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Liability

Product defects

How is a ‘product defect’ defined in your jurisdiction?

A product can be deemed defective if it lacks the level of safety which it should normally possess, taking into account:

  • its nature and characteristics;
  • ordinarily foreseeable uses;
  • the state of the art (scientific or technical knowledge) at the time of delivery; and
  • other relevant circumstances relating to the product.

Causation and burden of proof

How is causation of loss or damage established in relation to product liability claims and where does the burden of proof lie? Can this burden be shifted in any way?

As a rule, the party bringing the liability claim (buyer or injured party) bears the burden of proof.

Under the Product Liability Act, the manufacturer’s liability is strict once it is found that the product sold was defective. Proof of the manufacturer’s fault, negligence or wilful misconduct is not required to seek monetary compensation. A plaintiff seeking monetary damages under the act must prove that the manufacturer’s product is defective and that the defect has caused the plaintiff’s injuries or damage. In practice, the plaintiff must at least prove that:

  • the defendant is a manufacturer;
  • there is a defect in the product that the defendant has manufactured, supplied, placed on the market or delivered;
  • the plaintiff’s life, body or property has been injured or damaged as a result of the product defect;
  • the occurrence resulted in damage and the amount claimed as damages; and
  • a causal link between the product defect and the injury or damage exists.

The Product Liability Act prescribes no specific test for proof of causation. Instead, the courts apply the standard test for causation used under the Civil Code. Under Article 709 of the Civil Code, the plaintiff must prove causation between the defendant’s negligence and the resulting damage. 

In a claim under Article 709, the plaintiff must prove that:

  • the injury was caused by a defect in the product; and
  • the manufacturer negligently or intentionally breached a duty owed to the plaintiff and this breach caused the plaintiff’s injuries or damage.

In practice, the plaintiff must prove:

  • the existence of the plaintiff’s right or legally protected interest;
  • the existence of a breach of the plaintiff’s right or interest;
  • the defendant’s intention or negligence in relation to the breach;
  • the occurrence of damage and amount claimed; and
  • the causal link between the breach and the damage.

For breach of contract claims, the plaintiff must prove that the manufacturer has breached the contract through the supply of a defective product in breach of an express or implied warranty and that such breach has caused some damage to the plaintiff.

Legal bases for claims

On what legal bases can a product liability claim be brought?

A plaintiff (generally a buyer) can bring a product liability claim against a seller that is its counterparty in a sale and purchase contract, either for breach of contract or breach of implied statutory warranties under the Civil Code, provided that there is a direct contractual relationship between the injured party and the seller of the defective product. Article 415 of the Civil Code deals with liability for incomplete performance of obligations, while Articles 566 and 570 govern warranties against latent defects. Article 526 of the Commercial Code, equivalent to Article 566 of the Civil Code, applies to latent and visible defects in transactions between business operators.

Traditionally, product liability claims were brought as tort claims under the Civil Code. Since 1995 claims can also be brought under the Product Liability Act, which allows a plaintiff to seek compensation for damages caused by a defective product. If a defective product causes any damage to the buyer’s life, body or property (excluding the product itself), the buyer can bring a product liability suit against the manufacturer (Article 3 of the Product Liability Act). The plaintiff is not required to prove that the manufacturer owed a duty to the plaintiff and negligently or intentionally injured the plaintiff. The plaintiff need only demonstrate that the product was defective and that the defect caused the injuries.

Alternatively, if a claim cannot be brought or is unsuccessful under the act, the injured party may bring a tort claim under the Civil Code. This type of claim, which is still relied on in civil cases to obtain monetary damages, is viewed as a last resort for persons injured by a defective product. Article 709 provides that a person who has intentionally or negligently infringed any right or legally protected interest of another will be liable for any resulting damage. In contrast with the act, the plaintiff must prove the defendants’ intent or negligence, and the burden of proof is subject to a high standard. Causes of action under Article 709 include fraud and misrepresentation.

Criminal liability

Can a defendant be held criminally liable for defective products?

Yes, under the Penal Code (45/1907) in the case of death or injury caused by a failure to exercise due care. Moreover, certain Consumer Product Safety Act violations can give rise to criminal penalties.

Liable parties

Which parties can be held liable for defective products?

  • Any natural or legal person classified as a manufacturer under the Product Liability Act can be held liable. The act defines a ‘manufacturer’ as:any person that manufactures, processes or imports the product as a business;
  • any person holding itself to be the manufacturer of a product by putting its name, trade name, trademark or other indication on the product, or any person that puts its name on the product in a manner that misleads others into believing that it is the manufacturer; and
  • any person that puts its name on a product and that, in light of the manner in which the product has been manufactured, processed, imported or sold, or any other relevant circumstances, may be recognised as a substantial manufacturer (de facto manufacturer).

Unless they fall within any of the aforesaid categories, the act provides for no cause of action against distributors or sellers of a product. Claims against these persons must be brought under the Civil Code on other grounds (eg, breach of implied statutory warranty or breach of contract or tort).

Limitation of liability

Can liability be excluded or mitigated in any way?

The parties to a contract can be released entirely or partially from their liability under the Product Liability Act or tortious liability under the Civil Code by entering into an agreement on indemnification excluding or capping such liability. A seller’s liability would not be excluded in the event of fraud or concealment of known facts (Article 572 of the code). An agreement excluding liability for death or injuries as a result of intentional acts or gross negligence would be deemed invalid as repugnant to public order.

In addition, liability exclusions and limitations are strictly limited by the Consumer Contract Act with respect to contracts entered into between a consumer and a merchant (business operator). It protects consumers in their dealings with business operators. The following clauses are void if they are included in a contract made between a consumer and a business operator (Article 8 of the act):

  • clauses which totally exempt a business operator from liability to compensate a consumer for damages arising from the business operator’s fault;
  • clauses which partially exempt a business operator from liability for damages arising from the business operator’s fault (limited to default arising due to an intentional act or gross negligence on the part of the business operator, its representatives or employees);
  • clauses which totally exempt a business operator from liability for damages to a consumer arising from a tort under the Civil Code committed during the business operator’s performance of a consumer contract;
  • clauses which partially exempt a business operator from liability for damages to a consumer arising from a Civil Code tort (limited to cases in which the tort arises due to an intentional act by, or the gross negligence of, the business operator, its representatives or employees) committed during the business operator’s performance of a consumer contract; and
  • if a consumer contract is for value and there is a latent defect in the subject of the contract (including a contract for services), clauses totally excluding a business operator from any liability to compensate a consumer for damages caused by such defect, except in the event that:
  • the contract provides that the business operator is liable to deliver substitute products without the defect or repair the goods when there is a latent defect; or
  • it is concluded between a consumer and a business operator simultaneously with, or after another contract is concluded between the consumer and another business operator entrusted by the business operator, or between the operator and another operator for the benefit of the consumer, and that other contract provides that the other operator is responsible to provide compensation for all or part of the damage caused by a defect, deliver substitute products without defects or repair the defective products where there is a latent defect.

The Consumer Contract Act limits the extent to which the seller may disclaim warranties or restrict the remedies available to a buyer injured by a product sold by the seller, but it offers no specific cause of action for damage caused by defective products.

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