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Liability

Product defects

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

Under Article 6 of the Product Liability Directive (85/384/EEC) a product is considered defective if, in all relevant circumstances, "it does not provide the safety which a person is entitled to expect". This is not a question of what safety expectations are held by the claimant but what safety expectations the public at large is "entitled" to hold. Circumstances relevant to the consideration of whether a product is defective include:

  • the presentation of the product;
  • the reasonably expected use of the product; and
  • the time when the product was supplied.

Article 6(2) of the Product Liability Directive also establishes that a product will not become defective simply because a better product is subsequently 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?

Article 4 of the Product Liability Directive makes it clear that the burden of proof to establish the primary elements in a product liability claim (ie, defect, damage and the causal relationship between the two) lies with the claimant. However, the way that burden must be discharged, in terms of the evidence required, will vary between member states. For instance, in the recent Sanofi decision the European Court of Justice held that claimants can rely on certain national evidentiary rules (eg, presumptions that draw on factual evidence) to discharge the burden of proof under Article 4, so long as the national courts are satisfied that a defect in the product appears to be the most plausible explanation for the occurrence of the damage.

Legal bases for claims

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

A product liability claim can be based on one, or a combination of, the following grounds:

  • contract;
  • negligence;
  • no-fault liability under the Product Liability Directive; and
  • statutory product liability systems pre-dating the Product Liability Directive (under Article 13) – for example, the German Drug Act.

Contract

The precise legal basis for claims in contract will vary across the European Union, depending on the national legal doctrines. For instance, while a claim for breach of an express or implied term of a contract can be brought on a strict liability basis in all jurisdictions, some jurisdictions may have a requirement to prove fault for certain elements of a contractual claim (eg, in Germany, liability for breach of contract is strict only as regards a claimant's rights to cancel the contract, demand supplementary performance or abate the purchase price).

The doctrine of privity of contract – which applies in most countries – can limit the potential defendants to a product liability claim, since the consumer can bring a contract claim only against the retailer or supplier that sold the consumer the product alleged to have caused the loss. This can preclude a direct claim against the manufacturer of the product, unless there is a direct contractual link between the producer and consumer (eg, a manufacturer's guarantee).

If any applicable warranties or guarantees are given by the producer in relation to the product, legislation has been adopted in the European Union to harmonise national laws on certain aspects of the sale of consumer goods and associated guarantees. The Consumer Sales and Guarantees Directive (1999/44/EC) deals with:

  • the terms that will always apply in relation to contracts for the sale of consumer goods;
  • consumers' rights and remedies in the event of lack of conformity of the goods; and
  • requirements relating to consumer guarantees.

Where a guarantee is within the scope of the Consumer Sales and Guarantees Directive, it must:

  • be legally binding on the offeror under the conditions laid down in the guarantee statement and the associated advertising (Article 6.1);
  • state that the consumer has legal rights under applicable national legislation governing the sale of consumer goods and make clear that those rights are not affected by the guarantee (Article 6.2);
  • set out in plain, intelligible language the contents of the guarantee and the essential particulars necessary for making claims under the guarantee – notably, the duration and territorial scope of the guarantee and the name and address of the guarantor (Article 6.2); and
  • be made available on request by the consumer in writing or feature in another durable medium that is available and accessible to the consumer (Article 6.3).

Rights arising from the Consumer Sales and Guarantees Directive may be exercised without prejudice to other rights that the consumer may invoke under national rules governing contractual or non-contractual liability (Article 8.1).

Negligence

Claims in negligence are primarily based on a breach of duty of care to act to an acceptable standard, rather than whether the product was defective. In negligence, the injured party has a direct right of action against any person in the supply chain, provided that the injured party can establish that a duty of care is owed. However, there are significant differences across member state jurisdictions as to how principles of fault liability are applied.

No-fault liability under the Product Liability Directive

Under Article 3 of the Product Liability Directive, no-fault liability for a defect in a product which causes injury or loss extends to:

  • the producer;
  • the first importer of the product into the European Union (the intention being to ensure that there will always be a defendant within the European Union that can be held liable for the defective product);
  • an ‘own brander’ (ie, a party holding itself out as a manufacturer by including its own name or trademark on the product); and
  • a downstream supplier (eg, retailer, wholesaler or distributor), but only if this supplier fails to identify the producer, first importer or ‘own brander’ to the claimant within a reasonable time.

Under Article 6(1) of the Product Liability Directive, a ‘defective product’ is one which does not provide the safety that a person is entitled to expect. In such a claim, the burden of proof still lies with the consumer or injured person; further, no-fault liability does not mean absolute liability, since several defences are set out in the directive.

Criminal liability

Can a defendant be held criminally liable for defective products?

The Product Liability Directive imposes a regime of no-fault civil liability, rather than criminal liability, in relation to defective products. Manufacturers and suppliers may also face criminal liability if their products are defective or unsafe. Criminal prosecutions in respect of unsafe products are becoming much more common in member states.

The General Product Safety Directive (2001/95/EC) clearly establishes that the imposition of criminal liability for breaches of national provisions implementing the directive is up to individual member states, that each member state has scope to set out rules and penalties applicable to infringements (Article 7), and that decisions made regarding product withdrawal or recall are without prejudice to the assessment of liability under national criminal law (Article 18(3)).

Liable parties

Which parties can be held liable for defective products?

Under Article 3 of the Product Liability Directive, liability for a defective product extends to:

  • the producer;
  • the first importer of the product into the European Union (the intention being to ensure that there will always be a defendant within the European Union that can be held liable for the defective product);
  • an ‘own brander’ (ie, a party holding itself out as a manufacturer by including its own name or trademark on the product); and
  • a downstream supplier (eg, retailer, wholesaler or distributor), but only if this supplier fails to identify the producer, first importer or ‘own brander’ to the claimant within a reasonable time.

Under Article 5, where two or more people are liable for the same damage they shall be jointly and severally liable.

Limitation of liability

Can liability be excluded or mitigated in any way?

Article 12 of the Product Liability Directive specifically holds that a producer cannot limit or exclude liability to an injured person arising under the directive by any provision attempting to limit, exclude or exempt that producer from liability.

Member states also have an option under the Product Liability Directive to fix a liability cap under Article 16(1). This option has been exercised by some member states.

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