D. Summers Chap 13 Product Liability Slides

Product Liability
Chapter 13
Product Liability
 Lawsuit
 a civil suit seeking money damages for injuries to
either a person or property or both.
 Plaintiffs
 the injured parties who file suit in a court of law.
 Defendants
 the person or company against who a claim or suit
is filed.
Quality, 5th ed. © 2010 Pearson Higher Education,

Donna C. S. Summers Upper Saddle River, NJ 07458. • All Rights Reserved.
2
Product Liability
 Negligence
 Negligence occurs when the person manufacturing the
product or providing the service has been careless or
unreasonable.
 Focus on the conduct of the manufacturer
 The injured party must prove that the defendant failed to exercise
due care in the creation of the product or provision of the service.
 Negligence cases place the burden on the plaintiff. It is the
plaintiff’s responsibility to show that the defendant’s conduct was
not what it should have been.

3
Product Liability
 Privity
 A suit cannot be filed unless a contract (an
agreement) exists between the parties of the suit.
 Privity is the legal term for a close, mutual, or

successive relationship to the same right of property
or the power to enforce a promise or warranty. It is
an important concept in contract law.

4
Product Liability
 Strict Liability
 A manufacturer who makes and sells a defective
product has committed a fault. A product is
considered defectively made if it has a defect that
causes it to be unreasonably dangerous and the
defect is the reason for the injury.
 Strict liability, sometimes called absolute liability,
is the legal responsibility for damages, or injury,
even if the person found strictly liable was not at
fault or negligent.
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Product Liability
 Contributory negligence
 Through their own behavior, the person contributed
to the accident or injury.
 Contributory negligence is a term used to describe the actions of an
injured individual who may have also contributed or caused his/her
own injury. For instance, if you are hit by a car while crossing the
street, but you failed to look before crossing, your careless actions
will be taken into consideration in a civil court setting.
 contributory negligence is evaluated based off the “standard of care”
provision. The standard of care clause in contributory negligence is
the same as traditional or ordinary negligence: that which a
reasonable individual would have done under similar circumstances.

6
Product Liability
What’s the difference between warranty and guarantee?
 A warranty is “a promise or guarantee given.” A warranty is usually a
written guarantee (More like insurance policy) for a product, and it holds the
maker of the product responsible to repair or replace a defective product or
its parts. It is only used as a noun.
 So, what’s a guarantee? Basically, it’s the promise included in the formal
(and legal) warranty.
 A warranty provides a promise from one party to the other that certain
conditions, such as the quality or life span of a product, will be met. If the
product doesn’t meet the conditions of the warranty, it can usually be
returned, repaired or replaced. If a merchant guarantees a feature of a
product, or even your satisfaction with it, the same holds true.
 The difference between a warranty and a guarantee is largely a question of
word choice.

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Guarantees
A guarantee is an agreement from the manufacturer confirming that they will repair or replace an item if
something goes wrong within a certain amount of time after you buy it.
Household products like appliances and furniture often come with a guarantee.
A guarantee gives you additional protection and strengthens your consumer rights. The guarantee usually
applies to the item for a specific time after you purchase it.
Guarantees can also apply to services, for example, installation and repair services in your home can have a
guarantee.
Warranties
When you are buying a product, the business may ask if you would like to buy a warranty. This is like buying an
insurance policy – it covers the product beyond the manufacturer’s guarantee period.
The idea of a warranty is that you won’t have to pay for repairs if the item breaks or becomes faulty within the
warranty period.
Before you agree to a warranty, remember:

The salesperson may be receiving commission for each warranty sold. It is completely optional and can be
expensive, so do not feel pressurised into taking one.
Consider the cost of replacing the faulty item and compare this to the cost of the warranty. Replacing the item
may cost less than the warranty.
Guarantees and warranties are legally binding on the business – they are enforceable through the courts if
necessary.
And remember also that you still have your consumer rights if something goes wrong, regardless of any
guarantee or warranty.
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Product Liability
Warranties
• What is covered? Not covered?
• When does the coverage begin?
• How long does the coverage last?
• What will the company do in the event of problems?
• How and where can the consumer get warranty
service?
• Are any state laws applicable?

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Product Liability
 Expressed Warranty - a seller's promise or guarantee

that a buyer relies on when they purchase an item.
 Part of the terms and conditions of the sale.
 An express warranty can take several different forms, whether spoken or written, and is basically a
guarantee that the product will meet a certain level of quality and reliability. If the product fails in
this regard, the manufacturer will fix or replace the product for no additional charge. Many such
warranties are printed on a product's packaging or made available as an option.
 A verbal express warranty may be as simple as a car dealer telling a customer, "I guarantee that
this engine will last another 100,000 miles." If the car fails to live up to this claim, the buyer may
take it up with the seller (although proving the existence of a verbal warranty is very difficult).
 Other warranties may be expressed in writing but do not necessarily look like traditional
warranties. For example, a light bulb manufacturer prints the words "lasts 15,000 hours" on its
packaging. The words "guaranteed" or "warranty" do not appear, but this claim nevertheless is an
express warranty.

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Product Liability
 Implied Warranty
 Warranty is implies by law rather than by the seller.
 Beware of the dangers of deceptive advertising and marketing
 Most consumer purchases are covered by an implied warranty of
merchantability, which means it is guaranteed to work as claimed. For
instance, a vacuum cleaner that does not create enough suction to clean
an average floor is in breach of the implied warranty of merchantability.
 Merchantability criteria - the goods must reasonably conform to an ordinary
buyer's expectations,
 They must conform to the standards of the trade as applicable to the contract for sale.
 They must be fit for the purposes such goods are ordinarily used, even if the buyer ordered
them for use otherwise.
 They must be uniform as to quality and quantity, within tolerances of the contract for sale.
 They must be packaged and labeled per the contract for sale.
 They must meet the specifications on the package labels, even if not so specified by the
contract for sale.
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Product Liability
 Liability Loss Control Programs

 Many manufacturers profess to have sound quality
programs and effort in place, but few have the
knowledge of how to take it to the level of being an
effective product liability prevention.

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Product Liability
 Quality Programs should have the following key elements:
 Policy statements
 Design reviews and engineering drawing control
 Product safety team review
 Reliability testing
 Clear selection methods for subcontractors and critical suppliers
 Clear wording on purchase orders/customer communications
 Records retention

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Product Liability

 Product Design and Development
 Design to remove unsafe aspects
 Guard against unsafe use
 Provide product warnings and instructions
 Design to standards
 Conduct design review
 Advertise and market wisely

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Product Liability

 Quality Assurance
 product liability must embrace design, marketing,
manufacturing, service provision, packaging, shipping,

and service.
 A review of the product or service should examine it to
determine the likelihood of hazards and determine its

reliability.

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Product Liability
 Quality system components
 Documented work method policies, procedures, and
processes
 Documented production policies, procedures, and processes
 Documented testing policies, procedures, and processes
 Design review policies and procedures
 Hazard analysis procedures
 An effective reliability testing program
 Documented compliance to government standards

16
Product Liability
 Quality system components

 An effective engineering change order program
 An effective supplier certification and selection
program
 Documented inspection policies and procedures
 A documented recall program
 Documented customer input and responses
 Education

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Product Liability
 Real Tools for Real Life example

 Using Quality Assurance Concepts to Reduce
Product Liability Risk

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Product Liability - CPA
According to South African law, manufacturers, retailers, distributors and
suppliers can be held liable for damages caused by defective or
hazardous products.
The Consumer Protection Act of 2008 was introduced to protect South

African consumers from manufacture flaws or defects in goods, whether
locally made or imported.
The Act designates clear solutions for those injured by defective

products. As a result of the Act, the consumer is no longer responsible
for proving fault or negligence in a product liability claim.
The entire supply chain, from manufacturer to retailer, is bound by law

to ensure that all products are safe for their intended uses.

19
Product Liability
Product Liability – Claims & Compensation
Have you been injured?

If you suffer an injury due to a defective product, you may be able to claim damages such
as:
•Current medical expenses due to treatment required for physical or
psychological damages suffered as a result of the defective product
•Future medical expenses and hospital costs should you need prolonged medical
treatment or follow up treatment, such as physical therapy or therapy
•Current and future loss of earnings or support. If the damages suffered are
severe enough to impede your ability to earn an income, or maintain your livelihood,
you may be awarded compensation equal to what is deemed adequate.
•General damages for 'pain and suffering' caused by the injuries. This includes
any psychological trauma you have suffered as a result of the defective product.
•Legal expenses involved in pursuing the case. If your claim is successful, the
Judge may rule that the Defendant must cover the costs of your legal representation.

20
Product Liability
 Product Recalls
 What is the utility of the product?
 What is the nature of the injury that the product might
cause?
 What is society’s need for the product?
 Who is exposed to the dangerous aspect of the product?
 What is the risk of injury associated with using the product?
 Are other, safer products available?
 What other information is available about the product or the
customers who use it?

21
Product Liability
 The Suit Process and Participants

 The Plaintiff’s actions
 When accidents occur, attorneys for plaintiffs
immediately learn what state of the art or product design
standards should apply to the product in question.

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Product Liability

 They then determine whether or not the manufacturer
deviated from any of these known standards and can thus
be viewed as having been negligent for putting an unsafe
product on the market.

23
Product Liability

 Files a lawsuit that alleges that the provider of a
product or service is guilty of breach of warranty
and negligence as well as being strictly liable.
 The plaintiffs are required to show that the product
was defective or unreasonably dangerous, that the
defect was the proximate cause of harm and that the
defect was in the product when it left the
manufacturer.

24
Product Liability

 In strict liability cases, it does not matter if the injured

party acted in a careless and unreasonable manner, strict
liability focuses on the product and its quality.
 For warranty cases, the plaintiff must show that the
product was not fit for the purposes for which it was
advertised.

25
Product Liability

 Opposing attorneys expect to see the following:
 A fully documented system of control procedures.
 A procedure for holding formal design reviews on new products
and documenting those reviews.
 Procedures or policies to assure compliance with any standards
that could apply to the manufacturer’s product.

26
Product Liability

 A system to fully document the result of hazards analysis on a
new product.
 Procedures for conducting reliability tests on new products and
for documenting results.

27
Product Liability
 An effective engineering and blueprint control program.
 A sound program for the selection of new suppliers.
 A thorough receiving inspection program.
 Procedures and processes for the inspection and testing of the
product during each phase of production, and records to prove
inspection occurred.
 Documentation of customer complaints about products
 A recall program that is used when deemed necessary.

28
Product Liability

 The Defendant’s actions
 The manufacturer must be able to prove to the court that
its product is safe and reliable by design.
 The manufacturer must be able to prove that every
reasonable effort was made to ensure that the product
was safe and reliable during development and
production.

29
Product Liability

 The defendant must establish that the product or service
provided is not defective or unreasonably dangerous.
 The defendant must prove that no defect existed in the
product at the time of manufacture or when the service
was provided.

30
Product Liability

 The defendant’s actions
 The defendant must show that the product or service was
not the actual cause of the accident or injury.
 Did the plaintiff exhibit bad judgment?
 Did the plaintiff improperly use the product?
 Did the plaintiff improperly maintain the product?
 Did the plaintiff change the product after its manufacture?

31
Product Liability

 Most importantly they must project the image of concern
and caring to the court because the opponent will most
likely be presenting just the opposite perception.

32
Product Liability
 Must be able to show:
 What efforts were made in the design, testing, and introduction
of this product to ensure that the product was state-of-the-art,
reliable, and safe for the intended user?
 What types of industry standards did your company comply
with during design and manufacturing?

 What types of reviews and inspections took place on the
product and what were the results?

 Documentation is key!

33
Product Liability

 Having a documented comprehensive quality program in
place is only half the story. Being able to prove that it is
being followed is the other half!

34
Product Liability

 The court’s actions
 The courts will consider the defective aspect of the
product or service.
 The courts will consider other designs of similar
products.
 The courts will consider the public’s knowledge of the
product’s dangerous aspects.
 The courts will consider the probability of an event
occurring.

35
Product Liability
 The court’s actions
 The courts will consider the adequacy of warnings and
instructions.
 The court will consider:
 Would a reasonable company market the product or service if
they knew of the defect?
 Is the product or service more dangerous than a consumer could
contemplate?
 Is the danger open and obvious?
 Would a reasonable consumer with ordinary knowledge of a
product or service understand its dangers?

36
Product Liability
 The expert witness
 Expert witnesses are chosen to inform the court
about aspects of the accident, injury, or product.
 Expert witnesses must be technically competent in
their field as evidenced by their degrees, years of
experience, and professional activities.
 Expert witnesses must be above reproach in terms of
their behavior and credentials.
 Expert witnesses must be able to communicate in a
common language with the judge and jury.
37

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Product Liability

Quality, 5th ed. © 2010 Pearson Higher Education,

Quality, 5th ed. © 2010 Pearson Higher Education,

 Privity is the legal term for a close, mutual, or

Quality, 5th ed. © 2010 Pearson Higher Education,

Quality, 5th ed. © 2010 Pearson Higher Education,

Quality, 5th ed. © 2010 Pearson Higher Education,

Before you agree to a warranty, remember:

Quality, 5th ed. © 2010 Pearson Higher Education,

 Expressed Warranty - a seller's promise or guarantee

Quality, 5th ed. © 2010 Pearson Higher Education,

 Liability Loss Control Programs

Quality, 5th ed. © 2010 Pearson Higher Education,

Quality, 5th ed. © 2010 Pearson Higher Education,

 Liability Loss Control Programs

 Guard against unsafe use

 Provide product warnings and instructions

 Conduct design review

 Advertise and market wisely

Quality, 5th ed. © 2010 Pearson Higher Education,

 Liability Loss Control Programs

manufacturing, service provision, packaging, shipping,

determine the likelihood of hazards and determine its

Quality, 5th ed. © 2010 Pearson Higher Education,

Quality, 5th ed. © 2010 Pearson Higher Education,

 Quality system components

Quality, 5th ed. © 2010 Pearson Higher Education,

 Real Tools for Real Life example

Quality, 5th ed. © 2010 Pearson Higher Education,

The Consumer Protection Act of 2008 was introduced to protect South

The Act designates clear solutions for those injured by defective

The entire supply chain, from manufacturer to retailer, is bound by law

Quality, 5th ed. © 2010 Pearson Higher Education,

Have you been injured?

Quality, 5th ed. © 2010 Pearson Higher Education,

Quality, 5th ed. © 2010 Pearson Higher Education,

 The Suit Process and Participants

Quality, 5th ed. © 2010 Pearson Higher Education,

 The Suit Process and Participants

Quality, 5th ed. © 2010 Pearson Higher Education,

 The Suit Process and Participants

Quality, 5th ed. © 2010 Pearson Higher Education,

 The Suit Process and Participants

 In strict liability cases, it does not matter if the injured

Quality, 5th ed. © 2010 Pearson Higher Education,

 The Suit Process and Participants

Quality, 5th ed. © 2010 Pearson Higher Education,

 The Suit Process and Participants

Quality, 5th ed. © 2010 Pearson Higher Education,

Quality, 5th ed. © 2010 Pearson Higher Education,

 The Suit Process and Participants

Quality, 5th ed. © 2010 Pearson Higher Education,

 The Suit Process and Participants

Quality, 5th ed. © 2010 Pearson Higher Education,

 The Suit Process and Participants

Quality, 5th ed. © 2010 Pearson Higher Education,

 The Suit Process and Participants

Quality, 5th ed. © 2010 Pearson Higher Education,

with during design and manufacturing?

product and what were the results?

Quality, 5th ed. © 2010 Pearson Higher Education,

 The Suit Process and Participants

Quality, 5th ed. © 2010 Pearson Higher Education,