The Consumer Defence Code governs the issue of product liability in Brazil. The general rule is that damage caused by defective products should be rectified by the supplier, irrespective of fault. In product liability cases, the main issues under dispute are whether the product is defective and whether causation exists between use of the product and the damage claimed.

The code provides for different types of product defect (eg, design, manufacturing, construction, assembly, formulae, handling, presentation or packaging, as well as insufficient or inadequate information regarding use and risks). It defines a 'defective product' as one that fails to offer:

"the safety legitimately expected of it, taking relevant circumstances into consideration, including: (i) the presentation of the product; (ii) use and risks reasonably expected of it; and (iii) the time when the product was placed in the market."

A risky product is not necessarily defective under the code – Article 11 of the code, which would have required suppliers to withdraw from the market any product carrying a high level of risk, even if properly used, was vetoed. The test to discover whether a defect exists centres on the legitimate expectation of a consumer in relation to the product: if the risk carried by the product exceeds the consumer's expectation, a defect exists.

The 'legitimate expectation' standard is objective. What matters when evaluating a product is the general perception of the product and its risks. A subjective standard would be impossible to assess in a mass consumption society, and no business could be run under such an unpredictable and variable standard.

Assuming that a defect exists, causation is the key issue to consider. Brazil has adopted a highly restrictive standard of causation: in order for the duty to indemnify to arise, there must be a link of necessity between the damage claimed and the use of the defective product. This is the 'direct and immediate' causation test.

One of the most common mistakes made when investigating causation in product liability cases is to rely on statistics to establish specific causation. While statistics may be helpful to conceive and implement public policies, as they are based on a wide sample of cases, they are unsuitable for the evaluation of specific cases, where other possible causes not foreseen in the statistics may have played a decisive role in the occurrence of the damage.

Therefore, once the product is found to be defective, the evidence regarding causation is crucial to determine whether liability applies.

For further information on this topic please contact Fernando Dantas M Neustein at Mattos Muriel Kestener Advogados by telephone (+55 11 3149 6100), fax (+55 11 3149 6101) or email ([email protected]).