February 8 2001 Overview (February 2001) Dentons | Product Regulation & Liability - Singapore Product Regulation & Liability Contract Tort Nuisance Statute Conclusion The Singapore legal system is a common law system comprising a national Constitution, statutes (codified legislation) and case law. There is no single code or body of legislation that deals with product liability in a comprehensive manner. Product liability law in Singapore is, therefore, to be found in statutes that deal in part with product liability issues, and in the common law areas of contract and tort. Singapore statutes which are relevant to product liability (eg, the Sale of Goods Act, the Supply of Goods Act, the Unfair Contract Terms Act and the Misrepresentation Act) all contain similar provisions to their UK counterparts. UK cases are also highly persuasive in Singapore in relation to both the interpretation of statutes and the common law of contract and tort.ContractThe sale of goods and/or supply of services under contract is governed by the Sale of Goods Act and the Supply of Goods Act. Under these statutes, certain terms are implied into agreements for the sale of goods. Liability for breach of the terms implied by the Singapore Sale of Goods Act is strict (ie, the seller of goods is liable even though he/she has taken every possible care and is not at fault).Under these implied terms, products must meet a number of conditions. Misdescription The courts are prepared to hold the seller liable for misdescription and allow the buyer to reject the goods, even where the deviation is small and does not make the product unsuitable for the intended purpose Satisfactory quality The implied term relating to quality or fitness of goods is that goods are of satisfactory quality. Goods are considered to be of 'satisfactory quality' if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances. The quality of goods includes their state and condition, and in appropriate cases, their: fitness for purpose; appearance and finish; freedom from minor defects; safety; and durability. The strict test of satisfactory quality may be tempered by the fact that the defects (i) were specifically drawn to the buyer's attention before the contract was made, or (ii) would have been revealed by an examination of the goods. This implied term applies in all cases where the sale or supply is in the course of business. Private sellers or producers are not covered by this statutory implied term, as the sale of the good or product does not arise in the course of business, unless there is an express agreement between buyer and seller that the good or product is of a certain quality or fitness. Fit for purpose Where a seller sells goods in the course of business and the buyer expressly or by implication makes known to the seller a particular purpose for which the goods are being bought, there is an implied condition that the goods are reasonably fit for that purpose. This is regardless of whether that is a purpose for which the goods are commonly supplied. The exception to this is where the circumstances show that the buyer does not rely, or it is unreasonable for him/her to rely, on the skill or judgment of the seller. Same as the sample Where there is a contract for sale based on a sample, there is an implied condition: that the bulk will correspond with the sample in quality; that the buyer will have a reasonable opportunity to compare the bulk with the sample; and that the goods will be free from any defect, rendering them unmerchantable, which would not be apparent on a reasonable examination of the sample.Misstatement or misrepresentation In marketing a product for sale or supply to a buyer, the seller would normally bring to the potential buyer's attention the quality and capability of the product. While such statements may have the effect of enticing the buyer into purchasing the product, misstatements of fact made by the seller may be used by the buyer to sue the seller if the buyer later becomes the victim of a defect in the product. In general, if a misstatement or misrepresentation of fact is made by the seller, the options open to the buyer of a defective product include (i) rescission of the contract for the sale or supply of goods, and/or (ii) the payment of damages to restore the victim to the position he/she would have been in had the misstatement or misrepresentation not occurred. A statement which is no more than mere puff and which induces the buyer into purchasing the product has no legal effect. Even though a misrepresentation must be one of fact (and not of law, opinion or future conduct), it may be possible for a buyer suffering loss and damage due to a defective product to show that the seller had an intention to act in a specified manner in the future. This is because a statement as to present intention may be argued to be a statement of fact. Liability Often a producer seeks to disclaim liability for the product in a sale contract. The Singapore Unfair Contract Terms Act provides that any attempt by a seller to limit or exclude his/her liability, under implied terms of sale, is void in cases where the sale is between a business and a private consumer. Where the sale is between two businesses, such exclusions and/or limitations may be enforceable provided they are found to be reasonable. The test of reasonableness is whether the parties have equal bargaining strength. If so, the party seeking to enforce the exclusion or limitation may be able to argue that the party purchasing or using the product should be bound by those terms. Sale of Goods Act Singapore has enacted the Sale of Goods (United Nations Convention) Act. This act gives effect to the United Nations Convention on Contract for the International Sale of Goods concluded at Vienna on April 11 1996. The English text of the convention is set out as a schedule in the act. TortThere will be occasions when a victim of a defective product will not be able to sue under a contract of sale of goods. There may not, for example, be a contract between the manufacturers and the victim of the defective product. In such situations, the victim may sue the manufacturer in tort. Negligence In contrast to the regime now imposed in the United Kingdom and the United States, there is little or no strict liability under statute in Singapore with respect to defective products. General principles of tort are applicable to product liability claims in Singapore. The principles laid down by the famous case of Donoghue v Stevenson  AC 562, which was itself an early case on product liability, continue to apply today. The case outlines the basic liability of producers for their products and is clearly expressed in the words of one of the judges: "[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 the knowledge that the absence of reasonable care in the preparation or putting up of the 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 effect of these words is that a manufacturer of a product will be liable to an ultimate consumer in situations where the sale of a manufactured product does not allow the buyer an opportunity to examine the product fully before the buyer purchases and uses it. If the defect in the product and the resulting injury to the ultimate consumer could have been avoided by the manufacturer's use of reasonable care in its production, the manufacturer is liable. In practical terms, the victim of the defective product may have difficulty in trying to establish the necessary conditions. These include, for example, that the defect occurred during the manufacturing process and that there was fault on the part of the manufacturer.Fault In order to prove fault, the following three conditions must be established: that there was fault on the part of the manufacturer; that the product reached the victim untampered; and that the state of the art of production at the time of production was such as to give rise to an obligation to take certain safeguards.Loss capable of being claimed at law It is necessary to prove that the economic or financial loss suffered by the consumer is capable of being claimed at law. Where a victim alleges that he/she has suffered economic loss (ie, purely financial loss) as a result of property damage caused by the negligence of the producer(s), the victim must have had a possessory or proprietary interest in the damaged property when the damage was inflicted. This means that the victim would have to prove that he/she owns or is interested in the damaged property. Whether a victim can recover in tort for loss of the defective product itself (rather than the loss suffered from damage to property other than the product) is a difficult issue. The present position in Singapore is that the victim cannot sue for such loss. However, if the victim has a possessory or proprietary interest in the product, and suffers loss which is consequential upon physical injury or property damage, he/she will be able to recover such economic loss in the courts.NuisanceAlthough nuisance is not generally considered to be a part of product liability law, it may be a useful legal right to assert if the manufacture or use of a product interferes with another person's enjoyment of his/her property.Liability in nuisance is not usually dependent on fault. If the manufacturer or user of a product cannot prevent interference, the manufacture and/or use cannot be lawfully undertaken at all, unless authorized by statute or with the consent of all those affected by it. The Singapore Environmental Public Health Act empowers the commissioner of public health to take steps to remove or abate all nuisances of a public nature and to proceed at law against any person committing such nuisance. The commissioner may impose requirements in respect of the way in which works are carried out so as to control the level of noise emitting from such works. Liability under Rylands v Fletcher The well-known rule in Rylands v Fletcher is that a person who brings onto his land and/or keeps anything likely to do mischief must do so at his/her own peril. If the object in question escapes and causes damage, that person is prima facie answerable for all the damage which is a natural consequence of its escape. The rule imposes strict liability on a user, who need not necessarily be a producer or distributor. StatuteThere are numerous laws, regulations, standards and codes of practice which try to ensure that products and services meet appropriate levels of quality and safety. They also ensure that the methods of trading, the terms imposed, and any attempts to exclude or limit liability are fair and reasonable. Failure to meet these requirements can result in both civil and criminal liability. The fact that the breach of a statute gives rise to a criminal offence does not necessarily deprive the victim of compensation. The criminal courts have a discretionary power to make compensation orders for personal injury, loss and damage, and/or legal costs against the offender, but there are financial limits and the power is not exercised on a regular basis. In the event that no compensation is ordered by the criminal courts, the criminal conviction may be adduced as evidence of negligence in a civil action. Consumer Protection (Trade Description and Safety Requirements) Act The Consumer Protection (Trade Description and Safety Requirements) Act prohibits the misdescription of goods supplied in the course of a trade or business by prescribing the requirements relating to informative marking, and the advertisement of goods and their safe composition, construction or design. The act also empowers the minister to make regulations promoting consumer safety. Contravention of the provisions of the act by itself will not render any contract for the supply of any goods void or unenforceable. The court before which a person is convicted of an offence under the act may make an order requiring the convicted person to pay compensation of up to S$1,000 to any person who has suffered loss or damage from the offence. Compensation does not prejudice any civil action that the person suffering loss and damage may bring against the offender. Sale of Food Act The Sale of Food Act secures wholesomeness and purity of food, fixes standards, and prevents the sale or use of articles dangerous or injurious to health. Basically, this act prohibits the sale of any food which is deemed under the act to be unsound or unfit for human consumption. It requires a statement or label to be clearly and firmly affixed to the package of food, indicating a description of the food and the identity of the producer. Contravention of the act's provisions gives rise to criminal liability. Section 19 prohibits the sale of any food which is manufactured, prepared, preserved, packaged or stored in insanitary conditions. Section 23 provides that every person shall be deemed to sell any food or appliance who does so either on his/her own account, or as agent or employee of any other person. Where there is sale by agent or employee, the principal or employer will be under the same liability as if he/she had personally effected the sale. Singapore Penal Code Section 273 of the Singapore Penal Code (the main legislation in criminal law) imposes criminal liability for knowingly selling noxious food or selling food which the seller has reason to believe is noxious. Singapore Workmen's Compensation Act The Singapore Workmen's Compensation Act relates to the payment of compensation to workmen for injury suffered in the course of their employment. The act provides that an employer is liable to pay compensation to its employee if personal injury by accident arising in the course of employment is caused to the employee. In order to qualify for compensation under the act, an employee must fall within the definition of 'workman'. Generally, 'injury' is defined to include death and disease. If the employer is liable to pay compensation, the amount recoverable is set out in the act. Although the act does not prohibit the injured workman from initiating civil proceedings for damages against a person other than the employer, the workman may not recover both damages and compensation. Further, the workman may not proceed to recover damages from his/her employer through the courts if he/she has applied for compensation under the act. ConclusionTo date, the law of product liability in Singapore is based largely on established UK common law principles of contract and tort. The enactment of the Application of English Law Act, the repeal of the right to appeal to the Privy Council and the Practice Statement by the Singapore Court of Appeal are all indicators that the movement and development of Singapore law (including the law on product liability) will in future follow a more independent path.This could be said to be a natural step for Singapore because the growing unification of laws in Europe means that UK law will be shaped in part by European civil law concepts. These civil law concepts do not form part of the legal history and jurisprudence of Singapore. However, legislators and the judiciary will continue to bear in mind the economic circumstances of Singapore as a free port, as well as the need for commercial certainty and consistency, when deciding on the direction that Singapore law will take. The social circumstances of Singapore have not yet warranted the need for a strict liability regime for products in a form similar to that adopted in other parts of the world. It remains to be seen whether Singapore will adopt such a regime, continue to apply common law principles, or perhaps create a regime of its own to address these issues. With the emergence of the Pacific Rim as an economic force in production, it is possible that there could be pan-Pacific machinery in place to address product liability in the 21st century. For further information on this topic please contact Lawrence Teh at Rodyk & Davidson by telephone (+65 225 2626) or by fax (+65 225 1838) or by e-mail ([email protected]). The materials contained on this web site are for general information purposes only and are subject to the disclaimer.