEC Directive 85/374.
62
European Commission v UK C-300/95 [1996] ECR I-6765.
22
what is important is whether the knowledge is accessible. In other words, the test is what
scientific knowledge is present in the world and is accessible to the public. If that scientific
knowledge is accessible, then a producer cannot rely on the development risk defence. This is
well demonstrated by the case of Abouzaid v Mothercare, discussed earlier.
Arguments Justifying the Products Liability Regime
If we are to apply a regime of strict liability to services, we must first examine whether the
strict liability regime in place for products is justified. McBride and Bagshaw put forward
several arguments, which I am in agreement with. The first argument in favour of the CPA is
that sometimes, it is very difficult for a consumer to prove that a defect in a product was due
to the manufacturer’s negligence. As such, the strict liability regime can be justified as the
‘most efficient way of delivering compensation to all the claimants who should, in principle,
be entitled to sue for compensation in negligence for the product-related harms they have
suffered’.63
The second argument that can be made in favour of the CPA is the one made by George
Fletcher where he argued that holding a defendant liable to pay compensation to a claimant
was justified where the defendant’s actions exposed the claimant to a ‘non-reciprocal risk of
harm’.64 Fletcher states that the fact that a claimant has been exposed to a risk of harm by the
defendant that is not reciprocated by a risk of harm that the claimant exposes to the defendant
means that it is fair and just that if that risk has materialised, then the defendant should bear
the consequences. He described this as the ‘paradigm of reciprocity.’ It is easy to see how
this argument can justify the products liability regime in the sense that, the risk of a product
63
McBride and Bagshaw, Tort Law (n 24) p.394.
64
George P. Fletcher,'Fairness And Utility In Tort Theory' (1972) 85 Harvard Law Review.
23
that a manufacturer has exposed to a consumer being defective is not reciprocated by any risk
the producer exposes to the manufacturer.
Greg Keating provides the third argument in favour of the CPA regime.65 He argues that ‘in
the world of activities … the choice between strict liability and negligence is a choice
between a grave disruption of security and a more modest disruption of liberty. Activity
liberty [strict liability for harms that are regularly associated with a particular activity] strikes
a more favourable balance between the competing claims of liberty and security than
negligence liability does, because activity liability disrupts the liberty of injurers less than
negligence impairs the security of victims’.66 Indeed, according to Coase, we must strike a
balance between competing activities at stake to ensure costs are met in the most
economically efficient manner.67
Finally, the fourth argument put forward by McBride and Bagshaw is one of deterrence,
where they state that the existence of a strict liability regime encourages manufacturers to do
all that is in their power to improve the safety of their products. The idea that is presented is
that without a strict liability regime, producers and manufacturers are much less likely to ‘get
away’ with producing defective or unsafe products than they would under a fault-based
negligence regime.68
One of the reasons for an implementation of a strict liability regime for ‘defective products’
is that a key aspect of mass-production of products is that some of those products will
65
Gregory C. Keating, 'The Idea Of Fairness In The Law Of Enterprise Liability' (1997) 95 Michigan
Law Review, 1256, p.1354.
66
ibid.
67 Coase, ‘Problem of Social Cost’ (n 4)
68
McBride and Bagshaw, Tort Law (n 24).
24
invariably be defective which will result in some sort of harm towards the consumer – a harm
that the manufacturer can do nothing about. This was echoed in Justice Traynor’s views on
strict liability69: the harm can sometimes be very catastrophic and cause a significant amount
of damage to a number of different people. An obvious example would be pharmaceutical
products where someone has a very sensitive or allergic reaction to taking a particular drug
despite excessive and rigorous testing being implemented. Consequently, fault would be very
difficult and costly to prove given that one would have to hire experts, go through each step
of the process to see if everything within the manufacturer’s power was done to ensure that
very few, if any, people would be likely to suffer from some harm arising.
A key factor to look at when attempting to decide whether the move towards a strict liability
regime for products was a good one is to look at the impact the CPA has had on litigation.
Moving from a regime of negligence to one of strict liability has almost eliminated products
liability litigation; one of the main reasons for this is because defendants do not feel it is
worth the hassle to bring claims to the courts. As such, this can be seen as a very positive
result for the tort law system, especially with the cutting down of tertiary costs. Indeed, that is
one of the reasons why Calabresi proposed to replace the dominant paradigm of fault with
simpler strict liability rules which place liability on the most appropriate actors (so, the
cheapest cost avoiders). Calabresi said that assuming that the objective function of the tort
system is the minimisation of the sum of the injury and injury avoidance costs associated
with accidents (primary costs), risk-spreading costs (secondary costs) and administrative
costs (tertiary costs), he suggested that the adoption of strict liability, targeted to specified
activities, would achieve the goal of cost minimisation.70 This would suggest that there is
69
Escola v Coca-Cola Bottling (1944) 150 P2d 436.
70
Calabresi, 'Does The Fault System Optimally Control Primary Accident Costs?' (n 3).
25
something good and positive about the strict liability regime and the CPA. While there were
only a minimal number of products liability cases and litigation prior to the Act being
introduced, it is clear that the UK lacks the volumes of litigation present in the US or in other
areas of tort. Before the Act was introduced, there was, on average, a products liability case
every couple of years but now there have only been a very small handful of cases since the
introduction of the Act and almost all of those cases came in the years immediately following
the introduction of the Directive. It is also interesting to note that in most of the products
liability litigation cases, the claimants won.
When assessing the case for a strict liability regime for products, it is important to consider
Justice Traynor’s opinion in perhaps the most famous of products liability cases: the
American case of Escola v Coca-Cola Bottling71. Justice Traynor stated that:
Public policy demands that responsibility be fixed wherever it will most effectively
reduce the hazards to life and health inherent in defective products that reach the
market.
He goes on to state that manufacturers are better placed to ‘anticipate some hazards’ and thus
are better prepared to handle the costs of injuries rather than consumers. Justice Traynor
justified this by saying that if the manufacturer of products was made liable, they can pass on
the cost of liability by ‘distribu[ting] among the public as a cost of doing business.’72 Thus, a
producer can pass on the cost of liability to the price of the product he sells; therefore, the
public, as a whole, pays and the cost of the accident is dispersed and dissipated.
71
(1944) 150 P2d 436.
72
ibid, at 440.
26
There are two different strands in the judgment of Escola – the first is focused on the model
of wrongs and the participation or involvement ‘of the product in the market’ and the
‘responsibility for its reaching the market.’ Whilst the second idea is very much based on the
model of costs which is focused on the person best-placed to avoid the accident and to deal
with the costs that arise as a consequence from the accident.
Consequently, to pose the question of whether there is a case for a regime of strict liability
using the model of wrongs, one must ask two questions: firstly, whether there was a wrong
and the defendant breached a standard of conduct and secondly what the duty of repair is.
The discussion of whether there should be a strict or fault based liability regime is how we
should phrase the proper ‘standard of conduct.’73 The standard of conduct that will result in
strict liability is that manufacturers should not provide defective products. This is an
obligation of result, as discussed at the beginning of the essay, and is enforced by the CPA.
With products liability, we have a choice as to which standard to choose: either the standard
of taking reasonable care or the standard of not supplying defective products full stop. Once
again, the discussion returns to whether one views the model of wrongs or the model of costs
as being the prevalent model to apply to tort law.
Polinsky and Shavell were two professors that were more interested in the model of costs and
the benefits and costs of having a products liability regime in place.74 Their main point was
that inducing product safety through a products liability regime did not make much of a
difference for a wide range of products. They had a further three main points to make about
73
For example, if we identify it as a standard of care as the courts did in Donoghue v Stevenson,
manufacturers should take reasonable care when producing products.
74
Mitchell Polinsky and Steven Shavell, 'The Uneasy Case For Product Liability' (2010) 123 Harvard
Law Review.
27
the products liability regime. Firstly, they conceded that the products liability regime leads to
greater deterrence and enhances product safety. However they doubted whether a strict
liability regime achieves that because of other regulations, which include government
regulations and what they called ‘market forces’ already in place that were effective against
products. Even without a products liability regime, if producers products were not
sufficiently safe, their sales may fall if their products harm consumers. Thus, most products
must frequently conform to safety regulations. Secondly, Polinsky and Shavell stated that
whilst a products liability regime can ‘improve consumer purchase decisions by causing
product prices to increase to reflect product risks’75, because of the litigation costs and other
factors, products liability may ‘raise prices excessively and undesirably chill purchases’.76 77
The third issue was that producst liability is present to compensate victims of product-related
accidents for their losses but that many claimants already had an insurance scheme that
would have covered their losses. They go on to state that the ‘award of damages for pain and
suffering tends to reduce the welfare of individuals because it effectively forces them to
purchase insurance for a type of loss for which they ordinarily do not wish to be covered’.78
This is because very few people would purchase insurance against ‘other harms’, such as
psychiatric injury, because people would not want to acquire insurance to cover a wide
variety of potential harms and subsequent losses. Another issue they raised is the large
administration costs in running a strict liability regime; thus, as a result, its use is often
unwarranted, especially for widely sold and popular products. Indeed, they stated that ‘for
75
ibid, p.1438.
76
ibid, p.1459 - They label this the ‘price-signaling effect of product liability’.
77
ibid, p.1438.
78
ibid, p.1438.
28
each dollar that an accident victim receives in a settlement or judgment, it is reasonable to
assume that a dollar of legal and administrative expenses is incurred’.79
One of the criticisms levelled at Polinsky & Shavell is that whist they may be correct in
asserting that widely sold and popular products are subject to regulations and ‘market forces,’
Goldberg and Zipursky80 are critical in the way Polinsky and Shavell ‘vest inexplicable
confidence in market incentives and a regulatory system with failings that are exasperating to
critics across the political spectrum’.81 So, if a product is widely marketed, it is more likely
that regulators will be interested in it so they will subject the product to a number of strict
regulations. If it is more marketed, then it is more likely that a larger number of people will
be informed about the product. As a result, strict liability may thus be more necessary in
cases of less popular, more niche products. Another criticism they have that is ‘strikingly
missing from [Polinsky and Shavell’s] entire picture is any mention of the basic principle that
a person wrongfully injured by the sale of a dangerous product should be able to hold the
manufacturer accountable for her injuries’.82 It is clear that, for Goldberg and Zipursky, the
model of wrongs is important because the idea of a manufacturer causing injury to a
consumer as a result of a defective product means that they should be held accountable for
the wrong that they caused. Thus, the basic case for products liability law is ‘actually quite
easy’ for the authors.
79
ibid, p.1470.
80
John. C. P Goldberg and Benjamin. C. Zipursky, 'The Easy Case For Products Liability Law: A
Response To Professors Polinsky And Shavell' (2010) 123 Harvard Law Review.
81
ibid, p.1922.
82
ibid, p.1922.
29
Earlier, I posed the question that in order to consider whether the model of costs should be
used to apply a regime of strict liability to services, we must consider who the cheapest cost
avoider is. With the products liability regime, a model of costs was advocated due to
producer expertise/lack of consumer knowledge, consumer reliance and impossibility of
inspection, difficulty of proving negligence, enterprise responsibility for placing products
into market, deterrence and the affordable risk distribution just discussed. Overall, it is
submitted that the strict liability regime and the CPA have been a welcome introduction for
products liability law and consequently, this has almost eliminated products liability
litigation. Thus we must return to the question of whether a strict liability regime should also
be applied to services. To answer that, one must examine who the cheapest cost avoider
would be in the context of services. That is what the next section of the essay aims to do.
30
II
Medical Malpractice
Costs
Before discussing the current fault-based regime in place for services, there are a few
preliminary questions that have to be mentioned. Given that the CPA, and the courts previous
willingness to be pro-consumer in the pre-CPA litigation, has effectively killed off product
litigation today, the first question that must be posed is whether we would also want to
achieve that with services, particularly with the medical profession. Given that one of the
biggest concerns within the NHS is the significant costs of clinical negligence, this would
appear to be a very key factor. Indeed, the Department of Health has estimated that over the
past decade, ‘costs have risen by over 750% from £53 million in 1990 to approximately £450
million in 2001/2002’.83 More recently, in the year of 2013/14, the approximate cost of
clinical negligence claims amounted to £1.2 billion, which is a further 167% rise.84 Whilst in
the US, it is estimated to cost US$22 billion a year, representing 0.2% of the USA’s GDP.85
Indeed, the volume of clinical negligence has increased drastically – by as much as 1200%
over the past 30 years.86 As such, the clinical negligence system costs the NHS hundreds of
millions of pounds every year. The next question that must be proposed is whether there is
anything different and special about services, compared with products. I will argue that there
is no distinction between services and products; as such, this is one of the reasons why a strict
liability regime should apply to services, particularly the medical profession.
83
Making Amends - Department of Health Consultation Paper (n 22).
84
NHS Litigation Authority Report And Accounts2013/14 (1st edn,2014)
<http://www.nhsla.com/aboutus/Documents/NHS%20LA%20Annual%20Report%20and%20Account
s%202013-14.pdf > accessed 15 April 2015.
85
Making Amends - Department of Health Consultation Paper (n 22).
86
Vivienne Harpwood, Medicine, Malpractice, And Misapprehensions (Routledge-Cavendish 2007).
31
Medical Malpractice
There are many patients that will sometimes be left worse off after receiving medical
treatment and may wish to bring an action in negligence. If the health care is provided in the
private sector, then a patient will have a contract with their doctor and/or with the clinic or
hospital where they received treatment. Thus, there is an implied contractual term that the
doctor ‘will exercise reasonable care and skill’ which is ‘indistinguishable from the doctor’s
duty of care in the tort of negligence.87 Furthermore, there are implied terms with contracts
for private health care.88
If a patient is being treated in public healthcare and they suffer some sort of harm or loss,
then the only avenue they can currently pursue is one in negligence. It is important to note
that with healthcare services in particular, there is no guarantee that any treatment or surgery
will work. Indeed as Lord Justice Neill said:
I do not consider that a reasonable person would have expected a responsible medical
man to be intending to give a guarantee. Medicine, though a highly skilled profession,
is not, and is not generally regarded as being, an exact science. The reasonable man
would have expected the defendant to exercise all the proper skill and care of a
surgeon in that speciality he would not in my view have expected the defendant to
give a guarantee of 100% success.89
As with all negligence cases, to bring a claim in negligence, one must establish that there was
87
Emily Jackson, Medical Law (3rd edn,Oxford University Press 2013) p.102.
88
Ss 4 & 9 of the Supply ofGoods and Services Act 1982 will hold that medical devices must be of
satisfactory quality and fit for their purpose.
89
Thake v Maurice [1986] QB 644.
32
a duty of care owed to the claimant by the defendant90, the defendant breached that duty by
failing to exercise reasonable care and that breach of duty caused the C’s injuries.91
In medical law, there is a well established ‘duty situation’ wherein a duty of care is imposed
upon the doctor once they have assumed responsibility for the patient’s care. The standard of
care expected of doctors is determined using the Bolam test92, as modified by Bolitho93. A
doctor will not be found to have acted negligently if they have operated in accordance with a
practice accepted as proper by a responsible body of opinion, provided that that opinion is
capable of withstanding logical analysis.94 For causation, a claimant must prove that the
breach of the duty of care caused their injuries. This may be especially difficult in clinical
negligence cases because there may be at least two possible causes of the patient’s injury: the
doctor’s actions and the patient’s pre-existing condition. Furthermore, where there are
multiple causes, proving causation on the balance of probabilities is especially problematic.
As Emily Jackson explains:
The patient’s health may have deteriorated even if the care they received was non-
negligent, which means that often what has been lost is the chance of being restored
to health. The courts are then forced to speculate what might have happened if the
doctor had not breached their duty of care.95
90
This will usually be the treating doctor and their employer (usually the NHS) will be vicariously
liable. GPs are a special case and will be sued personally but they will have some sort of insurance in
place.
91
And those injuries are not too remote.
92
As enunciated in Bolam v Friern Hospital Management Committee [1957] 2 All ER 118.
93
Bolitho v City and Hackney HA [1997] 4 All ER 771.
94
Jackson,‘Medical Law’ (n 81).
95
ibid, p.125.
33
This paper does not aim to go into a discussion of the complex rules of causation in medical
negligence cases, so for the purposes of this essay, causation will be simplified to satisfy the
standard ‘but-for’ test for causation.96 Furthermore, with the ‘loss-of-chance’ cases, referring
to the judgements of Hotson97 and Fairchild98, the court must be satisfied that it is more likely
than not that the claimant’s injuries would have been avoided if the doctor was not negligent
in his actions. With regards to remoteness, the type of damage that the claimant suffers must
be foreseeable, although its extent and the manner in which it occurred need not be.99 100
With regards to defences, it is generally assumed that contributory negligence will have a
little role to play in clinical negligence cases because usually if something goes wrong with
the doctor’s treatment of a patient, it is usually unlikely to be regarded as partly being the
patient’s fault.101 Similarly, the defence of volenti non fit innjuria is extremely unlikely to
apply in clinical negligence claims. Finally, to bring a claim to court, potential claimants have
a three-year limitation period from the date of the injury, or from the date the patient realised
that they might be able to sue.102
96
As enunciated in Barnett v Chelsea and Kensington Hospital Management Committee [1969] 1 QB
428.
97
Hotson v East Berkshire Area HA [1987] 2 All ER 909.
98
Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32.
99
Per The Wagon Mound No.2 [1967] 1 AC 617.
100
Remoteness will rarely be an issue in medical negligence cases given that the type of damage
claimants will normally claim is some sort of physical injury and that’ll be an obviously foreseeable
consequence of negligent medical care.
101
An example of a patient potentially being contributory negligent is if they discharge themselves
from hospital early, against their doctors advice.
102
The limitation period is set by S 14 of the Limitation Act 1980 – the three year period can be
extended at the court’s discretion, per S 33 if found to be necessary.
34
Problems Currently Found Within Clinical Negligence
Whilst discussing the current problems found with the fault-based clinical negligence regime,
this warning delivered by Lord Justice Denning should be borne in mind:
It is so easy to be wise after the event and to condemn as negligence that which was
only a misadventure. We ought always to be on our guard against it, especially in
cases against hospitals and doctors. Medical science has conferred great benefits on
mankind, but these benefits are attended by considerable risks. Every surgical
operation is attended by risks. We cannot take the benefits without taking the risks.
Every advance in techniques is also attended by risks. Doctors, like the rest of us,
have to learn by experience; and experience often teaches in a hard way. Something
goes wrong and shows up a weakness and then it is put right.103
Nevertheless, it is clear that there are many problems with the current clinical negligence
system: it is very costly104, inefficient and claimants are seldom successful. Further, it doesn’t
help doctors and the NHS to learn from previous mistakes and fosters a ‘blame culture’.
Starting with the vast costs to the NHS, in 2013/14 the NHS Litigation Authority received an
unprecedented number of 11,945 new negligence claims, which is up from 10,129 claims in
2012/13; whilst the NHSLA paid out almost £1.2 billion where almost 63% amounted to
legal costs.105 Indeed, as Merry & McCall Smith explain:
103
Roe v Minister of Health [1954] 2 QB 66.
104
It costs the NHS millions of pounds each year.
105
NHS Litigation Authority Report 2013/14 (n 83).
35
[R]egardless of how deserving individual claimants’ cases might be, it must be
acknowledged that diverting NHS funds to the payment of damages and lawyers’ fees
reduces the amount of money available for patient care.106
Furthermore, John Harris has suggested that when assigning funds, the same rationing criteria
that are present throughout the NHS should also apply to medical negligence victims rather
than being given absolute priority.107
Another prevalent problem is the failure to provide remedies to injured patients, especially
given that proving breach of duty and causation are very formidable obstacles. As a result,
most patients who seek compensation end up receiving nothing.108 Moreover, the litigation
process of bringing a claim is very stressful and will end in disappointment for claimants and
even when claimants do receive compensation, many remain dissatisfied given that they
expect an apology or a statement of reassurance that the same mistake will not happen again.
Furthermore, some claimants are not even aware that they can bring a claim against a doctor
in medical negligence; many decide that the hassle of pursuing a claim is not worth it given
the small chance of receiving compensation.109 Indeed, according to the NHLA, 60-70% of
106
Alan Merry and Alexander McCall Smith, Errors, Medicine and The Law (Cambridge University
Press 2001).
107
John Harris, 'The Injustice Of Compensation For Victims Of Medical Accidents' (1997) 314 BMJ.
108
NHS Litigation Authority - NHSLA Claims Factsheet (1st edn,2014)
<http://www.nhsla.com/CurrentActivity/Documents/NHS%20LA%20Factsheet%203%20-
%20claims%20information%202013-14.pdf> accessed 14 April 2015.
109
Linda Mulcahy, Disputing Doctors (Open University Press 2003).
36
claims do not proceed beyond the initial contact with a solicitor and 30% of claims are
eventually abandoned by a claimant.110
There are many fears that the UK is moving towards a US-style ‘compensation culture’
where claimants are being encouraged, especially by Claims Management Companies, to
pursue a clinical negligence claim despite the low chances of success. There are two
immediate consequences to this: firstly this is a major drain on the NHS’ resources where the
money being spent compensating victims could instead be better spent on improving medical
facilities across the country and patient care. The second argument that is put forward is that
the potential threat of litigation may result in doctors reverting to practising ‘defensive
medicine’ wherein they choose the treatments that are the safest, legally, as opposed to seeing
what is in the best interests of their patients. However, Baroness Hale doubts whether doctors
really will revert to defensive medicine. She said that:
[O]f course doctors and other health care professionals are not solely or even mainly,
motivated by the fear of adverse legal consequences: they are motivated by their
natural desire and their professional duty to do their best for their patients.111
Indeed even if there was a fear of doctors practising ‘defensive medicine’, Section 1 of the
Compensation Act 2006 was in part directed at the problem.
110
'Department Of Health Full Regulatory Impact Assessment NHS Redress Act' (2006)
<https://www.gov.uk/government/organisations/department-of-health> accessed 14 April 2015.
111
Gregg v Scott [2005] UKHL 2, at [217].
37
III
Proposal to Introduce a Strict Liability Regime for Services
Returning to the question that I had proposed with regards to whether the model of costs
should be used to apply a regime of strict liability for services, what needs to be considered is
who the cheapest cost avoider would be. Under the model of costs, the person who must bear
the costs of a harm-causing accident is the cheapest cost avoider. Before assessing whether
service providers are indeed the cheapest cost avoiders, I will begin by examining the reasons
the courts have currently given as to why they refuse to extend applying a strict liability
regime to services.
The most commonly mentioned reason is that ‘no sale of goods is involved’.112 That is
decidedly unhelpful because the courts are simply restating the obvious and are not really
explaining why they feel strict liability should not be extended to services. Those that do
indulge in offering some reasoning state that those who render services to consumers never
issue their guarantees as to the results of those services. This is most commonly found in
cases involving professional services, including the medical profession. Again, this reasoning
has to be rejected because that is not what is being proposed. I have already discussed how it
is generally accepted by most people that when they attain a service, by a professional or
otherwise, they do not believe that the service provider is offering a guarantee on the results
of that service. This is especially the case in the medical profession, where it would be
counter-intuitive and daft to suggest that patients expect perfect results, especially in a highly
complex and pressurised environment that modern health care is found in.
112
Michael Greenfield, 'Consumer Protection In Service Transactions - Implied Warranties And Strict
Liability In Tort' [1974] Utah Law Review, 664. p.683.
38
Some of the courts’ further reasoning is based on the fact that there is a distinction between
products and services – namely that with professional services, they are far more complex
and uncertain of results113. One court elaborated even further to state that professional
services are ‘experimental in nature and dependent on materials produced by others or on
factors beyond the control of the professional.’114 Furthermore, in medical services cases in
particular, courts have suggested that the social welfare need for readily available medical
services is ample reason for rejecting applying a strict liability regime. One judge has stated
that:
The nature of the services, the utility of and the need for them, involving as they do,
the health and even survival of many people, are so important to the general welfare
as to outweigh in the policy scale any need for the imposition on dentists and doctors
of the rules of strict liability in tort.115
Moreover, similar to the argument made in the UK that because of a fear of liability, doctors
may practice ‘defensive medicine’, it has been suggested that imposition of a strict liability
regime will result in new medical devices, techniques, treatments and medicines being
discouraged.116 As with the first argument, these arguments presented are not convincing in
113
Case of Johnson v Sears,Roebuck & Co., 355 F. Supp. 1065, 1066-67 (E.D. Wis 1973) where it
was stated that a doctor can only be expected to provide adequate treatment corresponding with the
accepted knowledge of medical science – so, the equivalent of the Bolam test with the Bolitho gloss
in the UK.
114
Broyles v. Brown Eng’r Co., 275 Ala. 35, 151 So. 2d 767 (1963) – a case talking of doctors,
lawyers and architects whilst holding an engineer liable.
115
Newmark v Gimbel’s Inc., 54 N.J. 585, 597, 258 A.2d 697, 703 (1969).
116
Arthur Allen Leff, 'Medical Devices And ParamedicalPersonnel: A Preliminary Context For
Emerging Problems' [1967] Faculty Scholarship Series
39
the slightest for a number of reasons. As Greenfield points out, ‘the production and sale of
food and drugs, which are as essential as medical services, are [also] subject to [a] strict
liability doctrine’.117 Also, it is not clear why there should be special treatment for services,
especially doctors, simply because they provide a service which is so essential for social
welfare. The only way that argument would carry some justification is if the introduction of a
strict liability regime somehow resulted in doctors and medical professionals being unwilling
to provide those same services either because they would be worried of a claim being brought
against them or because their services suddenly see a vast spike in prices. Greenfield
dismisses both arguments and I am in agreement with him because it is extremely doubtful as
to whether either assumption would occur. I have already discussed and dismissed the claim
that doctors would resort to practicing ‘defensive medicine’. With regards to the claim that
services offered by the medical profession would suddenly increase in prices, that is also
unlikely to happen because one only has to look at the products liability regime to see that an
introduction of a strict liability regime does not necessarily entail that there will be a spike in
prices by professionals offering their services.
Arguments for an Extension of a Strict Liability Regime
Many, if not all, of the arguments provided as justification for a strict liability regime for
products also apply for services. In other words, just like a manufacturer of a product is the
best placed and thus the cheapest cost avoider, under the model of costs, a service provider is
also the best placed and cheapest cost avoider. The justifications given with regards to
products liability are: that the producer has a greater expertise in their ability to inspect the
<http://digitalcommons.law.yale.edu/fss_papers/2818/?utm_source=digitalcommons.law.yale.edu%2
Ffss_papers%2F2818&utm_medium=PDF&utm_campaign=PDFCoverPages >.
117
Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability
in Tort’ (n 111) p.687
40
products and goods they produce for any defects compared with the consumer, the consumer
relies on the producer given the impossibility of inspection for a consumer to carry out,
enterprises and corporations are responsible for placing their products into the market,
deterrence and giving an incentive to manufacturers to ensure they have safer, better
products, affordable risk distribution amongst consumers compared to the overwhelming cost
of harm to the claimant and the difficulties of proving negligence.
The first argument – that a manufacturer or producer has the superior expertise and
knowledge with regards to his products therefore, is better placed to determine if his goods
are defective also applies to providers of services. A doctor or health care professional is far
better placed than his patient to determine whether the service they are offering118 is not
defective; if it were defective, the doctor has the greater ability to modify and change it.
However, some courts have cited the defendant’s inability to discover a defect as a reason for
not applying a strict liability regime. Nevertheless, it is submitted that even if that were the
case, the defendant has a higher possibility of discovering the defect, in comparison with the
consumer. Furthermore, it would be less expensive and cause less hassle for the provider of a
service to examine the potential risk compared to the consumer. Using the earlier example of
the impure blood containing hepatitis C in A v National Blood Authority, even if there were
no possibility to screen the blood, the mere fact that the National Blood Authority were aware
of the risk found in the blood and had the superior ability to screen the blood made them
better placed to determine if there were defective goods.
Secondly, a consumer’s reliance on the producer’s expertise is as important, if not more
important, in the context of service transactions. Greenfield discusses how ‘sellers of most
118
An operation, treatment, check-up etc.
41
kinds of non-professional services advertise and otherwise promote their services’ which is
designed “to encourage reliance on the skill and expertise of the advertiser”’.119 Moreover, he
highlights that ‘since the rendition of services is usually tailored to the particular needs of the
consumer, which he communicates to the seller, reliance on the seller is likely to be greater
… and more justified’.120 Further he asserts that sellers of services hold themselves out as
experts and thus ‘courts have looked to the consumer’s justifiable reliance on one who holds
himself out as an expert as a reason for imposing liability for defective performance’.121 This
would especially be the case in a medical context, where, if the patient is seeking private
healthcare, he will invariably search for the best available doctor by consulting with
advertisements, brochures and leaflets which will most likely highlight the doctor’s great
reputation and expertise. Likewise with the public healthcare domain, the NHS is unlikely to
hire doctors or medical practitioners that do not meet a certain qualified standard.
The model of costs asserts that the person best placed should bear the responsibility of the
costs that arise out of the harm and once again, the affordable risk distribution of the seller of
products applies equally to a seller of services. Indeed, with regards to defective goods,
public policy should demand that those who introduce their products onto the market that
may result in harm to consumers should be the ones to carry the burden of the costs that arise.
These costs can be treated as part of the costs of producing the product and can be offset by
obtaining insurance against such liability.
119
Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability
in Tort’ (n 111) p.690.
120
ibid, p.689.
121
ibid, pp.689-690.
42
A key factor that should be taken into consideration when assessing whether the provider of
services should be the one to shoulder the cost is if they are capable of distributing the cost
onto the consumers of those services. As such, the size of the enterprise will be important in
determining the seller’s ability to distribute the costs. However, I disagree with the rationale
behind the idea that a smaller enterprise or self-employed service provider is unable to pass
on and distribute the costs onto his consumers, because even the self-employed service
provider is able to increase the costs of his services. What might count against the self-
employed is that they do not have as much capital, assets or resources compared with a big
multinational enterprise.122 This might present more difficulties to deal with the potential
scenario of consumers not employing the self-employed service provider because his new
prices are extortionately expensive. Greenfield also points out that the critical fact is that ‘the
seller’s ability to bear and distribute the loss is still far greater than the consumer’s ability’.123
Either way, this issue would also apply to a product manufacturer.124 There is, however, the
potential for a difference to emerge between applying a strict liability regime to products and
to services. With products, statistically speaking, ‘the number of injury-producing defects
should increase in direct proportion to an increase in [the businesses’] volume’.125
Nonetheless, that may not necessarily be the case with regards to service providers because it
is statistically plausible for the number of ‘defective’ service transactions not to be directly
proportional to the size of the business. In other words, you could find a truly incompetent
122
Such as a manufacturer or retailer.
123
Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability
in Tort’ (n 111), p.691.
124
Indeed, that is one of the main points of the Goldberg and Zipursky reply to professors Polinsky
and Shavell. They argue that a strict liability regime for products is needed for the smaller, more niche
products as they may not be as regulated as the bigger, more ‘important’ products that are produced
by the bigger manufacturers.
125
Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability
in Tort’ (n 111), p.692.
43
self-employed service provider who delivers repeated ‘defective’ services; as such it could
adversely affect the sustainability of small enterprises.
Moreover, just as with producers’ ability to distribute the risk of injuries and harm resulting
from a defective product by procuring insurance, the service provider is also able to do
likewise. Greenfield notes a possible consequence of increased reliance on insurance being
that ‘the insurance companies may impose quality standards as prerequisites to the issuance
of liability policies’.126 One of the consequences of insurance companies imposing quality
standards is that there will be an increase in the quality and standard of the service. However,
another potentially more adverse consequence would be that certain service providers would
be unable to acquire insurance given the higher demands and subsequent expenses of meeting
quality standards of a high threshold. One of the arguments against placing the burden of
costs that may arise from injuries on service providers is that a lot of services are provided for
‘non-commercial’ or ‘non-profit’ reasons so, that is a sufficient reason not to impose a strict
liability regime. One court in particular, has described hospitals as ‘bourns of mercy’ that
employ doctors as ‘unselfish disciples of relief.’ That court goes on to say that:
The argument that public policy demands that the manufacturer of food, the fabricator of
machines, the dispenser of meals, - all of whom are self-seeking profit-making
beneficiaries of the purchaser, should be bound by an implied warranty, reasonably
cannot urge inclusion in such category a traditional institution of healing and mercy,
because it shelves blood for transfusion purposes, where perhaps, such storage might be
126
ibid.
44
the difference between life and death, and all of which it furnishes at the cost of
procuration, preservation, testing and administration, - for a few pieces of silver.127
Again, this is an argument that is unconvincing simply because of the fact that the majority of
professionals providing services do not do so for charitable purposes. Whilst certain
professionals, such as doctors, do seem to have an extra benefit of providing a service that
offers great benefits to society by potentially saving lives, doctors still derive a financial
benefit from their services. Even if one were to accept the argument that, because doctors are
‘unselfish disciples of relief’128 and thus no liability should be found outside of negligence, it
is arguable whether doctors are the only professionals that offer their consumers a service
that is deemed paramount for society. I would further the argument that professionals such as
lawyers and engineers are just as important and society derives just as great a benefit from
their services. As such, providers of medical services should not be subject to a differential
treatment simply because they advance science and save people’s lives.129 Furthermore, even
if a service provider or enterprise was deemed to be ‘non-profit’ in nature, that does not
signify that it cannot bear the extra costs that might arise from an implementation of a strict
liability regime; the service provider could then be able to re-distribute the added cost
through the services it provides to its consumers.
Another argument used to justify a strict liability regime is deterrence and providing
incentives to manufacturers to ensure their products are to a higher standard with fewer
127
Dibblee v Dr. WH Groves Latter-Day Saints Hospital 12 Utah 2d 241 (1961) 364 P.2d 1085.
128
ibid.
129
Indeed, not all doctors do so either – we live in a world where there is an increasing number of
services provided by healthcare professionals that is aimed at enhancing consumer’s welfare and
improving their lifestyle rather than treating an illness or disease. The obvious example would be of
cosmetic and plastic surgery.
45
defects. Once again, there is no reason why that argument should not also apply to services.
The potential to being held strictly liable for a ‘defective’ service will logically mean that
service providers will have greater incentives to ensure that the services they provide is of the
highest quality and the number of ‘defective’ services is lowered. Likewise, the idea that
enterprises should be responsible for placing products into the market can also apply to
services. Referring back to the model of costs, just like a manufacturer of a product is the best
placed and cheapest cost avoider to examine their products before placing them on the
market, the same can be said in the context of services.
Finally, with products liability law, another argument proposed is the difficulty with which a
claimant can prove that the producer was negligent in supplying the defective product. In a
sense, that would not apply to services because in the vast majority of cases, it would be clear
if a service is ‘defective’; thus, the professional who had provided that service will be directly
implicated. Furthermore, Greenfield advances the argument that ‘the policy of avoiding
circuity of action also applies to litigation over defective services, but to a lesser extent than
to litigation over defective products’.130 131 Thus, in a service transaction, rather than having
numerous different parties involved in the transfer of the product, the only person that can
130
Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability
in Tort’ (n 111) p.692.
131
The privity doctrine dictates that when a defective product injures a claimant, the claimant cannot
directly sue the manufacturer in negligence. If the claimant purchased the product, he can bring a
claim against the retailer who will then bring a claim against the supplier who eventually sues the
manufacturer.
The doctrine of strict liability abolishes the privity doctrine meaning that the injured claimant can
claim against the manufacturer, supplier and retailer.
46
have a claim issued against is the service-provider himself. Accordingly, given that the
consumer is in direct privity with the service provider, ‘no circuity of action results’.132
Consequences of Imposing a Strict Liability Regime
Perhaps the argument that carries the most weight as to why courts have rejected an extension
of strict liability to services is the consequences of increased prices and costs that service-
providers will impose. There is a suggestion that increasing the prices of services (as a result
of service providers distributing the cost of insurance onto consumers) will mean that many
consumers cannot access services that are already expensive. Consequently, the cheapest cost
avoider would be the consumer as opposed to the provider of services. As such, a regime for
strict liability would not be justified by the model of costs. However, it is again submitted
that the same issue is applicable to products liability and yet that has not stopped the
imposition of a strict liability regime to products. Furthermore, I would cast significant doubt
on the prospect of service prices rising so drastically that result in consumers not being able
to afford them anymore
Another consequence of imposing strict liability on services and the resulting increase in
price to the consumer to purchase a service is a reduced competition market for services. If
some enterprises and service providers cannot afford to increase the prices to their services,
that may eliminate them from the market which would have the effect of reducing
competition amongst service providers. This could potentially lead to a monopoly by certain
enterprises that could, in theory, further raise prices for their services given the reduced
competition. It could potentially also result in certain services not being catered for anymore
132
Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability
in Tort’ (n 111) p.693.
47
if the service providers are unable to meet the increasing costs of conducting their
businesses.133
Finally, there is the potential for litigation to substantially increase if a strict liability regime
is introduced for services. Given the fact that one of the major reasons I have advocated
moving away from a negligence based regime is due to the already substantial amounts of
litigation present with clinical negligence cases, for example, then this would be a substantial
block in the strict liability regime’s path. However, whilst in theory an increase in litigation is
possible and plausible, I would question the likelihood of that occurring in practice. One may
look at the amount of litigation in the UK since the implementation of the Consumer
Protection Act to realise that its fears of substantial litigation do not necessarily follow.
Rather, it is more likely that litigation will decrease given the increased potential for liability
that service providers will incur. Returning to the issue of the large litigation and
transactional costs involved with clinical negligence, a move to a strict liability regime
cannot be any worse or less expensive. Ergo, the model of costs would advocate such a
regime in place given that the serious litigation costs would decrease and the social costs,
which Coase views as being the most important, increases.
133
ibid. p.695.
48
IV
Strict Liability and its Application to Services
The final part of the essay aims to propose how the law should implement a strict liability
regime. Greenfield suggests that the ‘rendition of services has three components: analysis of
the problem to ascertain its cause, selection or fabrication of a solution to the problem, and
application of the solution’.134 A ‘defect’ may occur in any of the three components and a
strict liability regime would apply to all three. Using the Restatement (Third) of Torts
402A as my guidance, the most critical issue is how one is able to define what a ‘defective
service’ would entail. I propose that for a service provider to be found strictly liable, a
‘defect’ must be found in the service which consequently causes the consumer some sort of
injury.
To determine whether a service is defective, I suggest that the definition used in the CPA and
the tripartite definition in the Restatement of Torts for products liability should also be used
for services. As discussed in section one, under the CPA, a product is found to be defective if
the safety of the product is not such as persons generally are entitled to expect; in other
words, if it falls below the reasonable expectations of the consumer. In the same way that a
reasonable consumer who purchases a product and uses it in the correct manner does not
expect harm to occur to his person or property, the reasonable consumer who purchases a
service will reasonably expect his person or property not to be injured. Similarly, just as a
consumer who purchases a product expects it to perform in the manner intended, the same
would also apply to services.
134
ibid, p.697.
49
It is important to note that with services, sometimes the consumer may have an expectation
that is unattainable and if that were the case then failure to satisfy the consumer’s
unattainable expectation does not render the service ‘defective.’ So, the ‘development
risks’135 defence that applies to products liability law will have similar application here.
Focusing on doctors, I will use a simple example that Greenfield also uses to explain his
reasoning. It is well known and accepted that there is great uncertainty involved in medical
healthcare and consequently, there are a greater number of variables to consider. Starting
with the first component of services suggested earlier: analysing the problem to ascertain a
cause. If a patient asks their doctor to diagnose an illness they have and the doctor is unable
to do so because there is an insufficient amount of scientific knowledge found in the medical
profession, the doctor cannot be held liable for failing to diagnose the illness or even
erroneously diagnosing the patient’s illness. Consequently, if there was sufficient medical
knowledge and information about that illness but the doctor still could not diagnose the
illness136, then the patient’s expectations that they be correctly diagnosed is reasonable and
thus the doctor would be held strictly liable. Of course, the doctor would also be able to
recommend the patient to another healthcare professional if he is not sure of the particular
illness that the patient has.137
The next component of services is selecting the solution to the problem. Adopting the
doctrine of strict liability would impose liability on doctors for injuries caused as a result of
selecting the wrong course of treatment. The question to be asked is what form of injury to
the patient would have to occur for the course of treatment given by the doctor to be labelled
‘wrong’. There are two potential avenues: the first is that the patient’s health deteriorated
135
CPA 1987, S 4(1)(e).
136
Assuming that the patient is going to a specialised doctor if it is a particularly special illness.
137
Indeed, it is recommended that patients acquire numerous professional opinions.
50
even further when it should not have if the course of treatment chosen was the correct one;
or, the doctor did not manage to cure his patient of the illness. Here, there is a potential
slippery slope argument to be made. There will be many people, myself included, who will
feel very hesitant towards imposing liability on a doctor for ‘failure to cure a disease.’
However, to counter that concern, I would return to the argument made earlier that imposing
strict liability on services does not mean that service providers suddenly guarantee their
consumers perfect results. Furthermore, if the patient had an illness that the doctor should
have recognised and could have provided a course of treatment that will usually fully ‘cure’
the patient then there is no reason why the doctor should not be found strictly liable for
failure to administer the right course of treatment. Again, this is because, if there is a known
cure for the illness, then the patient’s expectation of being cured of that illness is perfectly
reasonable. The patient’s expectation of being cured from an illness will not, however, be
reasonable in the scenario that there is no known cure or the cure is untested or inaccessible
to doctors. In that case, the doctor cannot be held to be strictly liable.138 Furthermore, there is
a caveat present in that a doctor would not be held liable when there is no known cure for an
illness, as long as the patient is fully informed on the matter.139 Without the doctor’s
disclosure on the issue, then it would be reasonable for the patient to view the service
provided as defective.140
138
An obvious example of an illness here would be the latter stages of cancer where,as of current
scientific knowledge, there is no ‘cure’ to stage 4 cancer.
Another example would be Tay-Sachs disease.
139
For more on Informed Consent, see Neil C Manson, Rethinking Informed Consent In Bioethics
(Cambridge University Press 2007).
140
Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability
in Tort’ (n 111), p.700.
51
The third and final component, application of the solution by the doctor, is the most
straightforward. A service provider will be held liable if they administer the wrong solution.
A doctor giving his patient the wrong medication or injecting his patient with the wrong
serum would be found strictly liable for any harm caused.
52
Conclusion
Throughout this essay, I found that the only situation where the model of wrongs can impose
liability on a service provider is if they are negligent in providing that service. I have also
explained how the model of costs would advocate an implementation of a strict liability
regime to services as the law has currently implemented for products liability. The model of
costs, which informs us that the most important aspect is the costs and benefits of allocation,
states that the aim of tort law is to minimise the social cost of preventing and dealing with
accidents; consequently, the person who is best placed to deal with the costs of an accident
should be the person to shoulder the responsibility.
I used the current products liability regime that is implemented in the UK to demonstrate
how, under the model of costs, a strict liability regime is justified because producers and
manufacturers, rather than the consumers, are best placed to deal with any defective products
that may be placed on the market. I then highlighted how products and services are very
similar and how the products liability regime and a potential services strict liability regime
cannot really be distinguished. By using an amalgamation, of both the American tripartite and
CPA definitions of ‘defect’, we can implement a similar definition for ‘defective services’.
The three components that are used when discussing the manufacturing of goods (analysing
the target market and the consumer’s needs, designing the product and manufacturing or
producing the product) can also easily be applied to services. Given that under the American
Restatement (Third) of Torts, a producer can be found strictly liable at either of the latter
two stages, there is no rational reasoning not to apply the same logic to services as well.
Thus, if the reasoning behind holding manufacturers strictly liable for any defective products
they may introduce onto the market is sound and accepted, there is no reason not to apply the
53
same reasoning to service-providers and anyone found to be providing a ‘defective’ service,
should be found strictly liable.
54
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Strict Liability for Harmful Services

  • 1. LL299 – Full Unit Dissertation Word Count: 14,966 (excluding Bibliography) Referencing Style: OSCOLA Should There Be a Regime of Strict Liability for Harm Caused By Services, Specifically the Medical Profession, in the Manner of Strict Liability for Harm Caused by Products?
  • 2. 2 Table of Contents Abstract ......................................................................................................3 Introduction ...............................................................................................4 I. Analysing Strict Liability Through a Comparison of the Models of Wrongs and Costs......................................................................................6 What is the Purpose of Tort Law? ............................................................6 Theory of Strict Liability........................................................................9 Model of Wrongs ..............................................................................11 Model of Costs...............................................................................14 Products Liability Regime ..........................................................15 Arguments Justifying the Strict Liability Regime ...................22 II. Medical Malpractice ..........................................................................30 Costs.....................................................................................................30 Problems Currently Found Within Clinical Negligence ..................34 III. Proposal to Introduce a Strict Liability Regime for Services .......37 Arguments for an Extension of a Strict Liability Regime .....................39 Consequences of Imposing a Strict Liability Regime......................46 IV. Strict Liability and its Application to Services ..............................48 Conclusion ...............................................................................................52 Bibliography ............................................................................................54
  • 3. 3 Abstract This paper examines whether a regime of strict liability for harm caused by services should be implemented with reference to the models of wrongs and costs. I use both models as the starting point to determine the extent to which they are consonant with a regime of strict liability for services. Depending on how the standard of conduct is interpreted, the model of wrongs does not recommend a model of strict liability whilst the model of costs does. By looking at the current products liability regime in place as an example, I find that there are many similarities in the reasoning as to why the model of costs recommends a strict liability regime. Analysing the current issues in medical law, the most pertinent problem found is the large costs of medical negligence cases which are a significant drain on the NHS’ resources. I find that there is a problem found with the current regime of fault liability for services, whereupon I use the model of costs to recommend that a regime of strict liability should be implemented that applies to all service provisions. Finally, the paper discusses how a regime of strict liability for services can be implemented in English tort law. I propose that we look at both the US tripartite and the CPA definitions implemented in products liability law to be used as an amalgamated model to implement a very similar regime for services.
  • 4. 4 Introduction Towards the end of the twentieth century and the beginning of the twenty-first century, there has been a move away from fault-based liability for defective products. Current English law has a regime of strict liability in place for any product that is deemed to be ‘defective.’ However, one of the increasingly common concerns is whether such a profound difference should be found between ‘goods’ and ‘services’ and whether there should be an expansion of liability in place that renders people who offer a ‘defective’ service strictly liable to their consumers or customers. Currently, the courts have rejected any extension of such liability. To examine whether there should be a regime of strict liability for harm caused by services, section I begins by examining the purpose served by the rules of tort law by referring to the model of wrongs, as advocated by Weinrib1 and Gardner2 and the model of costs, which theorists like Calabresi3, Coase4 and Shavell5 advocated. Depending on how the standard of conduct is formulated, the model of wrongs presents us with two different conclusions as to whether a strict or fault based liability regime should apply to services; it would recommend that a service provider can only be held liable if he were careless or negligent. The model of costs, however, would recommend a regime of strict liability; regardless of who is at fault, the cheapest cost avoider must always be the one who bears the cost. 1 Ernest J. Weinrib, 'Corrective Justice In A Nutshell' (2002) 52 The University of Toronto Law Journal. 2 John Gardner, 'What Is Tort Law For? Part 1. The Place Of Corrective Justice' (2010) 30 Law and Philos. 3 Guido Calabresi, 'Does The Fault System Optimally Control Primary Accident Costs?' (1968) 33 Law and Contemporary Problems. 4 R. H. Coase,'The Problem Of Social Cost.' (1960) 3 The Journal of Law and Economics. 5 Steven Shavell, 'Liability For Harm Versus Regulation Of Safety' (1984) 13 J LEGAL STUD.
  • 5. 5 Next, I use the products liability regime, both in the UK and the US, as an example to examine the justifications for a regime of strict liability in place for ‘defective products’. I find the US tripartite definition of ‘defect’ more clearly defined but the CPA definition more consumer friendly; thus when attempting to define what a ‘defective service’ will entail, I will use a combination of both as my guidance. I end section I by finding that the strict liability regime has been a welcome introduction for products liability law. In section II, I analyse the current fault-based regime in place and problems found in the context of medical services; the large costs of medical negligence cases are a significant drain on the NHS’ resources. In section III, I begin by examining, and subsequently dismissing, the reasons the courts have given to refusing an extension of a strict liability regime to products. I show how the arguments provided as justification for a strict liability regime for products can also apply to services; just as the manufacturer of a product is the best placed and thus the cheapest cost avoider, the same logic would apply to service providers. I then look at some of the potential consequences of imposing a strict liability regime for services. The final section of the essay discusses how a regime of strict liability for services can be implemented in English tort law. Given the similarities found between the justifications for implementing a strict liability regime for products and services, I propose that the current regime for products liability law be used as a model to implement a very similar regime for services.
  • 6. 6 I Analysing Strict Liability Through a Comparison of the Models of Wrongs and Costs What is the Purpose of Tort Law? Put at its simplest, the purpose of tort law is to determine how a community ought to allocate the costs of harm-causing events. It also provides us guidance regarding who should pay for the cost of an accident. As a result, there are four theories that propose principles for allocation of accident costs: deterrence, cost efficiency, corrective justice and distributive justice.6 Stephen Perry proposed some justifications as to why tort law can be seen as being divided into two main categories. The first category comprises theories that are ‘based on individual moral rights’7 whilst the second category is to: [L]ook upon civil liability as a means for advancing one or more public policies such as general social compensation, wealth distribution, loss-spreading or the attainment of economic efficiency through deterrence’.8 Briefly examining the theories, the deterrence model states that one’s capacity to avoid an accident is important. However, there are a few difficulties that arise – namely that there are many ways to deter people from causing harm and secondly, sometimes we, as a society, do not wish to deter people from causing harm. For example, a patient will go to a doctor with a type of cancer that is still possible to treat, but only through chemotherapy; subjecting that patient to the chemotherapy will result in some harm to the person which some may object to. 6 Jules Coleman, 'Theories Of Tort Law' (Plato.stanford.edu,2003) <http://plato.stanford.edu/entries/tort-theories/ >Accessed 13 April 2015. 7 Stephen Perry,'The Moral Foundations Of Tort Law' (1992) 77 Iowa Law Journal, p.2. 8 Ibid.
  • 7. 7 However, it would be counter-productive if chemotherapy were suddenly outlawed for the purpose of circumventing the incidental harm-causing event. The cost efficiency model (model of costs) tells us that the costs and benefits of allocation are important. This model advocates looking at the ‘bigger picture’ and minimising the social cost of accidents by allocating costs of harm-causing events in the way that produces the most benefits to everyone. It is important to highlight that the model does not rule out each person’s individual rights, but rather, advocates that each person’s resources belongs to a community of ‘one’ that we wish to maintain and preserve. Furthermore, with the model of costs, we are not concerned with the person with the ‘deepest pockets’ per se, but rather the person who is able to pay the least amount of money; they are the ones that should bear the responsibility on their shoulders. The corrective justice model (model of wrongs) informs us that rights are important and that if someone violates someone else’s rights, then a ‘wrong’ is being committed against that person; the job of tort law is to correct that wrong. The idea of personal responsibility seems to ring true with our ‘inner beliefs and morals’ but it also presents us with a problem: doctors assume responsibility for their patients care when treating or operating on them but one may question whether that should also be the case with very risky and complex operations or procedures. Should doctors be held liable and made to pay potentially crippling amounts of money to compensate their patients for an action or procedure that was very high risk in the first place? What if the doctor did everything in their power to ensure nothing went wrong, but even then, something did – should a doctor be held strictly liable? That is one of the questions this essay will attempt to answer.
  • 8. 8 The final model which Coleman9 discusses is distributive justice, in which one’s social standing is significant. However, this theory encounters a problem when the difficulties associated with methods of resource distribution within the community are considered. Sometimes, someone’s mistakes leading to harm-causing accidents are a consequence of the social structure. A GP, employed by the NHS, in a small clinic in a small town in the countryside, should maybe not be held completely responsible for their actions, simply because of their social standing and position. All of these theories examine when society and the State may hold someone responsible for the cost of an accident. We can implement a good theory of tort law based on the idea of responsibility; as such, responsibility should depend on the circumstances of our choices. Thus one’s capacity to avoid the accident can be discussed with reference to costs, rights and social structure. For the purposes of this essay, I will focus on the two main models of tort: the models of wrongs and costs. The question being proposed is whether tort law serves to correct wrongs or to minimise the social cost of accidents. My answer is that tort law should serve both purposes, as best as possible. When one allocates the cost of an accident to a person, one should, in tort law, be able to justify that allocation to the person carrying the burden. Generally, and with regards to the medical profession, the questions that must be asked before an answer on whether a strict liability regime should apply are: what is required from doctors? Is it that they do not cause harm or to take care not to cause harm? If so, how much care is reasonable? Moreover, is it ever justified to make doctors (or the NHS) pay for accidents they took all reasonable care to avoid? Further, should a doctor be held personally 9 Coleman, 'Theories of Tort Law' (n 6).
  • 9. 9 liable for the consequences of an accident that they have caused? With regards to the last question, English tort law currently says yes, through a fault-based negligence system. Throughout the course of this essay, I will examine, with reference to the models, whether a move to a strict liability regime to services is viable. I will eventually conclude that a strict liability regime should be applied to services that, similarly to the products liability regime, fall below the consumer’s ‘reasonable expectations.’10 The Theory of Strict Liability A strict liability regime is in place when one’s duty is not to injure ‘full stop’ whilst a fault liability regime is in place when one’s duty is not to injure ‘negligently, recklessly or intentionally.’ The main difference between the two regimes is that ‘fault liability can be undermined by justification,’11 whereas, with a regime of strict liability, even if you behave ‘impeccably,’ you can still be held liable. Currently, there is a strict liability regime in place for products and the question this essay seeks to answer is whether there should be a strict liability regime in place for services. Before assessing whether it would be feasible to introduce a strict liability regime for services, there must be an account to explain when it is acceptable to impose a regime of strict liability. Negligence needs a rule of strict liability as a general backstop because a regime of fault-based liability by itself is not enough as a standard of responsibility. 10 Consumer Protection Act1987. 11 Coleman, 'Theories of Tort Law' (n 6).
  • 10. 10 Epstein12 believed that the model of wrongs requires a regime of strict liability because he viewed harm-causing events and accidents as an invasion of rights. However, some theorists were critical of Epstein’s theory and viewed causation as being over-inclusive. Negligence only explains why few people are causally involved and responsible but not why everybody is. Weinrib13 and Coleman14 believed that corrective justice prohibits a regime of strict liability. Weinrib stated that to figure out whether a regime of fault-based or strict liability should be implemented, the question should be asked of what each person requires of the other. He believed that due care is the most a society has the right to ask of others. Furthermore, he thought that strict liability restricted a lot of people’s freedom to pursue their ends. Coleman goes further by stating that tort law should not always rely on the model of wrongs because outcomes are never normatively significant in themselves. He goes on to state that one must show that causing some outcomes disturbs some normative relation but sometimes, when the costs are too high, there should be a regime of strict liability in tort. A difficulty found in the theory of corrective justice arises here; the question must be asked as to why it is that we look to whether participation in harm production affects society’s normative relationships. Rather, why is it not the question of where each person in society is placed? Weinrib and Epstein discuss a world where the only issue that matters are people’s individual rights but sometimes, a person’s rights is not the most important thing. Rather, some believe that we should instead look to the model of costs and who the cheapest cost avoider is when trying to answer the question of who should be found liable. 12 Richard A. Epstein, 'A Theory of Strict Liability' (1973) 2 The Journal of Legal Studies. 13 Weinrib, ‘'Corrective Justice In A Nutshell' (n 1). 14 Jules Coleman, 'The Morality of Strict Tort Liability' (1976) 18 William & Mary Law Review, 259.
  • 11. 11 Calabresi and Hirschoff were advocates of the model of costs.15 They believed that the person best placed to work out and act on whether the benefit of the activity is worth the risk of an accident should be the person who must bear the costs. For Calabresi, negligence is not a requirement of liability, because liability should depend on an agent’s placement, not the character of their conduct. The obvious difficulty with this theory is that the mere fact that someone is the cheapest cost avoider does not show us why dealing with the cost is that person’s problem. Sometimes a person will reasonably not want to worry about certain problems and at times the cheapest cost avoider will not necessarily be the cheapest cost bearer because they would not be well-placed to deal with the consequences of the harm. Model of Wrongs Some theorists argue that tort law’s function is to ‘rectif[y] the injustice inflicted by one person on another’16 and to correct wrongs inflicted by one person on another. Weinrib discusses the ‘rectificatory function’ that corrective justice implements ‘by correcting the injustice that the defendant has inflicted on the plaintiff.’17 This thus creates ‘a connection between the remedy and the wrong’18 and ‘the idea that correlativity informs the injustice, as well as its rectification, is a central insight of the corrective justice approach to the theory of liability.’19 He goes on to dismiss other factors, such as economic wellbeing, as a normative factor that can be considered to apply to both parties. For example: 15 Guido Calabresi and Jon T. Hirschoff, 'Toward A Test For Strict Liability In Torts' (1972) 81 The Yale Law Journal, 1055. 16 Ernest J. Weinrib, 'Corrective Justice In A Nutshell' (n 1) p.2. 17 ibid, p.3. 18 ibid. 19 ibid.
  • 12. 12 A factor that applies to only one of the parties – the defendants having deep pocket[s] or being in a position to distribute losses broadly – is an inappropriate justification for liability because it is inconsistent with the correlative nature of the liability.20 Ergo, any discussion about whether a regime of strict liability should be implemented should address the question of whether a wrong has been committed. Next, the model of wrongs dictates that one must assess whether the defendant has committed a wrong and if found to be affirmative, then what their duty to ‘right that wrong’ is. When discussing whether a regime of strict liability should be imposed, one must ask whether a wrong has been committed; a wrong has been committed if the defendant breaches a certain standard of conduct expected of him.21 Consequently, the question of whether the defendant has committed a wrong revolves around the question of how the standard of conduct is formulated. The standard of conduct can thus be formulated in two different ways. I will illustrate this with an example of a doctor negligently misdiagnosing or treating a patient leading to some sort of harm being suffered. The first formulation would be that doctors should not injure any patients whilst treating them full stop. This formulation would lead to the absurd conclusion that the doctor would be in breach of the standard of conduct regardless of whether he took the utmost care whilst treating his patient or if he was negligent in his treatment. If this were the formulation that one would adopt for the standard of conduct, then the corrective justice model would point towards a regime of strict liability for services. However, it is submitted that this would be absurd because it is well established that 20 ibid. p.4. 21 Applying the duty of care standard,as enunciated in the case of Donoghue v Stephenson [1932] UKHL 100.
  • 13. 13 ‘sometimes unintentional harm comes to patients as a result of a clinical decision or a clinical procedure’.22 Alternatively, the second formulation would be that doctors should not carelessly injure their patients whilst treating them. Under this formulation, the doctor would not have breached his standard of conduct if he took all due care whilst treating his patient. Returning to our example, if the patient was undergoing a complex brain surgery, it is reasonable to say that even if all due care were taken, a surgery of a very complex nature can easily go wrong. Under the second formulation, the doctor would only be held liable if he were careless or negligent in his treatment. As such, under this formulation of the standard of conduct, the corrective justice model would point towards a regime of fault-based liability for harm caused by services. Consequently, the model of wrongs presents us with two different conclusions as to whether a strict liability regime should apply to services based on how we interpret the standard of conduct. Some, like Gardner23, are happy with the idea of imposing obligations of result where someone is held liable for breach of standard of conduct regardless of whether they behaved impeccably or were careless. Weinrib24, on the other hand, would disagree with whether strict liability was ever justifiable under the model of wrongs because he simply would not agree with obligations of result holding someone to a standard that they sometimes cannot meet, as illustrated in the surgery example. Thus, the only situation when the model of wrongs can impose liability on the doctor and oblige him to ‘rectify the injustice’ inflicted 22 Making Amends - A Consultation Paper Setting Out Proposals For Reforming The Approach To Clinical Negligence In The NHS (1st edn,2003) <http://webarchive.nationalarchives.gov.uk/20130107105354/http:/www.dh.gov.uk/prod_consum_dh/ groups/dh_digitalassets/@dh/@en/documents/digitalasset/dh_4060945.pdf> Accessed 13 April 2015. 23 John Gardner, 'What Is Tort Law For? Part 1. The Place Of Corrective Justice' (n 2). 24 Ernest Weinrib, 'Toward A Moral Theory Of Negligence Law' (1983) 2 Law & Philosophy.
  • 14. 14 upon the patient is when he is careless or negligent in his treatment of the patient but not when he exercised the utmost care and still caused an unavoidable harm. Model of Costs In contrast, the model of costs shows that the aim of tort law is not to correct injustices but to minimise the social cost of preventing and dealing with accidents. Consequently, the theory claims that the person who is best placed to deal with the costs of the accident should be the one to ‘shoulder the responsibility’. This is the basis of Coase’s paper on cost efficiency: that tort law is not about wrongs and rights but rather, about social costs.25 Coase argues that we, as a society, must ensure that we meet the cost of accidents in the most economically efficient way. The cost efficiency model claims that when we think about possible damages, we should not just factor in the costs to the victim but also factor in the costs to the defendant taking precautions to avoid the accident. Coase says that, under this model, we must identify the competing activities at stake because protecting or promoting one activity may deter another. He describes the ideal situation where parties can strike a mutually beneficial deal but sometimes, we may encounter a problem. Returning to the example of the doctor treating a patient, the competing interests present would be the patient’s desire to be cured and the doctor’s desire not to harm his patient.26 After identifying the ‘competing activities’ at stake, we must consider whether we should use regulatory rules or tort rules or a combination of both to balance the competing interests.27 As mentioned earlier, the cost efficiency model is most interested in the person best placed to shoulder the cheapest costs. As such, it is evident that the standard employed by the model of costs is one of strict liability, given that 25 R. H. Coase,'The Problem of Social Cost.' (n 4). 26 It may also be that the patient is simply going to the GP for a routine check-up and wants to ensure the doctor correctly identifies and diagnoses any disease/problem the patient may have. 27 Steven Shavell, 'Liability For Harm Versus Regulation Of Safety' (n 5).
  • 15. 15 regardless of who is at fault, the person who must always bear the costs is the cheapest cost avoider. Thus, to consider whether the model of costs should be used to apply a regime of strict liability for services, we must consider who the cheapest cost avoider would be. In order to do so, I will use the products liability regime as an example to examine the justifications for a regime of strict liability in place for ‘defective products.’ Products Liability Regime The default position in English tort law is one of fault liability and for any strict liability regime, a special argument to justify the implementation of such a regime must be broached. As pointed out above, the model of costs would posit a reversal of that picture where the cheapest cost avoider should always be the one who bears the responsibility for liability. Consequently, the model would recommend that the default regime applied in tort law should be one that is strict in its nature. Before the Consumer Protection Act was implemented in 1987, if a consumer wanted to sue as a result of a defective product, they had two possibilities they could pursue. They could sue the seller of the product, under S 14 of the Sale of Goods Act 1979, if he had bought the product from someone; the seller would be held strictly liable if the product was not fit for purpose or was not of a satisfactory quality. They would be held liable for ‘any and all’ foreseeable losses that the claimant suffered as a result of the defective product. They could also sue the manufacturer in negligence.28 However, the manufacturer would only be held 28 As,perhaps the most famous case in English law demonstrated,: Donoghue v Stephenson [1932] UKHL 100.
  • 16. 16 liable for the defective product only if he was at fault and it was reasonably foreseeable that the claimant would suffer some harm to his person or property.29 The Consumer Protection Act 1987, which implemented the EEC Council Directive 85/374, gave claimants a third avenue of recourse. It is interesting to note that at the time, the objective of the Directive was to harmonise the differing products liability laws across the EU because ‘existing divergences may distort competition and affect the movement of goods within the [EU’s] common market’.30 Unlike with a fault-based negligence regime, there is no requirement of a duty of care under the CPA. Section 2 imposes civil liability in tort for damage caused wholly or partly by a defect in a product. This includes producers, ‘own- branders’, component producers and first importers into the EC.31 Importantly, suppliers are not liable under the CPA, but have a duty to disclose producers and ‘where two or more persons are liable by virtue of this Part for the same damage, their liability shall be joint and several’.32 Section 1 defines how a product is to be construed under the Act as being some sort of good33 or piece of information34. Section 3 defines a defect as being present when ‘the safety of the product is not such as persons generally are entitled to expect’.35 Relevant factors in that assessment include the manner and purposes of marketing of the product; the product 29 Nicholas J McBride and Roderick Bagshaw, Tort Law (4th edn, Pearson Education 2013). pp.381- 382. 30 Preamble to EEC Council Directive 85/374. 31 CPA 1987, S 2(2). 32 ibid, S 2(5). 33 Examples include ships, aircrafts,vehicles etc. 34 Brocklesby v US (1994) 753 F 2d 794 – where a landing chart was held as being a ‘good’ - the US was sued because a plane did not land in the correct place according to a landing chart. 35 CPA 1987, S 3(1).
  • 17. 17 ‘get-up’; marks, warnings and indications about proper or improper use36; expected use of the product37 and time of supply38. This is substantially different to the tripartite definition of ‘defect’ in the US Restatement of Torts.39 Before discussing the UK case law, I will briefly comment on the US tripartite definition of ‘defect.’ Under US law, a product is defective when, at the time of sale or distribution, it contains a manufacturing defect, is defective in design, or is defective because of inadequate instructions or warnings: A product (a) Contains a manufacturing defect when the product departs from its intended design even though all possible care was exercised in the preparation and marketing of the product; (b) Is defective in design when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the alternative design renders the product not reasonably safe; (c) Is defective because of inadequate instructions or warnings when the foreseeable risks of harm posed by the product could have been reduced or avoided by the 36 CPA 1987, S 3(2)(a). 37 ibid, S 3(2)(b). 38 ibid, S 3(2)(c). 39 American Law Institute, Restatement (Third) of Torts: ProductsLiability (1988).
  • 18. 18 provision of reasonable instructions or warnings by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the instructions or warnings renders the product not reasonably safe. Thus, for example, if a consumer were to show that there was a defect in a product’s design, under the US standard, they would have to demonstrate that there was an alternative design; they would also have to navigate through a number of different processes such as, hiring experts to show that there was a different design present. As such, the US test is much more demanding especially when it comes to design and is much less consumer friendly compared with the EU test, where a consumer only has to prove what can be expected of safety at the end of the process. In practice, there have been very few cases that have applied the ‘legitimate expectations test’40. McBride and Bagshaw describe the legitimate expectations test as ‘unhelpfully vague’ given that there ‘seems to be no right answer to the question of how safe we are entitled to expect products to be’.41 They go on to state that if: [A] product has feature X or lacks feature Y, [it] cannot mean that it is defective for the purposes of S 3 if people generally expect the product to have feature X or people generally would not expect that product to have feature Y. But if people generally had no expectations as to whether a particular product would have feature X or lack feature Y, then the courts seem to have taken the view that they should find that the 40 A v National Blood Authority (No 1) [2001] 3 All ER 289; B and others v McDonalds Restaurants Ltd [2002] All ER (D) 436; Richardson v LRC Products [2000] 59 BMLR 185; Worsley v Tambrands Ltd [1999] EWHC 273 (QB). 41 McBride and Bagshaw, Tort Law (n 24) p.384.
  • 19. 19 presence of feature X or the absence of feature Y in a product rendered the product defective if it would be consistent with the policy of the Act.42 As such the European test for a defect, whilst being more consumer friendly, is perhaps not as clearly defined as the US tripartite definition. Thus, when considering whether a strict liability regime should apply to services43, I will use an amalgamation of the US tripartite definition and the CPA’s definition of ‘defect’ as my guidance to defining what a ‘defective service’ will entail. The case of A v National Blood Authority,44 where the claimants contracted hepatitis C from blood transfusions, illustrates this point nicely. The court held that the factors that should not affect the assessment of a defect were: the social benefits of making the product available, the cost of precautions and the ‘avoidability’ of the risk posed by the product. Accordingly, dangerous products (such as knifes) were not defective for that reason and because the public knowledge of risks could tell against ‘defectiveness.’ These three factors were later tested in a number of later cases. In B v McDonalds Restaurants Ltd45, McDonalds was not held to be liable because the public knowledge of the risks, which in this case was that if the coffee spilt, it would at least scald the plaintiff, undermined the claim against the design of the ‘McCoffee cups’. In Richardson v LRC Products46, it was held that no producer would ever hold themselves to be 100% effective. Here, there were legitimate concerns about the problems of latex used in manufacturing condoms and whether they would be 100% 42 ibid. p. 384. 43 Section IV of this paper. 44 (No. 1) [2001] EWHC QB 446. 45 [2002] EWHC 490 (QB). 46 (2000) 59 BMLR 185.
  • 20. 20 effective. Also, in Worsley v Tambrands Ltd47, it was held that it was necessary to ‘balance the rarity and the gravity’48 of the case; the consumer had suffered from a ‘toxic shock syndrome’ that occurs to a non-negligible amount of women who use tampons. The claimant argued that the warning that was found in the leaflet must have been reproduced on the outside packaging of the box itself, something the court rejected. As the case of Abouzaid v Mothercare49 illustrates, the inquiry into whether a ‘standard product’ is defective under the CPA is not as constrained as it would be if the claim was brought in negligence. In this case, the claimant failed in his claim in negligence because it was held that at the time the sleeping bag was manufactured, it was not foreseeable that marketing a sleeping bag with that kind of design would result in an injury to the claimant in that manner. However, the claim brought under the CPA was held to be defective because the sleeping bag could have been designed to a higher safety standard. Section 5 of the CPA provides for the sort of damage that can be sued under the Act. Damage is taken to mean ‘death or personal injury or any loss of or damage to any property (including land)’.50 One can only claim for property damage if it exceeded £27551 52 and the property must have been mainly intended for private use.53 54 Recoverable damage also 47 [2000] PIQR 95. 48 ibid, Per Ebsworth J,at [102]. 49 (UK) Ltd, Times, Feb 20, 2001. 50 CPA 1987, S 5(1). 51 ibid, S 5(4). 52 If damage is below that, then the claimant should apply through common law of negligence. 53 As such, businesses cannot claim using the CPA. 54 CPA 1987, S 5(3).
  • 21. 21 excludes purely economic losses suffered from the defective product and excludes loss of the product itself.55 Section 4 provides the defences for manufacturers which include: the product not being supplied to another56 or not being supplied in the course of business57; the defect not existing at the time or that the producer complied with government regulations58. Furthermore, component suppliers were not to be found liable if the defect was solely attributable to the finished article as opposed to the component that was supplied59. Finally, there is the ‘development risk’ defence, in which there is no liability if the risk could not have been discovered at the time of supply.60 The presence of the development risk defence is important given that it could potentially present significant obstacles and undermine the CPA regime. It is especially important to note the difference in language between the Directive that introduces the regime and the CPA, which implements the EEC Directive61. Art 7(e) of the Directive states that a producer shall not be liable if he proves that ‘the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered’. Whilst, S 4(1)(e) of CPA 1987 talks about the defects that the producer could be expected to discover, given the available scientific knowledge. As such, the CPA rule is more business-friendly whilst the Directive is more lenient towards the consumer. The view from the European Court of Justice62 is that 55 This is in line with the common law – as such, you can sue in contract law. 56 CPA 1987, S 4(1)(b). 57 ibid, S 4(1)(c). 58 ibid, S 4(1)(d). 59 ibid, S 4(1)(f). 60 ibid, S 4(1)(e). 61 EEC Directive 85/374. 62 European Commission v UK C-300/95 [1996] ECR I-6765.
  • 22. 22 what is important is whether the knowledge is accessible. In other words, the test is what scientific knowledge is present in the world and is accessible to the public. If that scientific knowledge is accessible, then a producer cannot rely on the development risk defence. This is well demonstrated by the case of Abouzaid v Mothercare, discussed earlier. Arguments Justifying the Products Liability Regime If we are to apply a regime of strict liability to services, we must first examine whether the strict liability regime in place for products is justified. McBride and Bagshaw put forward several arguments, which I am in agreement with. The first argument in favour of the CPA is that sometimes, it is very difficult for a consumer to prove that a defect in a product was due to the manufacturer’s negligence. As such, the strict liability regime can be justified as the ‘most efficient way of delivering compensation to all the claimants who should, in principle, be entitled to sue for compensation in negligence for the product-related harms they have suffered’.63 The second argument that can be made in favour of the CPA is the one made by George Fletcher where he argued that holding a defendant liable to pay compensation to a claimant was justified where the defendant’s actions exposed the claimant to a ‘non-reciprocal risk of harm’.64 Fletcher states that the fact that a claimant has been exposed to a risk of harm by the defendant that is not reciprocated by a risk of harm that the claimant exposes to the defendant means that it is fair and just that if that risk has materialised, then the defendant should bear the consequences. He described this as the ‘paradigm of reciprocity.’ It is easy to see how this argument can justify the products liability regime in the sense that, the risk of a product 63 McBride and Bagshaw, Tort Law (n 24) p.394. 64 George P. Fletcher,'Fairness And Utility In Tort Theory' (1972) 85 Harvard Law Review.
  • 23. 23 that a manufacturer has exposed to a consumer being defective is not reciprocated by any risk the producer exposes to the manufacturer. Greg Keating provides the third argument in favour of the CPA regime.65 He argues that ‘in the world of activities … the choice between strict liability and negligence is a choice between a grave disruption of security and a more modest disruption of liberty. Activity liberty [strict liability for harms that are regularly associated with a particular activity] strikes a more favourable balance between the competing claims of liberty and security than negligence liability does, because activity liability disrupts the liberty of injurers less than negligence impairs the security of victims’.66 Indeed, according to Coase, we must strike a balance between competing activities at stake to ensure costs are met in the most economically efficient manner.67 Finally, the fourth argument put forward by McBride and Bagshaw is one of deterrence, where they state that the existence of a strict liability regime encourages manufacturers to do all that is in their power to improve the safety of their products. The idea that is presented is that without a strict liability regime, producers and manufacturers are much less likely to ‘get away’ with producing defective or unsafe products than they would under a fault-based negligence regime.68 One of the reasons for an implementation of a strict liability regime for ‘defective products’ is that a key aspect of mass-production of products is that some of those products will 65 Gregory C. Keating, 'The Idea Of Fairness In The Law Of Enterprise Liability' (1997) 95 Michigan Law Review, 1256, p.1354. 66 ibid. 67 Coase, ‘Problem of Social Cost’ (n 4) 68 McBride and Bagshaw, Tort Law (n 24).
  • 24. 24 invariably be defective which will result in some sort of harm towards the consumer – a harm that the manufacturer can do nothing about. This was echoed in Justice Traynor’s views on strict liability69: the harm can sometimes be very catastrophic and cause a significant amount of damage to a number of different people. An obvious example would be pharmaceutical products where someone has a very sensitive or allergic reaction to taking a particular drug despite excessive and rigorous testing being implemented. Consequently, fault would be very difficult and costly to prove given that one would have to hire experts, go through each step of the process to see if everything within the manufacturer’s power was done to ensure that very few, if any, people would be likely to suffer from some harm arising. A key factor to look at when attempting to decide whether the move towards a strict liability regime for products was a good one is to look at the impact the CPA has had on litigation. Moving from a regime of negligence to one of strict liability has almost eliminated products liability litigation; one of the main reasons for this is because defendants do not feel it is worth the hassle to bring claims to the courts. As such, this can be seen as a very positive result for the tort law system, especially with the cutting down of tertiary costs. Indeed, that is one of the reasons why Calabresi proposed to replace the dominant paradigm of fault with simpler strict liability rules which place liability on the most appropriate actors (so, the cheapest cost avoiders). Calabresi said that assuming that the objective function of the tort system is the minimisation of the sum of the injury and injury avoidance costs associated with accidents (primary costs), risk-spreading costs (secondary costs) and administrative costs (tertiary costs), he suggested that the adoption of strict liability, targeted to specified activities, would achieve the goal of cost minimisation.70 This would suggest that there is 69 Escola v Coca-Cola Bottling (1944) 150 P2d 436. 70 Calabresi, 'Does The Fault System Optimally Control Primary Accident Costs?' (n 3).
  • 25. 25 something good and positive about the strict liability regime and the CPA. While there were only a minimal number of products liability cases and litigation prior to the Act being introduced, it is clear that the UK lacks the volumes of litigation present in the US or in other areas of tort. Before the Act was introduced, there was, on average, a products liability case every couple of years but now there have only been a very small handful of cases since the introduction of the Act and almost all of those cases came in the years immediately following the introduction of the Directive. It is also interesting to note that in most of the products liability litigation cases, the claimants won. When assessing the case for a strict liability regime for products, it is important to consider Justice Traynor’s opinion in perhaps the most famous of products liability cases: the American case of Escola v Coca-Cola Bottling71. Justice Traynor stated that: Public policy demands that responsibility be fixed wherever it will most effectively reduce the hazards to life and health inherent in defective products that reach the market. He goes on to state that manufacturers are better placed to ‘anticipate some hazards’ and thus are better prepared to handle the costs of injuries rather than consumers. Justice Traynor justified this by saying that if the manufacturer of products was made liable, they can pass on the cost of liability by ‘distribu[ting] among the public as a cost of doing business.’72 Thus, a producer can pass on the cost of liability to the price of the product he sells; therefore, the public, as a whole, pays and the cost of the accident is dispersed and dissipated. 71 (1944) 150 P2d 436. 72 ibid, at 440.
  • 26. 26 There are two different strands in the judgment of Escola – the first is focused on the model of wrongs and the participation or involvement ‘of the product in the market’ and the ‘responsibility for its reaching the market.’ Whilst the second idea is very much based on the model of costs which is focused on the person best-placed to avoid the accident and to deal with the costs that arise as a consequence from the accident. Consequently, to pose the question of whether there is a case for a regime of strict liability using the model of wrongs, one must ask two questions: firstly, whether there was a wrong and the defendant breached a standard of conduct and secondly what the duty of repair is. The discussion of whether there should be a strict or fault based liability regime is how we should phrase the proper ‘standard of conduct.’73 The standard of conduct that will result in strict liability is that manufacturers should not provide defective products. This is an obligation of result, as discussed at the beginning of the essay, and is enforced by the CPA. With products liability, we have a choice as to which standard to choose: either the standard of taking reasonable care or the standard of not supplying defective products full stop. Once again, the discussion returns to whether one views the model of wrongs or the model of costs as being the prevalent model to apply to tort law. Polinsky and Shavell were two professors that were more interested in the model of costs and the benefits and costs of having a products liability regime in place.74 Their main point was that inducing product safety through a products liability regime did not make much of a difference for a wide range of products. They had a further three main points to make about 73 For example, if we identify it as a standard of care as the courts did in Donoghue v Stevenson, manufacturers should take reasonable care when producing products. 74 Mitchell Polinsky and Steven Shavell, 'The Uneasy Case For Product Liability' (2010) 123 Harvard Law Review.
  • 27. 27 the products liability regime. Firstly, they conceded that the products liability regime leads to greater deterrence and enhances product safety. However they doubted whether a strict liability regime achieves that because of other regulations, which include government regulations and what they called ‘market forces’ already in place that were effective against products. Even without a products liability regime, if producers products were not sufficiently safe, their sales may fall if their products harm consumers. Thus, most products must frequently conform to safety regulations. Secondly, Polinsky and Shavell stated that whilst a products liability regime can ‘improve consumer purchase decisions by causing product prices to increase to reflect product risks’75, because of the litigation costs and other factors, products liability may ‘raise prices excessively and undesirably chill purchases’.76 77 The third issue was that producst liability is present to compensate victims of product-related accidents for their losses but that many claimants already had an insurance scheme that would have covered their losses. They go on to state that the ‘award of damages for pain and suffering tends to reduce the welfare of individuals because it effectively forces them to purchase insurance for a type of loss for which they ordinarily do not wish to be covered’.78 This is because very few people would purchase insurance against ‘other harms’, such as psychiatric injury, because people would not want to acquire insurance to cover a wide variety of potential harms and subsequent losses. Another issue they raised is the large administration costs in running a strict liability regime; thus, as a result, its use is often unwarranted, especially for widely sold and popular products. Indeed, they stated that ‘for 75 ibid, p.1438. 76 ibid, p.1459 - They label this the ‘price-signaling effect of product liability’. 77 ibid, p.1438. 78 ibid, p.1438.
  • 28. 28 each dollar that an accident victim receives in a settlement or judgment, it is reasonable to assume that a dollar of legal and administrative expenses is incurred’.79 One of the criticisms levelled at Polinsky & Shavell is that whist they may be correct in asserting that widely sold and popular products are subject to regulations and ‘market forces,’ Goldberg and Zipursky80 are critical in the way Polinsky and Shavell ‘vest inexplicable confidence in market incentives and a regulatory system with failings that are exasperating to critics across the political spectrum’.81 So, if a product is widely marketed, it is more likely that regulators will be interested in it so they will subject the product to a number of strict regulations. If it is more marketed, then it is more likely that a larger number of people will be informed about the product. As a result, strict liability may thus be more necessary in cases of less popular, more niche products. Another criticism they have that is ‘strikingly missing from [Polinsky and Shavell’s] entire picture is any mention of the basic principle that a person wrongfully injured by the sale of a dangerous product should be able to hold the manufacturer accountable for her injuries’.82 It is clear that, for Goldberg and Zipursky, the model of wrongs is important because the idea of a manufacturer causing injury to a consumer as a result of a defective product means that they should be held accountable for the wrong that they caused. Thus, the basic case for products liability law is ‘actually quite easy’ for the authors. 79 ibid, p.1470. 80 John. C. P Goldberg and Benjamin. C. Zipursky, 'The Easy Case For Products Liability Law: A Response To Professors Polinsky And Shavell' (2010) 123 Harvard Law Review. 81 ibid, p.1922. 82 ibid, p.1922.
  • 29. 29 Earlier, I posed the question that in order to consider whether the model of costs should be used to apply a regime of strict liability to services, we must consider who the cheapest cost avoider is. With the products liability regime, a model of costs was advocated due to producer expertise/lack of consumer knowledge, consumer reliance and impossibility of inspection, difficulty of proving negligence, enterprise responsibility for placing products into market, deterrence and the affordable risk distribution just discussed. Overall, it is submitted that the strict liability regime and the CPA have been a welcome introduction for products liability law and consequently, this has almost eliminated products liability litigation. Thus we must return to the question of whether a strict liability regime should also be applied to services. To answer that, one must examine who the cheapest cost avoider would be in the context of services. That is what the next section of the essay aims to do.
  • 30. 30 II Medical Malpractice Costs Before discussing the current fault-based regime in place for services, there are a few preliminary questions that have to be mentioned. Given that the CPA, and the courts previous willingness to be pro-consumer in the pre-CPA litigation, has effectively killed off product litigation today, the first question that must be posed is whether we would also want to achieve that with services, particularly with the medical profession. Given that one of the biggest concerns within the NHS is the significant costs of clinical negligence, this would appear to be a very key factor. Indeed, the Department of Health has estimated that over the past decade, ‘costs have risen by over 750% from £53 million in 1990 to approximately £450 million in 2001/2002’.83 More recently, in the year of 2013/14, the approximate cost of clinical negligence claims amounted to £1.2 billion, which is a further 167% rise.84 Whilst in the US, it is estimated to cost US$22 billion a year, representing 0.2% of the USA’s GDP.85 Indeed, the volume of clinical negligence has increased drastically – by as much as 1200% over the past 30 years.86 As such, the clinical negligence system costs the NHS hundreds of millions of pounds every year. The next question that must be proposed is whether there is anything different and special about services, compared with products. I will argue that there is no distinction between services and products; as such, this is one of the reasons why a strict liability regime should apply to services, particularly the medical profession. 83 Making Amends - Department of Health Consultation Paper (n 22). 84 NHS Litigation Authority Report And Accounts2013/14 (1st edn,2014) <http://www.nhsla.com/aboutus/Documents/NHS%20LA%20Annual%20Report%20and%20Account s%202013-14.pdf > accessed 15 April 2015. 85 Making Amends - Department of Health Consultation Paper (n 22). 86 Vivienne Harpwood, Medicine, Malpractice, And Misapprehensions (Routledge-Cavendish 2007).
  • 31. 31 Medical Malpractice There are many patients that will sometimes be left worse off after receiving medical treatment and may wish to bring an action in negligence. If the health care is provided in the private sector, then a patient will have a contract with their doctor and/or with the clinic or hospital where they received treatment. Thus, there is an implied contractual term that the doctor ‘will exercise reasonable care and skill’ which is ‘indistinguishable from the doctor’s duty of care in the tort of negligence.87 Furthermore, there are implied terms with contracts for private health care.88 If a patient is being treated in public healthcare and they suffer some sort of harm or loss, then the only avenue they can currently pursue is one in negligence. It is important to note that with healthcare services in particular, there is no guarantee that any treatment or surgery will work. Indeed as Lord Justice Neill said: I do not consider that a reasonable person would have expected a responsible medical man to be intending to give a guarantee. Medicine, though a highly skilled profession, is not, and is not generally regarded as being, an exact science. The reasonable man would have expected the defendant to exercise all the proper skill and care of a surgeon in that speciality he would not in my view have expected the defendant to give a guarantee of 100% success.89 As with all negligence cases, to bring a claim in negligence, one must establish that there was 87 Emily Jackson, Medical Law (3rd edn,Oxford University Press 2013) p.102. 88 Ss 4 & 9 of the Supply ofGoods and Services Act 1982 will hold that medical devices must be of satisfactory quality and fit for their purpose. 89 Thake v Maurice [1986] QB 644.
  • 32. 32 a duty of care owed to the claimant by the defendant90, the defendant breached that duty by failing to exercise reasonable care and that breach of duty caused the C’s injuries.91 In medical law, there is a well established ‘duty situation’ wherein a duty of care is imposed upon the doctor once they have assumed responsibility for the patient’s care. The standard of care expected of doctors is determined using the Bolam test92, as modified by Bolitho93. A doctor will not be found to have acted negligently if they have operated in accordance with a practice accepted as proper by a responsible body of opinion, provided that that opinion is capable of withstanding logical analysis.94 For causation, a claimant must prove that the breach of the duty of care caused their injuries. This may be especially difficult in clinical negligence cases because there may be at least two possible causes of the patient’s injury: the doctor’s actions and the patient’s pre-existing condition. Furthermore, where there are multiple causes, proving causation on the balance of probabilities is especially problematic. As Emily Jackson explains: The patient’s health may have deteriorated even if the care they received was non- negligent, which means that often what has been lost is the chance of being restored to health. The courts are then forced to speculate what might have happened if the doctor had not breached their duty of care.95 90 This will usually be the treating doctor and their employer (usually the NHS) will be vicariously liable. GPs are a special case and will be sued personally but they will have some sort of insurance in place. 91 And those injuries are not too remote. 92 As enunciated in Bolam v Friern Hospital Management Committee [1957] 2 All ER 118. 93 Bolitho v City and Hackney HA [1997] 4 All ER 771. 94 Jackson,‘Medical Law’ (n 81). 95 ibid, p.125.
  • 33. 33 This paper does not aim to go into a discussion of the complex rules of causation in medical negligence cases, so for the purposes of this essay, causation will be simplified to satisfy the standard ‘but-for’ test for causation.96 Furthermore, with the ‘loss-of-chance’ cases, referring to the judgements of Hotson97 and Fairchild98, the court must be satisfied that it is more likely than not that the claimant’s injuries would have been avoided if the doctor was not negligent in his actions. With regards to remoteness, the type of damage that the claimant suffers must be foreseeable, although its extent and the manner in which it occurred need not be.99 100 With regards to defences, it is generally assumed that contributory negligence will have a little role to play in clinical negligence cases because usually if something goes wrong with the doctor’s treatment of a patient, it is usually unlikely to be regarded as partly being the patient’s fault.101 Similarly, the defence of volenti non fit innjuria is extremely unlikely to apply in clinical negligence claims. Finally, to bring a claim to court, potential claimants have a three-year limitation period from the date of the injury, or from the date the patient realised that they might be able to sue.102 96 As enunciated in Barnett v Chelsea and Kensington Hospital Management Committee [1969] 1 QB 428. 97 Hotson v East Berkshire Area HA [1987] 2 All ER 909. 98 Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22; [2003] 1 AC 32. 99 Per The Wagon Mound No.2 [1967] 1 AC 617. 100 Remoteness will rarely be an issue in medical negligence cases given that the type of damage claimants will normally claim is some sort of physical injury and that’ll be an obviously foreseeable consequence of negligent medical care. 101 An example of a patient potentially being contributory negligent is if they discharge themselves from hospital early, against their doctors advice. 102 The limitation period is set by S 14 of the Limitation Act 1980 – the three year period can be extended at the court’s discretion, per S 33 if found to be necessary.
  • 34. 34 Problems Currently Found Within Clinical Negligence Whilst discussing the current problems found with the fault-based clinical negligence regime, this warning delivered by Lord Justice Denning should be borne in mind: It is so easy to be wise after the event and to condemn as negligence that which was only a misadventure. We ought always to be on our guard against it, especially in cases against hospitals and doctors. Medical science has conferred great benefits on mankind, but these benefits are attended by considerable risks. Every surgical operation is attended by risks. We cannot take the benefits without taking the risks. Every advance in techniques is also attended by risks. Doctors, like the rest of us, have to learn by experience; and experience often teaches in a hard way. Something goes wrong and shows up a weakness and then it is put right.103 Nevertheless, it is clear that there are many problems with the current clinical negligence system: it is very costly104, inefficient and claimants are seldom successful. Further, it doesn’t help doctors and the NHS to learn from previous mistakes and fosters a ‘blame culture’. Starting with the vast costs to the NHS, in 2013/14 the NHS Litigation Authority received an unprecedented number of 11,945 new negligence claims, which is up from 10,129 claims in 2012/13; whilst the NHSLA paid out almost £1.2 billion where almost 63% amounted to legal costs.105 Indeed, as Merry & McCall Smith explain: 103 Roe v Minister of Health [1954] 2 QB 66. 104 It costs the NHS millions of pounds each year. 105 NHS Litigation Authority Report 2013/14 (n 83).
  • 35. 35 [R]egardless of how deserving individual claimants’ cases might be, it must be acknowledged that diverting NHS funds to the payment of damages and lawyers’ fees reduces the amount of money available for patient care.106 Furthermore, John Harris has suggested that when assigning funds, the same rationing criteria that are present throughout the NHS should also apply to medical negligence victims rather than being given absolute priority.107 Another prevalent problem is the failure to provide remedies to injured patients, especially given that proving breach of duty and causation are very formidable obstacles. As a result, most patients who seek compensation end up receiving nothing.108 Moreover, the litigation process of bringing a claim is very stressful and will end in disappointment for claimants and even when claimants do receive compensation, many remain dissatisfied given that they expect an apology or a statement of reassurance that the same mistake will not happen again. Furthermore, some claimants are not even aware that they can bring a claim against a doctor in medical negligence; many decide that the hassle of pursuing a claim is not worth it given the small chance of receiving compensation.109 Indeed, according to the NHLA, 60-70% of 106 Alan Merry and Alexander McCall Smith, Errors, Medicine and The Law (Cambridge University Press 2001). 107 John Harris, 'The Injustice Of Compensation For Victims Of Medical Accidents' (1997) 314 BMJ. 108 NHS Litigation Authority - NHSLA Claims Factsheet (1st edn,2014) <http://www.nhsla.com/CurrentActivity/Documents/NHS%20LA%20Factsheet%203%20- %20claims%20information%202013-14.pdf> accessed 14 April 2015. 109 Linda Mulcahy, Disputing Doctors (Open University Press 2003).
  • 36. 36 claims do not proceed beyond the initial contact with a solicitor and 30% of claims are eventually abandoned by a claimant.110 There are many fears that the UK is moving towards a US-style ‘compensation culture’ where claimants are being encouraged, especially by Claims Management Companies, to pursue a clinical negligence claim despite the low chances of success. There are two immediate consequences to this: firstly this is a major drain on the NHS’ resources where the money being spent compensating victims could instead be better spent on improving medical facilities across the country and patient care. The second argument that is put forward is that the potential threat of litigation may result in doctors reverting to practising ‘defensive medicine’ wherein they choose the treatments that are the safest, legally, as opposed to seeing what is in the best interests of their patients. However, Baroness Hale doubts whether doctors really will revert to defensive medicine. She said that: [O]f course doctors and other health care professionals are not solely or even mainly, motivated by the fear of adverse legal consequences: they are motivated by their natural desire and their professional duty to do their best for their patients.111 Indeed even if there was a fear of doctors practising ‘defensive medicine’, Section 1 of the Compensation Act 2006 was in part directed at the problem. 110 'Department Of Health Full Regulatory Impact Assessment NHS Redress Act' (2006) <https://www.gov.uk/government/organisations/department-of-health> accessed 14 April 2015. 111 Gregg v Scott [2005] UKHL 2, at [217].
  • 37. 37 III Proposal to Introduce a Strict Liability Regime for Services Returning to the question that I had proposed with regards to whether the model of costs should be used to apply a regime of strict liability for services, what needs to be considered is who the cheapest cost avoider would be. Under the model of costs, the person who must bear the costs of a harm-causing accident is the cheapest cost avoider. Before assessing whether service providers are indeed the cheapest cost avoiders, I will begin by examining the reasons the courts have currently given as to why they refuse to extend applying a strict liability regime to services. The most commonly mentioned reason is that ‘no sale of goods is involved’.112 That is decidedly unhelpful because the courts are simply restating the obvious and are not really explaining why they feel strict liability should not be extended to services. Those that do indulge in offering some reasoning state that those who render services to consumers never issue their guarantees as to the results of those services. This is most commonly found in cases involving professional services, including the medical profession. Again, this reasoning has to be rejected because that is not what is being proposed. I have already discussed how it is generally accepted by most people that when they attain a service, by a professional or otherwise, they do not believe that the service provider is offering a guarantee on the results of that service. This is especially the case in the medical profession, where it would be counter-intuitive and daft to suggest that patients expect perfect results, especially in a highly complex and pressurised environment that modern health care is found in. 112 Michael Greenfield, 'Consumer Protection In Service Transactions - Implied Warranties And Strict Liability In Tort' [1974] Utah Law Review, 664. p.683.
  • 38. 38 Some of the courts’ further reasoning is based on the fact that there is a distinction between products and services – namely that with professional services, they are far more complex and uncertain of results113. One court elaborated even further to state that professional services are ‘experimental in nature and dependent on materials produced by others or on factors beyond the control of the professional.’114 Furthermore, in medical services cases in particular, courts have suggested that the social welfare need for readily available medical services is ample reason for rejecting applying a strict liability regime. One judge has stated that: The nature of the services, the utility of and the need for them, involving as they do, the health and even survival of many people, are so important to the general welfare as to outweigh in the policy scale any need for the imposition on dentists and doctors of the rules of strict liability in tort.115 Moreover, similar to the argument made in the UK that because of a fear of liability, doctors may practice ‘defensive medicine’, it has been suggested that imposition of a strict liability regime will result in new medical devices, techniques, treatments and medicines being discouraged.116 As with the first argument, these arguments presented are not convincing in 113 Case of Johnson v Sears,Roebuck & Co., 355 F. Supp. 1065, 1066-67 (E.D. Wis 1973) where it was stated that a doctor can only be expected to provide adequate treatment corresponding with the accepted knowledge of medical science – so, the equivalent of the Bolam test with the Bolitho gloss in the UK. 114 Broyles v. Brown Eng’r Co., 275 Ala. 35, 151 So. 2d 767 (1963) – a case talking of doctors, lawyers and architects whilst holding an engineer liable. 115 Newmark v Gimbel’s Inc., 54 N.J. 585, 597, 258 A.2d 697, 703 (1969). 116 Arthur Allen Leff, 'Medical Devices And ParamedicalPersonnel: A Preliminary Context For Emerging Problems' [1967] Faculty Scholarship Series
  • 39. 39 the slightest for a number of reasons. As Greenfield points out, ‘the production and sale of food and drugs, which are as essential as medical services, are [also] subject to [a] strict liability doctrine’.117 Also, it is not clear why there should be special treatment for services, especially doctors, simply because they provide a service which is so essential for social welfare. The only way that argument would carry some justification is if the introduction of a strict liability regime somehow resulted in doctors and medical professionals being unwilling to provide those same services either because they would be worried of a claim being brought against them or because their services suddenly see a vast spike in prices. Greenfield dismisses both arguments and I am in agreement with him because it is extremely doubtful as to whether either assumption would occur. I have already discussed and dismissed the claim that doctors would resort to practicing ‘defensive medicine’. With regards to the claim that services offered by the medical profession would suddenly increase in prices, that is also unlikely to happen because one only has to look at the products liability regime to see that an introduction of a strict liability regime does not necessarily entail that there will be a spike in prices by professionals offering their services. Arguments for an Extension of a Strict Liability Regime Many, if not all, of the arguments provided as justification for a strict liability regime for products also apply for services. In other words, just like a manufacturer of a product is the best placed and thus the cheapest cost avoider, under the model of costs, a service provider is also the best placed and cheapest cost avoider. The justifications given with regards to products liability are: that the producer has a greater expertise in their ability to inspect the <http://digitalcommons.law.yale.edu/fss_papers/2818/?utm_source=digitalcommons.law.yale.edu%2 Ffss_papers%2F2818&utm_medium=PDF&utm_campaign=PDFCoverPages >. 117 Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability in Tort’ (n 111) p.687
  • 40. 40 products and goods they produce for any defects compared with the consumer, the consumer relies on the producer given the impossibility of inspection for a consumer to carry out, enterprises and corporations are responsible for placing their products into the market, deterrence and giving an incentive to manufacturers to ensure they have safer, better products, affordable risk distribution amongst consumers compared to the overwhelming cost of harm to the claimant and the difficulties of proving negligence. The first argument – that a manufacturer or producer has the superior expertise and knowledge with regards to his products therefore, is better placed to determine if his goods are defective also applies to providers of services. A doctor or health care professional is far better placed than his patient to determine whether the service they are offering118 is not defective; if it were defective, the doctor has the greater ability to modify and change it. However, some courts have cited the defendant’s inability to discover a defect as a reason for not applying a strict liability regime. Nevertheless, it is submitted that even if that were the case, the defendant has a higher possibility of discovering the defect, in comparison with the consumer. Furthermore, it would be less expensive and cause less hassle for the provider of a service to examine the potential risk compared to the consumer. Using the earlier example of the impure blood containing hepatitis C in A v National Blood Authority, even if there were no possibility to screen the blood, the mere fact that the National Blood Authority were aware of the risk found in the blood and had the superior ability to screen the blood made them better placed to determine if there were defective goods. Secondly, a consumer’s reliance on the producer’s expertise is as important, if not more important, in the context of service transactions. Greenfield discusses how ‘sellers of most 118 An operation, treatment, check-up etc.
  • 41. 41 kinds of non-professional services advertise and otherwise promote their services’ which is designed “to encourage reliance on the skill and expertise of the advertiser”’.119 Moreover, he highlights that ‘since the rendition of services is usually tailored to the particular needs of the consumer, which he communicates to the seller, reliance on the seller is likely to be greater … and more justified’.120 Further he asserts that sellers of services hold themselves out as experts and thus ‘courts have looked to the consumer’s justifiable reliance on one who holds himself out as an expert as a reason for imposing liability for defective performance’.121 This would especially be the case in a medical context, where, if the patient is seeking private healthcare, he will invariably search for the best available doctor by consulting with advertisements, brochures and leaflets which will most likely highlight the doctor’s great reputation and expertise. Likewise with the public healthcare domain, the NHS is unlikely to hire doctors or medical practitioners that do not meet a certain qualified standard. The model of costs asserts that the person best placed should bear the responsibility of the costs that arise out of the harm and once again, the affordable risk distribution of the seller of products applies equally to a seller of services. Indeed, with regards to defective goods, public policy should demand that those who introduce their products onto the market that may result in harm to consumers should be the ones to carry the burden of the costs that arise. These costs can be treated as part of the costs of producing the product and can be offset by obtaining insurance against such liability. 119 Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability in Tort’ (n 111) p.690. 120 ibid, p.689. 121 ibid, pp.689-690.
  • 42. 42 A key factor that should be taken into consideration when assessing whether the provider of services should be the one to shoulder the cost is if they are capable of distributing the cost onto the consumers of those services. As such, the size of the enterprise will be important in determining the seller’s ability to distribute the costs. However, I disagree with the rationale behind the idea that a smaller enterprise or self-employed service provider is unable to pass on and distribute the costs onto his consumers, because even the self-employed service provider is able to increase the costs of his services. What might count against the self- employed is that they do not have as much capital, assets or resources compared with a big multinational enterprise.122 This might present more difficulties to deal with the potential scenario of consumers not employing the self-employed service provider because his new prices are extortionately expensive. Greenfield also points out that the critical fact is that ‘the seller’s ability to bear and distribute the loss is still far greater than the consumer’s ability’.123 Either way, this issue would also apply to a product manufacturer.124 There is, however, the potential for a difference to emerge between applying a strict liability regime to products and to services. With products, statistically speaking, ‘the number of injury-producing defects should increase in direct proportion to an increase in [the businesses’] volume’.125 Nonetheless, that may not necessarily be the case with regards to service providers because it is statistically plausible for the number of ‘defective’ service transactions not to be directly proportional to the size of the business. In other words, you could find a truly incompetent 122 Such as a manufacturer or retailer. 123 Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability in Tort’ (n 111), p.691. 124 Indeed, that is one of the main points of the Goldberg and Zipursky reply to professors Polinsky and Shavell. They argue that a strict liability regime for products is needed for the smaller, more niche products as they may not be as regulated as the bigger, more ‘important’ products that are produced by the bigger manufacturers. 125 Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability in Tort’ (n 111), p.692.
  • 43. 43 self-employed service provider who delivers repeated ‘defective’ services; as such it could adversely affect the sustainability of small enterprises. Moreover, just as with producers’ ability to distribute the risk of injuries and harm resulting from a defective product by procuring insurance, the service provider is also able to do likewise. Greenfield notes a possible consequence of increased reliance on insurance being that ‘the insurance companies may impose quality standards as prerequisites to the issuance of liability policies’.126 One of the consequences of insurance companies imposing quality standards is that there will be an increase in the quality and standard of the service. However, another potentially more adverse consequence would be that certain service providers would be unable to acquire insurance given the higher demands and subsequent expenses of meeting quality standards of a high threshold. One of the arguments against placing the burden of costs that may arise from injuries on service providers is that a lot of services are provided for ‘non-commercial’ or ‘non-profit’ reasons so, that is a sufficient reason not to impose a strict liability regime. One court in particular, has described hospitals as ‘bourns of mercy’ that employ doctors as ‘unselfish disciples of relief.’ That court goes on to say that: The argument that public policy demands that the manufacturer of food, the fabricator of machines, the dispenser of meals, - all of whom are self-seeking profit-making beneficiaries of the purchaser, should be bound by an implied warranty, reasonably cannot urge inclusion in such category a traditional institution of healing and mercy, because it shelves blood for transfusion purposes, where perhaps, such storage might be 126 ibid.
  • 44. 44 the difference between life and death, and all of which it furnishes at the cost of procuration, preservation, testing and administration, - for a few pieces of silver.127 Again, this is an argument that is unconvincing simply because of the fact that the majority of professionals providing services do not do so for charitable purposes. Whilst certain professionals, such as doctors, do seem to have an extra benefit of providing a service that offers great benefits to society by potentially saving lives, doctors still derive a financial benefit from their services. Even if one were to accept the argument that, because doctors are ‘unselfish disciples of relief’128 and thus no liability should be found outside of negligence, it is arguable whether doctors are the only professionals that offer their consumers a service that is deemed paramount for society. I would further the argument that professionals such as lawyers and engineers are just as important and society derives just as great a benefit from their services. As such, providers of medical services should not be subject to a differential treatment simply because they advance science and save people’s lives.129 Furthermore, even if a service provider or enterprise was deemed to be ‘non-profit’ in nature, that does not signify that it cannot bear the extra costs that might arise from an implementation of a strict liability regime; the service provider could then be able to re-distribute the added cost through the services it provides to its consumers. Another argument used to justify a strict liability regime is deterrence and providing incentives to manufacturers to ensure their products are to a higher standard with fewer 127 Dibblee v Dr. WH Groves Latter-Day Saints Hospital 12 Utah 2d 241 (1961) 364 P.2d 1085. 128 ibid. 129 Indeed, not all doctors do so either – we live in a world where there is an increasing number of services provided by healthcare professionals that is aimed at enhancing consumer’s welfare and improving their lifestyle rather than treating an illness or disease. The obvious example would be of cosmetic and plastic surgery.
  • 45. 45 defects. Once again, there is no reason why that argument should not also apply to services. The potential to being held strictly liable for a ‘defective’ service will logically mean that service providers will have greater incentives to ensure that the services they provide is of the highest quality and the number of ‘defective’ services is lowered. Likewise, the idea that enterprises should be responsible for placing products into the market can also apply to services. Referring back to the model of costs, just like a manufacturer of a product is the best placed and cheapest cost avoider to examine their products before placing them on the market, the same can be said in the context of services. Finally, with products liability law, another argument proposed is the difficulty with which a claimant can prove that the producer was negligent in supplying the defective product. In a sense, that would not apply to services because in the vast majority of cases, it would be clear if a service is ‘defective’; thus, the professional who had provided that service will be directly implicated. Furthermore, Greenfield advances the argument that ‘the policy of avoiding circuity of action also applies to litigation over defective services, but to a lesser extent than to litigation over defective products’.130 131 Thus, in a service transaction, rather than having numerous different parties involved in the transfer of the product, the only person that can 130 Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability in Tort’ (n 111) p.692. 131 The privity doctrine dictates that when a defective product injures a claimant, the claimant cannot directly sue the manufacturer in negligence. If the claimant purchased the product, he can bring a claim against the retailer who will then bring a claim against the supplier who eventually sues the manufacturer. The doctrine of strict liability abolishes the privity doctrine meaning that the injured claimant can claim against the manufacturer, supplier and retailer.
  • 46. 46 have a claim issued against is the service-provider himself. Accordingly, given that the consumer is in direct privity with the service provider, ‘no circuity of action results’.132 Consequences of Imposing a Strict Liability Regime Perhaps the argument that carries the most weight as to why courts have rejected an extension of strict liability to services is the consequences of increased prices and costs that service- providers will impose. There is a suggestion that increasing the prices of services (as a result of service providers distributing the cost of insurance onto consumers) will mean that many consumers cannot access services that are already expensive. Consequently, the cheapest cost avoider would be the consumer as opposed to the provider of services. As such, a regime for strict liability would not be justified by the model of costs. However, it is again submitted that the same issue is applicable to products liability and yet that has not stopped the imposition of a strict liability regime to products. Furthermore, I would cast significant doubt on the prospect of service prices rising so drastically that result in consumers not being able to afford them anymore Another consequence of imposing strict liability on services and the resulting increase in price to the consumer to purchase a service is a reduced competition market for services. If some enterprises and service providers cannot afford to increase the prices to their services, that may eliminate them from the market which would have the effect of reducing competition amongst service providers. This could potentially lead to a monopoly by certain enterprises that could, in theory, further raise prices for their services given the reduced competition. It could potentially also result in certain services not being catered for anymore 132 Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability in Tort’ (n 111) p.693.
  • 47. 47 if the service providers are unable to meet the increasing costs of conducting their businesses.133 Finally, there is the potential for litigation to substantially increase if a strict liability regime is introduced for services. Given the fact that one of the major reasons I have advocated moving away from a negligence based regime is due to the already substantial amounts of litigation present with clinical negligence cases, for example, then this would be a substantial block in the strict liability regime’s path. However, whilst in theory an increase in litigation is possible and plausible, I would question the likelihood of that occurring in practice. One may look at the amount of litigation in the UK since the implementation of the Consumer Protection Act to realise that its fears of substantial litigation do not necessarily follow. Rather, it is more likely that litigation will decrease given the increased potential for liability that service providers will incur. Returning to the issue of the large litigation and transactional costs involved with clinical negligence, a move to a strict liability regime cannot be any worse or less expensive. Ergo, the model of costs would advocate such a regime in place given that the serious litigation costs would decrease and the social costs, which Coase views as being the most important, increases. 133 ibid. p.695.
  • 48. 48 IV Strict Liability and its Application to Services The final part of the essay aims to propose how the law should implement a strict liability regime. Greenfield suggests that the ‘rendition of services has three components: analysis of the problem to ascertain its cause, selection or fabrication of a solution to the problem, and application of the solution’.134 A ‘defect’ may occur in any of the three components and a strict liability regime would apply to all three. Using the Restatement (Third) of Torts 402A as my guidance, the most critical issue is how one is able to define what a ‘defective service’ would entail. I propose that for a service provider to be found strictly liable, a ‘defect’ must be found in the service which consequently causes the consumer some sort of injury. To determine whether a service is defective, I suggest that the definition used in the CPA and the tripartite definition in the Restatement of Torts for products liability should also be used for services. As discussed in section one, under the CPA, a product is found to be defective if the safety of the product is not such as persons generally are entitled to expect; in other words, if it falls below the reasonable expectations of the consumer. In the same way that a reasonable consumer who purchases a product and uses it in the correct manner does not expect harm to occur to his person or property, the reasonable consumer who purchases a service will reasonably expect his person or property not to be injured. Similarly, just as a consumer who purchases a product expects it to perform in the manner intended, the same would also apply to services. 134 ibid, p.697.
  • 49. 49 It is important to note that with services, sometimes the consumer may have an expectation that is unattainable and if that were the case then failure to satisfy the consumer’s unattainable expectation does not render the service ‘defective.’ So, the ‘development risks’135 defence that applies to products liability law will have similar application here. Focusing on doctors, I will use a simple example that Greenfield also uses to explain his reasoning. It is well known and accepted that there is great uncertainty involved in medical healthcare and consequently, there are a greater number of variables to consider. Starting with the first component of services suggested earlier: analysing the problem to ascertain a cause. If a patient asks their doctor to diagnose an illness they have and the doctor is unable to do so because there is an insufficient amount of scientific knowledge found in the medical profession, the doctor cannot be held liable for failing to diagnose the illness or even erroneously diagnosing the patient’s illness. Consequently, if there was sufficient medical knowledge and information about that illness but the doctor still could not diagnose the illness136, then the patient’s expectations that they be correctly diagnosed is reasonable and thus the doctor would be held strictly liable. Of course, the doctor would also be able to recommend the patient to another healthcare professional if he is not sure of the particular illness that the patient has.137 The next component of services is selecting the solution to the problem. Adopting the doctrine of strict liability would impose liability on doctors for injuries caused as a result of selecting the wrong course of treatment. The question to be asked is what form of injury to the patient would have to occur for the course of treatment given by the doctor to be labelled ‘wrong’. There are two potential avenues: the first is that the patient’s health deteriorated 135 CPA 1987, S 4(1)(e). 136 Assuming that the patient is going to a specialised doctor if it is a particularly special illness. 137 Indeed, it is recommended that patients acquire numerous professional opinions.
  • 50. 50 even further when it should not have if the course of treatment chosen was the correct one; or, the doctor did not manage to cure his patient of the illness. Here, there is a potential slippery slope argument to be made. There will be many people, myself included, who will feel very hesitant towards imposing liability on a doctor for ‘failure to cure a disease.’ However, to counter that concern, I would return to the argument made earlier that imposing strict liability on services does not mean that service providers suddenly guarantee their consumers perfect results. Furthermore, if the patient had an illness that the doctor should have recognised and could have provided a course of treatment that will usually fully ‘cure’ the patient then there is no reason why the doctor should not be found strictly liable for failure to administer the right course of treatment. Again, this is because, if there is a known cure for the illness, then the patient’s expectation of being cured of that illness is perfectly reasonable. The patient’s expectation of being cured from an illness will not, however, be reasonable in the scenario that there is no known cure or the cure is untested or inaccessible to doctors. In that case, the doctor cannot be held to be strictly liable.138 Furthermore, there is a caveat present in that a doctor would not be held liable when there is no known cure for an illness, as long as the patient is fully informed on the matter.139 Without the doctor’s disclosure on the issue, then it would be reasonable for the patient to view the service provided as defective.140 138 An obvious example of an illness here would be the latter stages of cancer where,as of current scientific knowledge, there is no ‘cure’ to stage 4 cancer. Another example would be Tay-Sachs disease. 139 For more on Informed Consent, see Neil C Manson, Rethinking Informed Consent In Bioethics (Cambridge University Press 2007). 140 Greenfield, ‘Consumer Protection in Service Transactions – Implied Warranties and Strict Liability in Tort’ (n 111), p.700.
  • 51. 51 The third and final component, application of the solution by the doctor, is the most straightforward. A service provider will be held liable if they administer the wrong solution. A doctor giving his patient the wrong medication or injecting his patient with the wrong serum would be found strictly liable for any harm caused.
  • 52. 52 Conclusion Throughout this essay, I found that the only situation where the model of wrongs can impose liability on a service provider is if they are negligent in providing that service. I have also explained how the model of costs would advocate an implementation of a strict liability regime to services as the law has currently implemented for products liability. The model of costs, which informs us that the most important aspect is the costs and benefits of allocation, states that the aim of tort law is to minimise the social cost of preventing and dealing with accidents; consequently, the person who is best placed to deal with the costs of an accident should be the person to shoulder the responsibility. I used the current products liability regime that is implemented in the UK to demonstrate how, under the model of costs, a strict liability regime is justified because producers and manufacturers, rather than the consumers, are best placed to deal with any defective products that may be placed on the market. I then highlighted how products and services are very similar and how the products liability regime and a potential services strict liability regime cannot really be distinguished. By using an amalgamation, of both the American tripartite and CPA definitions of ‘defect’, we can implement a similar definition for ‘defective services’. The three components that are used when discussing the manufacturing of goods (analysing the target market and the consumer’s needs, designing the product and manufacturing or producing the product) can also easily be applied to services. Given that under the American Restatement (Third) of Torts, a producer can be found strictly liable at either of the latter two stages, there is no rational reasoning not to apply the same logic to services as well. Thus, if the reasoning behind holding manufacturers strictly liable for any defective products they may introduce onto the market is sound and accepted, there is no reason not to apply the
  • 53. 53 same reasoning to service-providers and anyone found to be providing a ‘defective’ service, should be found strictly liable.
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  • 57. 57 EEC Council Directive 85/374 Supply of Goods and Services Act 1982 Limitation Act 1980 Online Resources Coleman, J. (2003). Theories of Tort Law. [online] Plato.stanford.edu. Available at: http://plato.stanford.edu/entries/tort-theories/ [Accessed 13 Apr. 2015]. Coleman J, 'Theories Of Tort Law' (Plato.stanford.edu, 2003) <http://plato.stanford.edu/entries/tort-theories/> accessed 13 April 2015 'Department Of Health Full Regulatory Impact Assessment NHS Redress Act' (2006) <https://www.gov.uk/government/organisations/department-of-health> accessed 14 April 2015 Leff A, 'Medical Devices And Paramedical Personnel: A Preliminary Context For Emerging Problems' [1967] Faculty Scholarship Series <http://digitalcommons.law.yale.edu/fss_papers/2818/?utm_source=digitalcommons.law.yale .edu%2Ffss_papers%2F2818&utm_medium=PDF&utm_campaign=PDFCoverPages> Making Amends - A Consultation Paper Setting Out Proposals For Reforming The Approach To Clinical Negligence In The NHS (1st edn, 2003) <http://webarchive.nationalarchives.gov.uk/20130107105354/http:/www.dh.gov.uk/prod_con sum_dh/groups/dh_digitalassets/@dh/@en/documents/digitalasset/dh_4060945.pdf> accessed 13 April 2015 NHS Litigation Authority - NHSLA Claims Factsheet (1st edn, 2014) <http://www.nhsla.com/CurrentActivity/Documents/NHS%20LA%20Factsheet%203%20- %20claims%20information%202013-14.pdf> accessed 14 April 2015 NHS Litigation Authority Report And Accounts 2013/14 (1st edn, 2014) <http://www.nhsla.com/aboutus/Documents/NHS%20LA%20Annual%20Report%20and%20 Accounts%202013-14.pdf> accessed 15 April 2015 Other Resources American Law Institute (1998) – Restatement (Third) of Torts: Products Liability