299 |
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2â Personnel |
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construed in line with the Directive even though the wording of the Act differs |
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significantly from that of the Directive.3 |
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Section 2 looks at the personnel involved in product liability, beginning |
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with the statutory definition of the term ‘producer’. The section continues by |
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analysing the potential liability for product-related injuries of producers, |
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own-branders, importers into the European Union and other people in the dis- |
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tributive chain. Section 3 considers the meaning of the term ‘product’ in the |
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context of the Consumer Protection Act 1987. Section 4 addresses the central |
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issue of defectiveness by considering (a) the classification of defects into manu- |
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facturing defects, design defects and duty to warn defects; it also considers |
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the challenge to this traditional classification by the decision in A v. National |
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Blood Authority;4 (b) an analysis of the meaning of ‘safety’ in section 3 of the |
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Consumer Protection Act 1987 and the criteria used in determining whether |
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a product satisfies the requirement for a product to be safe; (c) the need for a |
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claimant to prove that the product is defective and that there is a causal link |
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between the defective product and the injury. |
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Section 5 considers the six defences that are available to the defendant in a |
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product liability case under section 4 of the Consumer Protection Act 1987. |
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Particular attention is given to the most controversial of the defences, namely, |
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the development risk defence. |
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Section 6 confirms that contributory negligence is applicable in product |
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liability cases, and Section 7 analyses the types of recoverable damage in prod- |
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uct liability cases, namely, death, personal injury and some types of property |
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damage. |
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Section 8 considers the time limits applicable in product liability claims. |
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In addition to the three-year limitation period there is also a ten-year cut-off |
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period after which no further claims can be made. It also looks at the global |
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financial limit permitted under the Product Liability Directive. |
2â Personnel
(a)â Definition of a ‘producer’
Two key concepts in the Consumer Protection Act 1987 are ‘producer’ and ‘product’, as the one is held liable for injuries caused through a defect in the other. The definition of ‘producer’ covers three types of persons.5 The first, and most obvious, is the person who manufactured the product.6 This also includes the manufacturer of any component part to the extent that his component has proven faulty, resulting in the injury to the user.7 Given the highly technical nature of many of the products now available in the market, a significant
3 |
Product Liability Directive, Art.7(e).â 4â [2001] 3 All ER 289. |
5 |
Consumer Protection Act 1987, s.1(2).â 6â Ibid. s.1(2)(a). |
7 |
However, note the defences available to a component manufacturer under ibid. s.4(1)(f). |
300 |
Product Liability under the Consumer Protection Act 1987 |
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number |
of individual manufacturers may be liable, in whole or part, in respect |
of a single end-product.
The second definition of a producer involves the person responsible for the production of substances that have not been manufactured but have been won or abstracted.8 This includes, for example, companies abstracting coal, gas, water or other minerals from underground but would be broad enough to include catching fish.
The final definition of a producer covers those who, where the product has not been manufactured, abstracted or won, have carried out an industrial or other process which has created essential characteristics of the product.9 This last definition requires some analysis as to what constitutes an industrial or other process and when a characteristic of a product is deemed to be essential. An industrial process would include, for example, turning timber into chipboard, but what of freezing food? Is a frozen pea a different product from a freshly picked one such as to make both the picker and the frozen food company liable as manufacturers? Arguably, the answer is ‘yes’, as although both products are peas, they have different storage abilities and thus, if the one is kept frozen, it will remain edible long after the other has perished, In fact, section 1(2)(c) specifically refers to agricultural produce as a product that may be subjected to an industrial or other process. As Professor Miller points out,10 the discussion is probably an academic one as the Directive does not go into such detail. Rather, it initially limits the definition to manufacturers, producers of raw materials, component manufacturers and own-branders.11 However, it goes on to provide that anyone importing a product into the Community in the course of his business will be deemed to be a producer and will be responsible as such. Finally, the Directive provides that, when the producer cannot be identified, each supplier of the product will be treated, prima facie, as its producer. By contrast, the Consumer Protection Act 1987’s definition of producer is restricted to a person who manufactured a product, won or abstracted it or who carried out an industrial process in relation to it. However, this restricted definition does not prevent liability being placed on own-branders and other suppliers of the product.12
There is an obvious attraction in interpreting the meaning of producer widely and placing liability upon other persons in the supply chain who have not truly produced the item at all. If an underlying purpose of the legislation is to place liability upon the people who are best able to handle it, then potential liability should extend to all those involved in the supply of the product as they can spread the risk most effectively through the use of insurance. This would mean that product liability has moved away from the basic societal proposition of only
â 8
10
11
12
Ibid. s.1(2)(b).â 9â Ibid. s.1(2)(c).
C.J. Miller and R.S. Goldberg, Product Liability (2nd edn Oxford University Press, 2004). Product Liability Directive, Art. 3.1.
Consumer Protection Act 1987, s.2.
301 2â Personnel
holding liable those people who are responsible for an action and extend it to anyone with an interest in the supply of the product. This argument would be particularly relevant in respect of the liability of producers for design defects were it not for the existence of the development risk defence under section 4(1)(e) of the 1987 Act. Of course, product liability is not the only area in which strict liability is imposed; the Sale of Goods Act 1979 holds the seller of goods strictly liable even though he has done nothing other than purchase the goods from a distributor and sell them on to the buyer.
Q1 Consider whether the broader definition of ‘producer’ helps to promote the underlying rationale of the Directive.
(b)â Potential defendants
The Product Liability Directive requires that in order to promote consumer protection, all producers in the production process should be made liable insofar as their finished product, component part or raw material was defective and further, that liability should be extended to the first importer into the community, own-branders and, when the producer cannot be identified, suppliers.13 In addition to this, comprehensive consumer protection requires that when several people are liable for the same damage, the consumer should be able to claim full compensation from any of them, i.e., that joint and several liability will apply.14
Section 2 of the 1987 Act identifies the potential defendants and complies both with the requirements of the Directive and the philosophy contained therein. Thus, section 2(1) requires that liability will fall on the specified individuals when damage has been caused wholly or partly by a defect in a product. The provision of ‘wholly or partly’ recognises that the defect may have been a contributory factor in the injury-causing incident without necessarily being the only factor. Thus, for example, it may be that the injured person is partly to blame for the injury, a situation acknowledged by the inclusion of contributory negligence as a factor reducing the liability of the defendant.15
The primary defendants are detailed in section 2(2) as being the producer of the product as previously defined, own-branders16 and the first importer into the European Union.
An own-brander is recognised as being someone who puts his name on the product or uses his trade mark or other distinguishing mark in relation to the
13 Product Liability Directive recital, para. 4.â 14â Ibid.
15Consumer Protection Act 1987, s.6(4).
16Ibid. s.1(2). There is no overt requirement that the producer or own-brander be acting in the course of a business and thus, technically, there could be prima facie liability against a private person. However, that possibility is negated by the fact that s.4(1)(c)(i) provides a defence to anyone who has only supplied the product other than in the course of a business. Thus, in practice, liability is restricted to producers and own-branders who are in business.
302 |
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Product Liability under the Consumer Protection Act 1987 |
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product, thereby holding himself out to be the producer. This would obviously |
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include those businesses, often but not exclusively supermarkets, who supply |
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goods under their own brand name when, in reality, they have been produced |
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on their behalf by somebody else. In practice, these own-brand companies often |
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make a better defendant than the company who actually produced them, either |
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because the real producer is a much smaller enterprise17 or because the real |
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producer is in another country beyond the jurisdiction of the UK courts.18 An |
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interesting issue arises with regard to the statements actually made on the prod- |
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uct packaging. If the only name that appears on the packaging is that of the own- |
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brander, then holding them liable is a straight-forward matter. However, it may be |
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that the packaging, while emphasising the name of the own-brander for market- |
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ing purposes, also indicates the name of the real producer, with a statement to the |
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effect that ‘this product was produced for ABC Ltd by XYZ Ltd’. In this case, there |
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is an argument for saying that the own-brander, ABC Ltd, should not be liable as |
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the identity of the true producer has been provided. As yet, there is no firm deci- |
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sion on this point. However, to allow an own-brander to evade liability in this way |
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would seem inequitable, as it would permit him to reap all of the benefits of using |
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his market profile to promote and sell the products while not accepting any liabil- |
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ity for them. Equally, it would fly in the face of fixing liability on those who are in |
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the best position to face it, and thus providing injured users with the best chance |
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of seeking compensation for their product-related injuries.19 |
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The policy of providing multiple potential defendants for the injured user to |
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sue also explains the inclusion of the first importer into the European Union as |
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a potential defendant in any action. Having a legitimate claim against a non-EU |
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producer based outside the jurisdiction of the courts is of no real benefit to an |
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injured user. However, by rendering the first importer liable, the Directive, and |
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hence the Consumer Protection Act 1987, ensures that there is always a poten- |
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tial defendant based within the jurisdiction of the courts against whom any |
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judgment can be enforced. While there always remains the possibility that all of |
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the potential defendants have ceased trading, it would be an extremely unlucky |
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claimant who faced this reality. |
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As regards the first importer into the European Union, the provision |
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expressly provides that the importation must have been in order for that per- |
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son, in the course of any business of his, to supply it to another. This business |
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requirement negates the risk, however remote, of a private tourist being held |
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legally responsible in respect of any defective items that they bring back with |
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them from travels outside the European Union.20 Thus, there is no liability for |
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17 |
Typical in food production and retailing |
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18 |
This is often the case in clothing production and retailing where the clothes are often |
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manufactured in workshops in the Far East. |
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19 |
For further discussion on this point see G. Howells and S. Weatherill, Consumer Protection Law |
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(2nd edn, Ashgate Publishing Ltd, Aldershot, 2005). |
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20 |
A defendant who has imported goods into the European Union in his private capacity would be |
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able to show that there is no prima facie action against him. Equally, he could use the defence in |
303 2â Personnel
presents or for items purchased outside the European Union at the express request of someone known to the tourist. The definition of the first importer requires analysis of the phrase ‘in the course of any business of his’. Business requirements appear regularly in trading legislation, both civil21 and criminal,22 but the wording can vary, and with it the meaning. The phrase ‘in the course of any business of his’ was considered by the House of Lords in the decision of Warwickshire County Council v. Johnson23 when interpreting and applying section 20 of the Consumer Protection Act 1987.24 They held that the phrase requires that the person is the owner of the business or has a controlling interest in it.25 This is a relatively narrow construction of the phrase. However, this construction is in line with the ethos of the Product Liability Directive and the 1987 Act, which seek to place liability on those who can exercise a measure of control over defective products as opposed to those who are simply employed in the industry producing and supplying them.
In addition to the primary defendants under section 2(2), liability is also placed upon suppliers by virtue of section 2(3) when the damage has been caused wholly or partly by a defective product. The term supplier is construed widely and is not limited to someone who supplies the product to the injured user. Instead, the approach is to hold responsible anyone who has been involved at any point in the chain of distribution. Thus, it includes not merely someone who supplied the product to the injured user but also anyone who has supplied a product to another person who has then incorporated it into another product, i.e., component manufacturers and anyone who has supplied the product to another person. This latter provision encompasses all suppliers in the whole of the contractual chain of distribution, including the ultimate sale by the retailer to a consumer who will not necessarily be the injured user. This liability extends the number of possible defendants quite significantly as it has the potential to include several people who have been involved in the supply of the product
Consumer Protection Act 1987, s.4(1)(c)(i) that the only supply by him had been otherwise than in the course of a business.
21See, e.g., Sale of Goods Act 1979, s.14.
22Trade Descriptions Act 1968, ss.1 and 14 (now repealed); Consumer Protection Act 1987, s.20(1) (now repealed). More recently, other regulations have introduced a business requirement by placing liability on a ‘trader’, defined as being a person who ‘is acting for purposes relating to his business’. See Consumer Protection from Unfair Trading Regulations 2008 (SI 2008/1277), reg. 2(1).
23[1993] 1 All ER 299.
24Consumer Protection Act 1987, s.20(1) provides that a person is guilty of an offence ‘if, in the course of any business of his, he gives (by any means whatsoever) to any consumers an
indication which is misleading as to the price at which any goods, services, accommodation or facilities are available (whether generally or from particular persons)’. This section was repealed and replaced by the Consumer Protection from Unfair Trading Regulations 2008.
25The subsequent decision in Denard v. Burton Retail Ltd, The Times, 19 November 1997 held that goods had been supplied in the course of Burton’s business when they were paid for through a till in a store belonging to Burton even though the goods had been supplied by a concession holder in the store who both owned the goods and fixed the prices for them. That said, some of the goods did carry price labels from Burton.
304 |
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Product Liability under the Consumer Protection Act 1987 |
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while not producing it. However, given that suppliers, while still making a |
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profit from the goods, are one step removed from their production, the section |
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includes factors that limit the liability of suppliers to situations where they have |
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failed the injured user in some way. Consequently, liability only arises where the |
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injured user has requested the supplier to identify one or more of the producer, |
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own-brander or first importer of the product26 and the supplier has failed to |
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do so.27 However, the injured person must have made the request within a rea- |
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sonable time after the damage occurred and at a time when it was not reason- |
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ably practicable for him to identify all of the section 2(2) defendants.28 There is |
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no definition of reasonable in either context and presumably it will depend on |
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the facts of the case. Assuming that the request has been made within a reason- |
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able time, the supplier must then comply with the request within a reasonable |
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time by either identifying the producer, own-brander or importer or, alterna- |
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tively, providing details of the person from whom he acquired the product. |
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Again there is no definition of a reasonable time but the European Commission |
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when considering the term in the Directive saw no need for amendment.29 It |
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is this failure by the supplier to comply with the request within a reasonable |
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time that triggers his liability to the injured user. Assuming, however, that he |
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complies with a valid request, the supplier will escape liability even if the people |
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that he identifies no longer exist, there being no requirement that the supplier |
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provides the user with a viable defendant who is capable of being sued. The sup- |
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plier’s liability is restricted to identifying the relevant people. Given the prevail- |
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ing economic climate, this is significant as many businesses, particularly in the |
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manufacturing sector, have gone into liquidation and thus are no longer cap- |
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able of being sued. The net result is that the potential number of prospective |
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defendants available to an injured user may be less than would otherwise be the |
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case, but this is no reason to extend the liability placed on a supplier. |
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Section 2(5) provides for joint and several liability such that each person |
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who can be held liable under Part I of the 1987 Act is liable for the whole of |
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the damages payable to the injured user. Clearly, this is advantageous to the |
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injured user as he only needs to identify one potential defendant to sue, leav- |
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ing it to that defendant to identify other potential defendants and either join |
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them in as co-defendants or seek a contribution from them in a separate action. |
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But the benefit to the injured user is not simply that he only needs to sue one |
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person. It also lies in the fact that he can select which of the potential defend- |
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ants is in the strongest position to pay him the full amount of his compensa- |
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tion, either through a court action or, preferably, via product liability insurance, |
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which will save the delay and cost of pursuing a court case. Hence, for example, |
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in a situation |
where a small producer produces goods for a large multinational |
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26 |
Consumer Protection Act 1987, s.2(3)(a). |
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27 |
Ibid. s.2(3)(c).â 28â Ibid. s.2(3)(b). |
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29European Commission, Report from the Commission on the Application of Directive 85/374 on Liability for Defective Products, COM(2000)893 final, para. 3.2.7.