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Learn about the concept of product liability, where those who make products available to the public are held responsible for any injuries caused by those products. This update covers the history of product liability laws and their application in different countries. Gain insights into who is liable, the definition of defects, and the consequences of defective products. Understand the duties of the supply chain to provide safe and quality goods.
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Product liability • is the area of law in which those who make products available to the public are held responsible for any injuries those products cause. 2016
1 Introduction to Product Liability Code of Hammurabi 18th Century BC If a builder build a house for someone and complete it, he shall give him a fee of two shekels in money for each sar of surface. If a builder builds a house for a man, and has not made his work sound, and the house he built has fallen and caused the death of its owner, that builder shall be put to death. If it is the owner’s son that is killed, the builder’s son shall be put to death. If it is the slave of the owner that is killed, the builder shall pay slave for slave to the owner of the house.
USA – strict liability since 1968 (California Supreme Court Greenman v Yuba Power Products) • EU – strict liability since 1985. Followed by Brasil, Peru and Australia • India – since 1986 • Japan – since 1994 (strict product liability law similar to EU) • China – since approx. 2000 • South Africa - since 2010/2011 Consumer Protection Act of 2008
Strict Product Liability introduced by legislation – alters common law situation. Strict Product Liability: • Anyone in the supply chain (amplified definititon of manufacturer) • can be liable to the victim (amplified definition of consumer) • for injury caused by a defective product (amplified definition of defect) • without the victim being obliged to prove fault.
Who is Liable? • CPA 61. Liability for damage caused by goods. • (1) Except to the extent contemplated in subsection (4), the producer or importer, distributor or retailer of any goods is liable for any harm, as described in subsection (5), caused wholly or partly as a consequence • of … • (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. • (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several. (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several. (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several.
CPA 53 Definition of “defect”: • “defect” means— • any material imperfection in the manufacture of the goods or components, or in performance of the services, that renders the goods or results of the service less acceptable than persons generally would be reasonably entitled to expect in the circumstances; or • (ii) any characteristic of the goods or components that renders the goods or components less useful, practicable or safe than persons generally would be reasonably entitled to expect in the circumstances; (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several. (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several.
“Consequences” of defective products Non-legal consequences: e.g. loss of reputation, loss of market share Legal consequences Consequences according to civil law Criminal penalties Contractual liability (liability for defects) Non-contractual liability Warranty Liability for consequential damage ProdHaftG Art. 823 BGB (tort. liability) Art. 439 ff BGB Reduction conversion Compensation for damages, e.g. for rental car or hotel Product liability: Comprehensive compensation!
Duties of the Supply Chain: 1. To supply safe, quality (non defective) goods 1.1 Compliance with all internal/external/industry/state quality and safety standards 1.2 No defects iro design, manufacture instruction/warning 2. To effectively Monitor products in the Market 3. To withdraw defective goods timeously to prevent or minimize harm 3.1 Implementation of monitoring & control measures/tracking 3.2 Recall 4. To remedy harm by payment of damages 5. To keep records (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several. (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several.
1410-LE10-TF000-002 Compliance with all safety requirements: • VDA 1 • DocumentationandArchiving • VDA 2 • Quality Assurance forSupplies • VDA 3 (Part 1 and 2) • Ensuringreliabilityofcarmanufacturersandsuppliers • VDA 4 ring binder • Securingthequalitybeforeserialproduction, incl. SPCVDA 4FMEA • VDA 5 • Capabilityof Measurement Processes • VDA 6 • Quality Audit Fundamentals • VDA 6.3 • Process Audit • VDA 6.4 • QM System Audit - Production Equipment • VDA 6.5 • Product Audit • VDA 6.7 • Process Audit - unitproduction • VDA 13 • Automotive SPICE • VDA 19 • Technical Cleanliness • VDA MLA • Maturity Level AssuranceVDA RPPRobust ProductionProcesses • VDA Field Failure Analysis • Attention: This listisincomplete! • (see VDA QMC web shop) • International requirements EU law & EU standardsEN ISO 9001 • Legal requirements National law VDA volumes & ISO/TS 16949 • Industry-specific requirements • Customer-specific requirements QSK, Special Terms, etc. QM manual Approach and responsibility Who, what, when Processes/oper-ating procedures How Work instructions Results, proof of efficacy Other documents, and records
Monitoring Obligation - Honda Case: Federal Court ofJustice 1986 According to the BGH, Honda had violated its product monitoring obligation because it had failed to warn against the fitting of a widespread accessory made by a third party manufacturer. The wind shield made by the third-party accessory manufacturer could result in the motorbike (the Gold Wing) becoming unstable. Honda should have issued warnings once the danger became known, even though Honda had not authorised production by the third-party manufacturer. It was sufficient that the accessory had achieved not insignificant popularity. Honda should thus have known of the possibility that this accessory would be fitted to its motorbikes and that it may cause harm and should therefor have guarded against it. (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several. (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several.
Establish an externalorganisationthatcollectscustomercomplaints • Observation of one's product and the ways it is used by the consumer • Observation of competitors' products • Observation of combinations with other products • Study of relevant literature, visits to professional conferences, regular visits to portals such as NHTSA Fed Office of Motor Vehicles, media alerts • Organization of data collection and analysis • Implementation of the insights into suitable measures (design changes, changes in manufacturing, warnings and recall) Product Monitoring Obligations of Supply Chain (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several. (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several.
Checklist: • Consider the need to monitor own/competitors products – consider need for media alerts, regular checks iro NHTSA/Fed Office of MV etc portals. • Consider need to appoint a PSB and a deputy PSB (Requirement ito D/TLD self audit). • Is a PSB in place at 2/3 tier suppliers? Do you have a list of names and contact numbers? • Revisit instructions/warnings with all and least sophisticated consumers in mind (not only end product user). • Consider need for staff training iro Product Liability. Basic induction training for new staff, in depth training for cross functional team responsible for this function. • Revisit risk assessment iro adequate insurance (especially in light of changes to legislation since 2010). (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several. (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several.
Checklist • Include regular Line Walks as part of product liability process. • Consider need for individual recall strategy and include obligation to notify NCC. • Consider your communication strategy (in light of your customer data base) in the event of a recall. • Reconsider document management. Are you able to access/read old files? • Ensure clear written contract are in place with all 3rd tier suppliers cascading all PSB and safely obligations. • Control advertising/marketing messages to manage reasonable expectations of consumers. • Consider additional QM/PM and problem solving tools and obtain any necessary training (eg Maturity Level Assurance). (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several. (2) A supplier of services who, in conjunction with the performance of those services, applies, supplies, installs or provides access to any goods, must be regarded as a supplier of those goods to the consumer, for the purposes of this section. (3) If, in a particular case, more than one person is liable in terms of this section, their liability is joint and several.
