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Liability

Product defects

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

The definition of a ‘product defect’ depends on the applicable regime. Under contract law, a product which does not meet the agreed quality or is unsuitable for the use intended under the contract or its customary use will be considered defective. Under tort law and the Product Liability Act, liability results from an unsafe product (ie, a product that does not provide the safety that the average consumer is entitled to expect, considering all circumstances, such as reasonably expected use, presentation and the time when it was put into circulation).

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?

Under the Product Liability Act, an injured person has the burden of proving:

  • the defect;
  • the damage; and
  • the causal relationship between the defect and the damage.

A claimant has the burden of proof and must establish causation between:

  • the injury or damage to health or property and the defect; and
  • the injury or damage and the loss claimed.

The burden of proof cannot be shifted to the defendant. Under certain conditions, claimants can rely on prima facie and circumstantial evidence.

Under Section 84 of the Medicinal Products Act, claimants must prove that:

  • the risks of the product in question outweigh its benefits; or
  • the information on the product’s label (eg, regarding potential adverse events) did not accurately reflect the state of scientific knowledge at the time when the product was put into circulation. 

The Medicinal Products Act provides for a presumption of causation where certain requirements are met, including elements that the claimant must prove. As a result, the standard under the Product Liability Act is, in practice, similar to that under the Medicinal Products Act. The burden of proof for causation lies with the claimant. The Federal Supreme Court has rejected shifting the burden of proof.

While the burden to prove fault usually falls on the claimant in tort, this rule differs in product liability cases. Where a breach of a duty of care is in question, it is often sufficient for the consumer to prove that the product was defective. The burden then shifts to the producer, which must show that it did everything necessary and reasonable to discover and avoid the defect. The onus remains on the claimant to prove damage (ie, the injury and any consequential damages resulting from the injury).

Legal bases for claims

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

Most product liability claims in tort are based on negligence. This requires a breach of a duty of care. The Federal Supreme Court characterises putting a defective product on the market as indicative of a breach of duty. In this context, the Supreme Court has identified three types of defect:

  • design defects;
  • manufacturing defects; and
  • instruction defects (ie, failure to warn or provide proper instructions).

Producers must also monitor their products and take appropriate measures once they are in circulation. German tort law further includes liability for a breach of statutory or regulatory provisions.

Strict liability for products in Germany is included in the Product Liability Act, the Drug Act and the Genetic Engineering Act.

The Drug Act is an important strict liability regime for pharmaceutical products that takes priority over the Product Liability Act. The Drug Act includes liability for development risks and renders insurance compulsory. The Genetic Engineering Act provides for liability for damage caused by genetically manipulated organisms (GMOs). This also includes liability for development risks.

In practice, most claims are brought under the Product Liability Act.

Contract law is relevant only where the injured person and the defendant have a contractual relationship. The law of contract provides for compensation for damage caused by a product – particularly where the product does not conform with the contract – although this will, in most cases, require fault on the defendant’s behalf. However, according to statutory contract law, fault may be presumed if the defendant delivered a defective product.

Criminal liability

Can a defendant be held criminally liable for defective products?

Criminal penalties for individuals exist in connection with supplying defective products. For example, relevant provisions exist in both the Food Act and the Drug Act. In addition, penalties for individuals can follow from the general Criminal Code (eg, if a person is injured by a defective product). Companies may face administrative fines of up to €10 million and a confiscation of profits for breaching criminal or regulatory provisions.

Liable parties

Which parties can be held liable for defective products?

The Product Liability Act imposes responsibility for a defective product on the producer. Within the meaning of the act, a ‘producer’ includes:

  • the manufacturer of the final product or a component part;
  • the producer of raw materials;
  • the own brander; and
  • the person importing the product into the European Union or the European Economic Area. 

The supplier of the product is liable only if the producer cannot be identified. The supplier can exonerate itself from liability as producer by providing the injured person with the identity of the producer or the person that supplied the product within one month. The same applies if the importer cannot be identified, even if the producer’s identity is known.

The Drug Act assigns responsibility to any party which, in its own name, put the drug into circulation in Germany (ie, the pharmaceutical entrepreneur). This also includes any marketing authorisation holder that is not the manufacturer of the product. A similar rule applies under the Genetic Engineering Act for liability for products incorporating GMOs.

A duty of care in tort can rest on parties involved in the production and marketing of a product, although the characteristics of the duty may vary, depending on the role that the individual has in this process (eg, manufacturer, quasi-manufacturer, supplier, wholesaler, retailer, importer or licensee). In contrast to the situation under the Product Liability Act, the supplier may be liable in tort, regardless of whether the producer can be identified. A duty of care can also rest on managers and other qualified persons of a company. Liability for a breach of statutory or regulatory duty falls on the party to whom the relevant provision assigns the duty.

Limitation of liability

Can liability be excluded or mitigated in any way?

The strict liability stipulated by the Product Liability Act cannot be excluded. In general, a contractual exclusion of liability regarding injury to life, body or health or in case of gross negligence is impossible. However, within narrow limits, it is possible to exclude tortious liability on an individual contractual basis. The liability for products within the scope of contractual arrangements with non-consumers and commercial providers can be excluded by means of clauses limiting liability (ie, exemption agreements).

Warnings and product recalls may mitigate liability (eg, in relation to consumers who continue to use the product despite knowledge of the risks and depending on the circumstances of the individual case).

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