What is product liability in contract and in tort?

A defective product is a product which does not meet the safety requirements which a person could reasonably expect. Defects or faults may be caused, for instance, by a problem in the production process, or because of defects in design, composition or specifications. A product can even be considered defective if it does not contain sufficient warnings or directions for use, and injury is caused as a result.

A supplier or manufacturer of defective products can be liable under their contractual relationships and/or under the law of tort. Contractual liability arises if the product or service provided under an agreement is faulty or defective. This would constitute a breach of contract because there are implied terms in the contract that the goods or services must be fit for purpose and of satisfactory quality.

Tortious liability arises if a defective product or service causes harm or death to an individual. The claim will be for negligence, and the manufacturer (or producer) does not have to have had a contractual relationship with the claimant to be sued in tort.

When you buy goods or services from a business, you have statutory protection under the Consumer Rights Act 2015 (CRA). The CRA implies various terms into the contract including that the goods or services must be fit for purpose and of satisfactory quality. If either or both of these implied terms, or other contractual terms, are breached because a faulty or defective product or service is supplied under the contract, the buyer can make a claim for breach of contract.

The extent of the other party’s contractual liability will be compensation for the damage caused by the defective product, as well as the right to reject the product. However, the claimant can only make a claim for breach of contract against another party to the contract – usually the retailer. This is the legal principle of ‘privity of contract’, which means that breach of contract claims can only be made against a person or organisation who was a party to the contract. Therefore, a manufacturer of a defective product is not liable for defective products under the usual contract rules.

However, there are very limited rights of third parties to claim under a contract, for instance, if a third party was intended to benefit from the transaction – but specialist legal advice should be taken.

Regardless of the lack of a contractual relationship, a manufacturer or producer can be held liable in tort if someone suffers injury or is killed as a result of a defective product. Tortious liability rests on the assumption that a manufacturer owes a duty of care to all those who it could reasonably be expected to use its products. This is a potentially wide pool of people and could include family members using household products and gadgets, by-standers and work colleagues.

To succeed in a negligence claim, the claimant must be able to prove, on the balance of probabilities that the manufacturer (or producer) failed to take reasonable care. This may be a failure, for instance, to take reasonable care during the manufacturing process, or during the design of the product, or a lack of testing, or failure to warn of dangers. This can be a difficult burden for the claimant to discharge.

However, the Consumer Protection Act allows an injured party to claim damages without having to prove the manufacturer was negligence.

The CPA imposes strict liability, which means the claimant does not have to prove negligence. It only has to prove the product was faulty – and that harm and personal injury (or death) was probably caused by that defect. A claim under the CPA cannot be made in respect of mere economic loss.

Liability under the CPA cannot be excluded or limited. If a business purports to limit or restrict its liability for defective products, it will not be effective. The victim will still have statutory protection.

There are further laws which impose liability, including criminal liability, for defective products, for instance, health and safety legislation, the Children and Young Persons (Protection from Tobacco) Act, Tobacco Advertising and Promotion Act, and the Fireworks Act.

In some cases, a supplier or manufacturer will be in a different jurisdiction, in which case English law may not apply. In these circumstances, specialist legal advice will be needed in relation to whether the English courts have jurisdiction to hear the case, and what law should be applied in resolving the dispute.