1. Introduction
Product liability concepts are continuously evolving with changing needs of the society. With the advent of market driven society the relationship between the manufacturers and the consumers is continuously changing. There once stood a time when alone the buyers were held responsible to bear the loss arising out of them buying defective products. But now the situation seems radically changed with pro-competitive policies of states, which had given immense power in hands of the consumers and now manufacturers also have a great role to play while the manufacturers delivering products in the market. And to ensure all these, the role of the Law of Torts is also becoming more and more important.
This report deals with the same evolution of laws pertaining to product liability. The researcher has tried to capture the history and subsequent progression of the laws with respect to the dynamics of the relationship between the manufacturers and the consumers.
Further the report will discuss a few landmark cases like Donoghue v Stevenson, which changed the perception of the term product liability. And later the researcher will try to discuss the statutes which govern the realm of Product Liability in India, with its relation to tort.
2. Product Liability – Definition
According to Black’s Law Dictionary[1] the term product liability is defined as: “A manufacturer’s or seller’s tort liability for any damages or injuries suffered by a buyer, user or bystander as a result of a defective product”
In very simple terms, product liability can be defined as the liability arising out of loss or injury caused by defective products sold by manufacturers.[2] Thus the term product liability generally refers to the laws which protect consumers from loss arising due to defective products, and which shifts the responsibility for the loss on the manufacturers, to deliver safe and ‘appropriate for use’ products in the market.
3. Evolution of Product Liability Laws
3.1 Caveat Emptor
Caveat emptor is a Latin term which stands for ‘let the buyer beware’. The term is defined as: “the principle that a person who buys something is responsible for finding faults in the thing they buy”[3]. This principle was prevalent in common law at old times. So the buyer alone had the onus to check the materials that he is buying carefully, to ensure that he is getting what he has paid for, or either he has to make concomitant contractual relations while buying with the seller, to ensure that he stands safe and unaffected if any problem arises in future related to the goods he bought. And if any buyer fails to do so, he himself should bear the loss and injury occurring to him, if any, directly or indirectly through those goods.[4]
“The law of products liability is that body of common and statutory law permitting money reparation for substandard conduct of others resulting in product-related injury to the injured party’s person or property. Resistance to the description of products liability as a doctrine having receded, there is today a guiding tenet in the law of product-related injury that is the distillate of seventy years of decisional law. The birth of the doctrine can be dated at 1916, the publication of the immensely influential decision in MacPherson v. Buick Motor Co.[5], in which the New York Court of Appeals held that the manufacturer of any product capable of serious harm if incautiously made owed a duty of care in the design, inspection, and fabrication of the products, a duty owed not only to the immediate purchase but to all persons who might foreseeably come into contact with the product. Following MacPherson, the doctrine is formed by decision of the ensuing decades is that a buyer, user, consumer or bystander in proximity to an unreasonably dangerous product, and who is injured in person or in property by its dangerous propensities, may recover in damages from the manufacturer or intermediate seller.”[6]
The common law system used to address the cases of loss due to faulty products through the principle of caveat emptor. In 1893 the parliament in US introduced Sale of Goods Act, which gave a bit of protection to the purchasers.
The biggest turning point to revamp the laws relating to product liability was the case Donoghue v Stevenson.[7] Before this case was decided, there were perplexities about whether the seller did have any duty towards the buyer, if there is no explicit contractual relationship between them already agreed to, with exception that the goods sold are not in classification of dangerous goods.[8] Even there was no good classification of dangerous goods as a genus itself. Scrutton L.J. in case Hodge v. Anglo-American Oil Co acknowledged that he was unable to differentiate “between a thing dangerous in itself, as poison, and a thing not dangerous as a class, but by negligent construction dangerous as a particular thing. The latter, if anything , seems to me the more dangerous of the two; it is a wolf in sheep’s clothing instead of an obvious wolf.”[9] But after Donoghue v Stevenson it was established, by a majority of three to two, that in redundance of whatever extraneous arrangement it may be, there lies a duty that the manufacturer should fulfill for his products. According to the narrow rule established in Donoghue v Stevenson case:
“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 result in an injury to the consumer’s life or property, owes a duty to the consumer to take that reasonable care.”[10]
The classification of dangerous goods which was used to decide cases of product liability was abolished by 1950s.
All the laws in tort for product liability were based on the principle of negligence, until the concept of strict liability was brought in as statute by the Consumer Protection Act. As per the current scenario, there lies no liability according to the laws of tort on manufacturer, until the negligence is proved on the part of the party, apart from specific statutes, which impose strict liability as such.
Thus, the principle of caveat emptor evolved into the Caveat Venditor, i.e. ‘Let the seller beware’.
4. Position in India
In India, there are various laws that address the rights of a buyer. Product liability in general is covered by various laws, such as:
1. The Consumer Protection Act, 1986 (herein after referred as CPA)
2. The Sales of Goods Act, 1930
3. The law of Torts
4. The Monopolies and Restrictive Trade Practices Act, 1969
5. Special statues pertaining to specific goods, for e.g.
a. Food Safety Standards Act 2006
b. Pharmacy Act 1948, etc.
All these acts and statutes address the concerns of a buyer to some extents, except the CPA, the main object of which is itself the Product Liability. We will deal here in this dissertation with Consumer Protection Act in detail.
5. Consumer Protection Act, 1986
Consumer protection act has certain aims and objectives. This statute was a result of widespread consumer protection movement across the globe. In a report of Secretary General on Consumer Protection, dated 27th may 1983, the UNESCo (United Nations Economic & Social Council) recommended that the world governments should develop, strengthen and implement a coherent consumer protection policy taking into consideration the guidelines set out therein.
In India CPA was ratified by the president on 24th Dec 1986, but it came into force on 15th April, 1987.
CPA has two main objectives. First is to protect the rights of the consumer. These rights are:
a) The right to be protected against marketing of goods which are hazardous to life and property
b) The right to be informed about the quality, quantity, potency, purity standard and price of goods to protect the consumer against unfair trade practices
c) The right to have, wherever possible, access to goods at competitive prices
d) The right to be heard and to be assured that consumers interests will receive due consideration at appropriate forums
e) The right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers
f) Right to consumer education.
Second, to facilitate the consumers in getting quicker or speedy redressal of their grievances by establishing special courts and tribunals, instead of filing a suit in civil court, which takes much longer time.
This act also defines various terms involved such as consumer, complainant, complaint etc.
5.1 Consumer – Defined
Section 2(1)(d) of CPA has defined the term consumer in two parts, first defines consumers of goods, and the second part deals with the consumers of services.
The section runs as
(d) “consumer” means any person who –
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use if made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary or such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person;
Explanation:- For the purposes of sub-clause (i), “commercial purpose” does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment;
Thus, the consumer means any person who buys any goods for consideration, and also includes persons other than buyers who use the goods with the consent of the buyer, as evident in the Donoghue v. Stevenson case.
5.2 Rights of a Consumer
There are various rights of a consumer which are promoted and protected under CPA as mentioned before, let us discuss it in some detail.
5.2.1 The Right of Protection Against Hazardous Goods
Here the term hazardous goods includes, for e.g. weak cement, narcotic drugs, adulterated foods, etc. All these things are dangerous to persons as well as property. There stand various laws established by government which prevent the marketing of such products but still, if any person gets victim of tort because of any such products he can always approach the CPA forums to get a speedy remedy.
The famous case Donoghue v. Stevenson[11], which we have discussed earlier in this text, also pertains to the hazardous goods. Here the bottle of drinks in which a dead snail was found was also considered to be dangerous good, which clearly portrays the ambit of the term dangerous or hazardous goods, i.e. any goods which can cause danger or hazard to person or property. It was held in this case that a manufacturer sending goods into the market would be liable to the ultimate consumer, if his person or property is injured by the normal use of the goods. In this case, A bought a bottle of ginger wine from the retailer which was produced by manufacturer B, and gave it to his friend C. The bottle allegedly contained the decomposed remains of a snail which were not, and could not be, detected (the bottle being opaque), until most of the bottle had been consumed. C alleged that she was ill due to that ginger wine and sued B. In this case B was held liable.
Similarly a weaver of trousers was held liable when the person who wore the trouser suffered a problem of dermatitis because of the chemical contained in that trouser.[12]
5.2.2 Right of Information
CPA protects every consumer’s right to have information about the quantity, quality, potency, purity, standard and price of goods or services he buys or avails.
This right helps to prevent the consumers cheated by unfair trade practices by the marketers. Unfair trade practices may include; any false warranty or guarantee of performance of the goods or services, publication of advertisements for sale or supply of goods or services at a bargain price, offering of gifts, prizes or other items with the intention of not providing them as offered or creating an impression that something in being offered free of charge when in fact it is not so in reality, etc.
To illustrate, the famous case Consumer Protection Council v. National dairy Development Board[13], in which, the complainant wanted to know that how the dairy board was using the imported palmolein oil but the Board was not furnishing the requisite information because according to it the figures were privileged from disclosure in public interest. It was held that the complainant had the right of information.
Similarly in India Photographic Co. v. H.D. Shourie[14], an importer of films was not able to print prices on films because the nature of his trade did not permit him to open packages. Therefore, he was directed to make a condition of attaching price tags to each item before selling them to his retailers.
Again, when Rs 88 were charged for an article which showed the price Rs 75, the buyer was given a compensation of Rs. 500[15].
Cases of unfair trade practices are also dealt by Monopolies Commissions established under the MRTP Act[16].
5.2.3 Right of Access to Variety of Goods and Services at Competitive Prices
Every consumer should be ensured the right access to variety of goods and services at competitive prices. Section 6(c) of CPA guarantees that. A consumer should be able to access different brands and types of goods and those all should be available at competitive prices so that the consumer stands free to choose. No shopkeeper can force the customer to buy only one type of goods, either by cajolement or by leaving customer out of choice by keeping only particular class of goods. The Consumer Protection Council holds the onus to ensure all this by virtue of section 6(c) of CPA.
5.2.4 Right to be Heard and Receive Due Consideration at Appropriate Forums
Every consumer has the right to be heard and receive due consideration at appropriate Forums. The Central Consumer Protection Council has been charged with the responsibility of ensuring that each consumer dispute is heard properly and of assuring that consumer’s interest will receive due consideration at appropriate forums. That means the National Consumer Protection Council should ensure that any consumer should never be denied to file a case or complaint, and further that complaint is for sure to be given consideration and hearing.
5.2.5 Right Against Unfair or Restrictive Trade Practices, Unscrupulous Exploitation
These days we see various advertisements in newspapers where permanent cure of baldness, for increasing height of a person, lands are sold with fake documents, duplicate products, selling old products in new packaging, medicines, all these come under scrupulous and unfair trade practices. If any consumer gets injured of his right or incurs damage because of such products, its National Consumer Protection Council’s responsibility to protect and get the consumer restituted against such cunning marketers. There are innumerable such cases.
5.2.6 Right to Consumer Education
It means that every consumer has the right to be educated about his rights and remedies available in case of any problem if arises, when he buys a product. So that people can exercise their rights and avail such legal remedies.
Any of the above rights are legal rights of a consumer and thus if violated, constitute to a tort committed.
6. Sale of Goods Act, 1930
Sale of Goods Act, 1930 also provides protection of some sort t buyers of goods, whether consumers or not. Sale of Goods Act enables the buyer of goods to reject the goods, i.e. the contract of sale of goods becomes voidable at the instance of buyer if:
a) Goods do not conform with their description
b) not fit for the use for intended purpose
c) goods are not of merchantable quality
d) the bulk of goods do not agree with the sample provided.
The problem with rights ensured by the Sale of Goods Act is that there are no special courts provided like that in CPA. One has to file a civil suit to bring an action, which takes much longer time. But again, the National Consumer Protection Council has bestowed the consumer protection quasi-judicial authorities with some power of civil courts. So even now cases out of sales of goods act which are of consumer protection in nature can be handled in CPA forums.
One drawback in the Sale of Goods act is that, due to privity of contract principle, no person other than the buyer can sue the seller for any injuries. Only persons party to the sale transaction can be sued. In case Daniels and Daniels v R. White & Sons[17], the person who bought the lemonade could successfully sue the seller of wines when the lemonade turned out to be contaminated and he suffered injuries but his wife who suffered similar injuries after drinking the same bottle of lemonade, could not have a remedy for her injuries, by either the Sale of Goods Act neither by the Contract Act. But such loopholes are now covered effectively by CPA.
7. Conclusion
The first product was done in 1959 when General Motors called back the Cadillacs because of defect in the steering linkage. After that in 1982 McNeil Consumer Health Care, a subsidiary of Johnson & Johnson recalled their product Tylenol. After that there started a trend of product recalls and more than 50 products recalls can be seen in the last decade alone for defective products reached into market. The same effect can be witnessed in the cases of Indian companies, Sun Pharmaceutical and Ranbaxy Laboratories, Maruti Suzuki, etc. In recent times, carmaker Maruti Suzuki too faced a similar situation when it had to recall 100,000 A-Star cars for faulty parts. Same with Toyota Prius cars when they were called back for defective parts in the engine. Also, the Nokia mobiles when they did a product recall for the exploding Nokia Mobile Batteries.
The very effect of product liability laws evolving from the doctrine of caveat emptor to caveat venditor, is seen in the market. The frequently seen product recalls by various pharmaceutical, computer, mobile, automobile manufacturers, etc. is a proof of how the situation has changed and the laws are becoming very consumer friendly in the era of consumerism.
[2] <http://www.legal-explanations.com/definitions/product-liability.htm>, last accessed on 4th November 2010.
[4] See, John Murphy, Street on Torts 367 (2003)
[5] 217 N.Y. 382, 111 N.E. 1050 (1916).
[7] Donoghue v. Stevenson, [1932] AC 562, HL.
[8] According to the privity of contract principle, it was deemed in those times, that the manufacturer had the contract with the retailer alone, so the manufacturer owed no duty towards the end consumer.
[9] Hodge v. Anglo-American Oil Co. (1922) 12 L1.L. Rep. 183 at 187.
[10] [1932] A.C. at 599.
[11] Supra note 7.
[12] Grant v Australian Knotting Mills, (1936) AC 85.
[13] (1991) 11 CPJ 617 Guj.
[14] (1991) 11 CPJ 142 Delhi Commission.
[15] Standard Automobile v. Syed Ashrat, (1991) 11 CPJ 626 Ker.
[16] Monopolies and Restrictive Trade Policies Act, 1969
[17] (1938) 4 All ER 258.
