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Published : July 07, 2013 | Author : surath
Category : Company Law | Total Views : 3779 | Rating :

I am currently pursuing 5 yr integrated BA LLB course at KIIT School of Law, Bhubaneswar, Odisha.

Manufacturers Liability - Case Developments in UK, USA and India

The Types of Defects and Liability of Manufacturers
Product Liability Law (Defective Products Law) falls under personal injury/tort law. It refers to the claims against any parties along the chain of manufacture (designers, manufacturers, distributors and retailers) of products which have defects that harm consumers causing injury or loss. Most defective products belong in one of three categories. These categories are:

1. Design defect – This occurs when the basic design of a product is inherently flawed--recognized easily because they usually affect all of the products in a line, rather than just some of them.

2.  Manufacturing defect – This occurs when a product is designed well, but someone makes an error while constructing it. One example is an electrical product that has been built with faulty wiring. Unlike design defects, manufacturing defects may only affect some of the items in a line.

3. Marketing defect – This occurs when a defect lies not with the product, but with the way it is sold, i.e. labeling of products, insufficient instructions or the failure to warn consumers of a product’s hidden dangers . For example, a children’s toy with an incorrect age recommendation on its packaging has a marketing defect.

The Earlier Scenario
Earlier the entire concept of manufacturer’s liability was very restricted. In England and the USA, in the early and middle 19th century, it was generally held that a duty of care was only owed where a contract existed between two parties. Winterbottom v. Wright [1842] , an English case, set the stage for early U.S. law upholding the privity requirement. In that case, a coach company contracted with the Postmaster General to provide coaches for the mail service and to take responsibility for the maintenance of the coaches. The plaintiff, hired by the Postmaster General to drive the coach and deliver the mail, was subsequently injured when the coach collapsed as a result of poor maintenance. The plaintiff sued the coach company. The court held that the driver could not recover from the coach company because the plaintiff was not a party to the contract for maintenance between the coach company and the Postmaster General. Until the early 20th Century, courts in the UK had been ruling with respect to the parties to the contract and not an outsider.

With the inception of the concept of the ‘neighbour’ in the cause célèbre Donoghue v. Stevenson , the rights of the injured party(s), though not contractually related, received recognition. In this case, Judge Atkins explained the concept of neighbour citing the reference from the parable of the Good Samaritan. The speech of Lord Atkin is the cynosure of this case which basically states that “ ‘persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions that are called in question’...‘a manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination, and with knowledge that the absence of reasonable care in the preparation or putting up of products will result in an injury to the consumer's life or property, owes a duty to the consumer to take that reasonable care.’ The case whose importance was not more recognized was MacPherson v. Buick Motor Company [1916], wherein, Judge Cardozo, in doing away with the privity concept, stated that, duty of care extended to ultimate consumers under two necessary criteria: first, the nature of the product must be such that it is likely to place the life and limb of a person in danger if negligently made. This knowledge of danger must be probable, not merely possible. Second, there must be knowledge that in usual course of events, the danger will be shared by people other than the buyer. The court in Donoghue had referred to the above mentioned case which, in many respects, is a landmark case that established duty of care beyond the limit of contractual obligations.

The Present Scenario
Case laws have progressed on the lines of holding the manufacturer liable for negligence in the event of an injury sustained by the ultimate consumer due to a design or a manufacturing defect. In the famous Liebeck v. McDonalds Restaurant case, the plaintiff sustained third-degree burns when the coffee, which was at 180 degrees Fahrenheit (which could cause such burns within a fraction of a second), spilled on her lap. The quality manager had confessed of negligence in not reviewing the safety ramification at such an elevated temperature even though it was necessary in order to retain the characteristic taste. The Court found for the plaintiff and ordered McDonalds to pay compensation.

It is incumbent upon the manufacturer to inspect their products before marketing them as they are in the best position to do so. The first inkling of a new standard for manufacturers, distributors, and sellers was espoused by Justice Traynor in a concurring opinion in Escola v. Coca Cola Bottling Co . In that case, a waitress was injured when a soda bottle exploded in her hand. Justice Traynor asserted that public policy demanded recovery for the plaintiff even if negligence could not be proven because the manufacturer was in the best position to insure against the damage. This position was based on the theory that the consumer does not have the same opportunity to inspect products, the same knowledge to recognize dangers, or the ability to spread the cost of such dangers. This idea of liability imposed without fault became known as “strict liability”.

The laws relating to product liability, in India, have been constantly evolving, by way of judicial interpretations and amendments, to become one of the most important socio-economic legislations for the protection of consumers. The enactment of the Consumer Protection Act, 1986 is ample proof of the fact that rights of the consumers are being given paramount importance. The courts have taken a pro-consumer approach in awarding compensation and damages which are more punitive than compensatory in nature. In Wheels World vs. Pradeep Kumar Khurana , the complainant, a doctor by profession, complained to the respondent about deficiency in service in not repairing, free of charge, a technical fault, which occurred during warranty period, in his new Montana car and then not delivering the same for a period of 4 years. The Court awarded damages to the plaintiff including the deposit of Rs. 50,000/- by the respondent for stay of imprisonment. Product liability in India also imposes penal liability in the event of non-compliance with acts such as the Food Adulteration Act, 1954, the Indian Penalty Code, 1860 etc. These acts are in addition and not in derogation of any laws which implies that a penal liability can also be initiated along with civil liability. For example, the provisions of Indian Penal Code (IPC), in respect of product liability, are attracted when the element of cheating and fraud can be attributed to the defects as discussed earlier.

Product liability law is fast developing in India owing to the pace of globalization. It is incumbent upon legislation to do justice to the bona fide consumers by providing them with the right to be informed and to complain in the event of the sale of defective products.

Authors contact info - articles The  author can be reached at: surath@legalserviceindia.com

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