This is a term given to a supplier’s or manufacturer’s liability if it supplies defective products that cause the purchaser or the user loss, damage, injury or even death.
A product is deemed to be defective “… if the safety of the product is not such as persons are generally entitled to expect.”
There are three main ways in which the manufacturer/supplier is liable and different rules apply to each. The purchaser or user can claim against the manufacturer/supplier under:
The Sale of Goods Act
The purchaser can claim against the supplier for losses or damages due to the defective product.
A claim can only be made by the purchaser and can only be made against the supplier. This is under the “privity of contract rule” which requires that only those parties (involved) in the contract can make a claim ie the purchaser and the supplier.
The manufacturer cannot be sued unless the goods were purchased directly from it. So, for example, if the goods were purchased from an agent or distributor, then the claim must be made against the agent or distributor.
The supplier may be sued for damages caused by a sub-contractor where the contract contains an ‘ancillary service’ ie the service is being provided by a sub-contractor.
Negligence (Tort of Negligence)
Negligence means that there has been a failure to take reasonable care, however, even if reasonable care has been taken, a product may still be dangerous.
Anyone, ie the purchaser or the user harmed as a result of a defective product, can claim against the manufacturer (note, not the supplier, unless it is also the manufacturer).
There must be proof that the manufacturer (or one of its employees) was negligent.
If the negligence has been caused by a sub-contractor,
- The purchaser or the user can only sue for negligence. This is under the “privity of contract rule” which requires that only those parties (involved) in the contract can make a claim against it ie the purchaser and the supplier.
- The purchaser or the user can also sue the main provider (or manufacturer) for negligence for its choice of sub-contractor.
Consumer Protection Act
The Consumer Protection Act relates, in the main, to consumer contracts, however it may be used in business contracts.
Under the Act anyone can claim against the manufacturer, irrespective of whether it was negligence.
Remember, if a supplier (or a manufacturer) sells goods or services under an exclusion clause, it must comply with the requirements of the Unfair Contract Terms Act ie the supplier (or manufacturer) cannot exclude its liability in terms of death, personal injury or damages caused by negligence.
Note: problems can arise, in legal terms, where a member of staff purchases an item that is then brought into an organisation and used. If that item, subsequently, turns out to be defective and a claim for damages should arise, the courts will first have to determine the parties to the contract ie the individual who made the purchase or the organisation. The available remedies differ for private consumer contracts and commercial contracts. Therefore, to help avoid potential problems products to be used by and within an organisation should be purchased under its normal procurement procedures.
Should product liability problems arise you should seek advice from your Head of Procurement.