Strict Product Liability

Cite this article as: Jason Mance Gordon, "Strict Product Liability," in The Business Professor, updated January 9, 2015, last accessed April 2, 2020, https://thebusinessprofessor.com/knowledge-base/strict-product-liability/.
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Strict Product Liability
This video explains what is strict product liability and how it arises from product defects.

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What is “Strict Products Liability”?

Strict products liability involves the commercial sale of defective products. In most states, any retail, wholesale, or manufacturer who sells an unreasonably dangerous, defective product that causes injury to a user of the product is strictly liable. This applies to commercial sellers who normally sell products like the one causing injury or who place them in the stream of commerce, such as suppliers of defective parts and companies that assemble a defective product.

There are two kinds of defects for purposes of strict product liability:

Production Defects – A production defect occurs when products are not manufactured to a manufacturer’s own standards. Consumers of the defective product are later injured as a result of this variation from the manufacturer’s standards.

Design Defects – A design defect occurs when a product is manufactured according to the manufacturer’s standards but is an unsafe design. The product injures a user due to its unsafe design.

If either of these defects makes the product unreasonably dangerous if used as intended, any seller of the product (from manufacturer to retailer) may be liable for an injury caused by the defective product. Strict products liability is useful in protecting individual consumers who suffer personal injury or property damage.

Discussion: How do you feel about the fact that anyone in the chain of distribution can be liable for design or manufacture defects? Why do you think the law allows for such wide liability?

Practice Question: Fancy Motors is a car manufacturing company. They develop a new, compact car for the US market. The car has troubles from the minute it comes off of the assembly line. The gas tank is located behind the fender-well of the vehicle. This leads to an increased risk of fire in the event of a rear-end collision. Also, Fancy Motors installed a seatbelt system that is designed to have three points of contact with the car frame. Due to space concerns and a lack of understanding of the seatbelt system, Fancy only attached the seatbelt to the frame in two locations. Can you identify any points of potential liability for Fancy Motors in this scenario?

Proposed Answer

  • In the example from the practice question, Fancy Motors will likely be strictly liable for the vehicle defect if it causes an injury. Strict product liability is a legal rule that says that a seller, distributor or manufacturer of a defective product is liable to a person injured by that product regardless of whether the defendant acted intentionally or negligently. The purpose of this rule is to ensure that sellers, distributors and manufacturers do not make products that are defective, produce defective designs of the products, or even sell said defective products. If the manufacturer, distributors, and seller ignore the defects and sells the product, they will be held liable for the injuries sustained by the buyers. In a strict liability claim, a plaintiff has to prove:
    • Product was sold in a dangerous, unreasonable condition.
    • Seller, manufacturer and distributor expected and intended the product would reach the consumers without any changes to it along the way.
    • Plaintiff and/or their property was injured because of the product’s defect.

     https://www.legalmatch.com/law-library/article/what-is-strict-product-liability.html

Academic Research

Hackney, Jr., James R., The Intellectual Origins of American Strict Products Liability: A Case Study in American Pragmatic Instrumentalism (1995). American Journal of Legal History, Vol. 39, No. 4, pp. 443-509, October 1995; Northeastern University School of Law Research Paper . Available at SSRN: https://ssrn.com/abstract=2007599. This article examines the intellectual origins of strict products liability in America. The author traces the intellectual roots of strict products liability to the constellation of ideas referred to in the article as “pragmatic instrumentalism” (pragmatism, institutional economics, and legal realism). Pragmatic instrumentalism played a significant role in changing the way tort law is viewed in America — transforming it from an individualist focus to being concerned with broader policy implications. This new intellectual perspective, combined with Progressive Era politics, led to the shift away from negligence to strict liability in products liability.

Nolan, Donal, Strict Product Liability for Design Defects (April 1, 2018). (2018) 134 Law Quarterly Review 176-181; Oxford Legal Studies Research Paper No. 22/2018. Available at SSRN: https://ssrn.com/abstract=3196098. A case note discussing the decision of Hickinbottom J in Wilkes v DePuy International Ltd [2016] EWHC 3096 (QB); [2017] 3 All ER 589, which is now the leading case on the application of the Consumer Protection Act 1987 in the case of an alleged design defect. It is argued in the note that the approach taken by Hickinbottom J to the issue of defectiveness should be seen as complementing or supplementing the guidance given in A v National Blood Authority [2001] 3 All ER 289, and that taken together with that earlier decision – and provided that due attention is paid to the significance of the standard/non-standard product distinction that the facts of the two cases encapsulate – the decision in Wilkes represents a solid foundation for future analysis of that issue under the strict product liability regime laid down by the 1987 Act.

Dean, Benjamin, An Exploration of Strict Products Liability and the Internet of Things (March 13, 2018). Available at SSRN: https://ssrn.com/abstract=3193049 or http://dx.doi.org/10.2139/ssrn.3193049. Internet connectivity, software, and autonomous capabilities are increasingly integrated into all manner of devices and objects, creating the so-called Internet of Things (IoT). Historically, products with these digital components and capabilities have not had sufficient security measures incorporated into their design. In the past, strict products liability has not tended to apply to the designers, manufacturers, and/or retailers of digital products. This will change because failures of increasingly ubiquitous IoT devices are likely to have consequences such as damage to property, personal harm, or even death. These consequences trigger the potential for application of strict product liability. This paper explains the market failures that lead to persistently poor cybersecurity, the reasons that strict product liability is likely to apply to harm caused by failure of IoT devices, and provides a roadmap for future research in this area.

Cantu, Charles, Twenty-Five Years of Strict Product Liability Law: The Transformation and Present Meaning of Section 402A (1993). 25 St. Mary’s L.J. 327 (1993). . Available at SSRN: https://ssrn.com/abstract=2890796. Twenty-five years ago, the American Law Institute had just published Section 402A of the Restatement (Second) of Torts. As a consequence of this new and innovative rule, the theory of recovery in the area of defective products was expanded from a system based on principles of negligence and warranty to one that also included the doctrine of strict product liability. The promulgation of Section 402A marked the beginning of a growing revolution in the field of plaintiff-oriented litigation in which parties and courts frequently center their inquiry upon the defectiveness of the product and issues related thereto, rather than on the defendant or principles of the law of warrantee. Unfortunately, since the advent of Section 402A, the American legal system has not perfected one uniform doctrine governing recovery. Much has transpired in the law of strict product liability in the last twenty-five years, and reflection upon this history shows that Section 402A does not, as written, represent the true state of the law today. The apparent intent of the drafters has been altered radically by the courts and legislatures, and events and individuals not mentioned in the original section are now able to find recourse under the law. One can barely imagine what additional changes will occur in the realm of product liability law as a new generation advances into the twenty-first century.

Keating, Gregory C., Products Liability as Enterprise Liability (December 5, 2016). USC Law Legal Studies Paper No. 16-38. Available at SSRN: https://ssrn.com/abstract=2880705 or http://dx.doi.org/10.2139/ssrn.2880705. The prevailing wisdom about the rise of modern products liability law is framed by a debate which took place more than a generation ago. George Priest argued that modern American products liability law was born as enterprise liability incarnate and consequently ran amok in a nightmare of unlimited liability. Gary Schwartz countered that product liability law strict in name but fault-based in fact. Strict products liability was a revolution in rhetoric alone. To this day, these positions dominate our understanding of products liability law in its formative moment. We are long overdue for a fresh look. This paper argues that Priest was right to argue that modern American product liability law exploded when it was crystallized as a form of enterprise liability in §402A of the Second Restatement of Torts. But he loses the thread of the narrative when he claims that strict products liability self-destructed because enterprise liability is inherently limitless Enterprise liability is liability for the characteristic risks of an activity and it is as preoccupied with identifying those risks of activities as fault liability is preoccupied with determining the presence or absence of fault. Professor Schwartz, for his part, is right that conceptions of balancing, duties of care, and comparative fault all find their ways into product liability law in its formative period. But Schwartz’s identification of products liability with negligence is fundamentally mistaken. In products liability’s formative moment these elements of negligence law were deliberately refashioned to construct a form of liability more strict than ordinary negligence liability. This paper proceeds as follows. Part I briefly traces the long common law pre-history of modern product liability law as it passes through four phases: freedom of contract, negligence liability, warranty liability and strict enterprise liability. Part II explains the idea of enterprise liability as a distinctive conception of tort liability, focused on activities not actions and finding its fullest incarnation in strict liability. Part III explains the liability rules that constituted products liability as enterprise liability with a particular eye to showing how they articulated a distinctive regime consciously designed to be more stringent than ordinary negligence liability. Part IV takes stock of the Priest and Schwartz theses in light of the regime described in Part III. Very briefly, Part IV also suggests why enterprise liability should be considered a valid alternative to negligence liability in the emerging world of autonomous vehicles.

Korzec, Rebecca, Dashing Consumer Hopes: Strict Products Liability and the Demise of the Consumer Expectations Test (Summer 1997). Boston College International and Comparative Law Review, Vol. 20, No. 2, 1997. Available at SSRN: https://ssrn.com/abstract=1418650 or http://dx.doi.org/10.2139/ssrn.1418650. The threshold issue in American products liability litigation is whether the product was defective at the time it left the manufacturer’s control. Traditionally, courts and scholars define “defect” in three functional categories: manufacturing defects, design defects and marketing defects. American products liability doctrine employs two major tests to determine whether a “defect” exists: the seller-oriented risk-utility test and the buyer-oriented consumer expectations test. The Draft of the Restatement Third of Torts: Products Liability, like some American jurisdictions, rejects the “consumer expectations” test as an independent standard in defective warning and design cases. Ironically, this limitation of the use of the consumer expectations test in American products liability doctrine coincides with the European Community’s adoption of the consumer-oriented test for European strict products liability cases. This article analyzes these contemporary developments. First, it considers the implications of the European Union’s (EU) Council Directive No. 85/374 (European Directive) for American products liability law. It then analyzes the consumer expectations test in light of the purpose of products liability law. Reconsideration of the consumer expectations test suggests that, properly constructed and applied, the consumer-oriented test promotes considerations of safety, equity, and efficiency.

Cupp, R.L. and Polage, Danielle, The Rhetoric of Strict Products Liability Versus Negligence: An Empirical Analysis (2002). New York University Law Review, Vol. 77, 2002. Available at SSRN: https://ssrn.com/abstract=1633625. In defective design and warning cases, courts and commentators increasingly are questioning the substantive distinction between negligence and strict liability causes of action. In 1998, the Restatement (Third) of Torts: Products Liability adopted a risk/utility analysis for defective design and warning claims that reflects a strong trend among jurisdictions in two ways. First, it advocated using the risk/utility test regardless of whether plaintiffs label their claims as negligence or strict liability (or, for that matter, implied warranty of merchantability). Second, the Restatement’s risk/utility analysis draws from principles of reasonableness, making strict liability essentially subject to a negligence analysis. In light of courts’ trend toward risk/utility and the Restatement’s position, commentators increasingly have wondered whether a plaintiff’s choice between negligence and strict liability in design and warning claims largely amounts to a rhetorical preference. In this Article, Professors Richard L. Cupp, Jr. and Danielle Polage present an empirical study of mock jurors that tests whether employing negligence versus strict liability language influences jury decisions when a substantively identical risk/utility standard is used. The authors found support for the perhaps counterintuitive argument that negligence language may favor plaintiffs by drawing on emotionally “hot” notions of fairness and fault, as opposed to the “cold” technical concepts of strict liability. The study found that jurors hearing the case under negligence language were more likely to find the defendant liable, and that they awarded, on average, almost twice the amount of damages compared to their strict liability counterparts. Indeed, although several findings showed advantages to using negligence language or disadvantages to using strict liability language, the study found no obvious rhetorical advantages to using strict liability language. The study thus presents a powerful challenge to the notion that strict liability is generally a pro-plaintiff doctrine under courts’ increasingly dominant approaches to design and warning cases.

Nelson, Randy Alan and DREWS, JAMES N., Strict Product Liability and Safety: Evidence from the General Aviation Market. Economic Inquiry, Vol. 46, Issue 3, pp. 425-437, July 2008. Available at SSRN: https://ssrn.com/abstract=1263080 or http://dx.doi.org/10.1111/j.1465-7295.2007.00098.x. This paper examines the impact of a strict product liability standard on the accident rate in the general aviation (GA) industry. Liability expenses increased by 775% between 1976 and 1986, reducing the sales of new GA aircraft by 90% and increasing the age of the GA fleet. Using both aggregate and model-specific data, our results indicate that the increase in the age of the GA fleet increased the accident rate by 25%-35% during 1981-2000. In addition, the higher price of GA aircraft boosted sales of homebuilt planes, which have higher accident and fatality rates than GA aircraft.

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