Product Liability

Law and Insurance

Mark Mildred, Mark Mildred

• Editorial: Informa Law from Routledge
• Año: 2020
• ISBN:
  9781000286472
• Edición: 1
• Categoría: Law
• Categoría: Financial Law

Originally published in 2001, Product Liability: Law & Insurance is a highly partical reference work that covers all facets of product liability. It looks at partical applications of the law and gives expert advice on how to operate in given situations; offering guidelines on how to avoid product liability problems and what to do in practice if things do go wrong.

CHAPTER 1

INTRODUCTION TO THE LAW OF PRODUCT LIABILITY

INTRODUCTION

1.1 The object of this chapter is to provide a context and a background. Everyone concerned in the field of product liability or insurance will know that the current product liability law begins with the European Community Directive on Liability for Defective Products of 1985,¹ passed into English law by the Consumer Protection Act 1987, Part 1.

1.2 A full understanding of the new law is fundamental to business conducted since 1 March 1988 and into the future. However, that understanding will be improved by an appreciation of where the law stood and how it had developed prior to that date. No one will need persuading that the untangling of insurance cover relationships and the long latent periods for certain types of damage or loss will mean that the old law will be relevant for some years to come.

1.3 Further, the Consumer Protection Act 1987 does not regulate liability for transactions between businesses where no consumer is involved and is not, in any event, an exclusive source of remedies. It leaves all existing law in place and is simply an additional and alternative cause of action.

SOURCES OF LAW

1.4 It is important to bear in mind throughout this book that the law we are dealing with is not the criminal law, by which society seeks to punish a citizen or corporation for the commission of a crime, but the civil law. This is the law which regulates disputes between individuals or corporations, designed to make compensation or reparation for loss and damage. It is, moreover, not public or administrative law by reference to which the judiciary regulates decision making by bodies exercising public functions.

1.5 There is no doubt that the criminal law can be and is applied to the supply of goods, e.g. the offences of contravention of safety regulations under section 12 and giving misleading information under section 20 in Part II of the Consumer Protection Act 1987, and of making false representations under the Trade Descriptions Act 1968. Product safety regulation which involves consideration of the criminal law is dealt with in Chapter 6. The penalties imposed by the criminal courts are not generally insurable.

1.6 The law we are dealing with comes from two sources: from Parliament and from judges.

1.7 The law made by Parliament is statute law. This comprises Acts of Parliament approved by both Houses of Parliament and given the Royal Assent. Under the powers given by Acts of Parliament regulations called Statutory Instruments can be made. These are subordinate legislation which can implement the purpose and provisions of Acts of Parliament but not make substantive changes to them. The modern fashion is for Acts to give Ministers powers and duties and to leave all matters of detail and implementation to the Regulations. The Regulations do not require Royal Assent and are generally passed without major publicity or debate.

1. Council Directive 85/374/EEC.

1.8 Acts and Regulations can be amended or revoked only by Parliament.

1.9 A further source of statutory law since our entering into the European Community in 1973 is Community law itself. It is relevant to mention here that Community law is made up of Regulations which are directly applicable to and incorporated into our domestic law and Directives which require domestic legislation to bring them into effect. The General Product Safety Directive has been implemented by Regulations in the UK (see Chapter 6). A domestic court can refer questions of potential or suspected conflict between domestic and Community legislation or of the interpretation of Community legislation to the European Court of Justice in Luxembourg for resolution under Article 234 of the Treaty of Rome.

1.10 Law made by judges is called the common law. For over a hundred years judgments made by judges of the higher courts have been recorded and these form precedents to be followed. Thus, a judge having to consider a concept not defined in an Act of Parliament or the standard to be achieved by a manufacturer may find guidance in previous judgments in other cases laying down the ground rules. The common law is widely found in Commonwealth countries and in almost all of the United States of America.

1.11 The common law develops in parallel to statute. A judge can never decide that Parliament was in error when formulating an Act or Regulation. If a judge believes that an Act or a Regulation applied to a case produces a result which is wrong, he or she can only express reluctance at the inevitable conclusion and the hope that Parliament will amend the position by legislation.

1.12 There is a hierarchy in judge-made law. The Judicial Committee of the House of Lords (universally known for this purpose as The House of Lords) is the supreme judicial authority in the United Kingdom. It hears only cases of public importance, usually when an interpretation of some part of an Act or a Regulation is required or when a common law concept needs to be explained or revised.

1.13 Until 1968 the House of Lords always considered itself bound by its own previous decisions (a profoundly conservative position), but now feels able to depart from them and, in effect, to change the common law at the highest level when the case for so doing becomes unanswerable.

1.14 The Court of Appeal is bound to follow the authority of decisions of the House of Lords. The first-tier judges of the High Court are bound to follow decisions of both House of Lords and Court of Appeal, and always profess reluctance to depart from judgments of their colleagues of the same rank without good reason.

1.15 The effect of the common law is perhaps a mixture of creativity and uncertainty. Many judges have deservedly had the reputation of being independent of the Executive in upholding the liberty of the citizen. Many have found ways to advance concepts or modernise procedures designed to make the law fairer or more accessible to consumer and business alike. The doctrine of precedent permits a judge to decide that the case which is supposed to determine his decision is not strictly comparable to the case he is trying, so that he may safely ignore it and come to the decision which he thinks right.

1.16 Nevertheless, some judges are more ready than others to resort to “creative” interpretation of Parliament’s intention in using certain words in a statute in order to bring about the result they consider right. The common law is thus in the hands of judges whose attitude to statute ranges from literal-minded conservatism to a liberalism which in itself diminishes the predictability of the outcome. Whether this is a good thing or a bad thing depends partly on the relative attractions of freedom, fairness and order, and partly on who ends up paying the price inherent in the unpredictability.

1.17 The other side of the coin is that the more opportunity judges have for expressing their own views of what is fair and just or socially acceptable in their interpretation or avoidance of precedent or statute, the more uncertain the outcome of the case becomes. This, the argument runs, is of no help whatsoever to either party, since the more predictable the result, the more likely it is that a settlement (always desirable) can be achieved and the delay and costs (not to mention the anxiety of the litigation process) kept to a minimum. In any event, given the scarce resource of Parliamentary time for legislation, particularly in the area of law reform, judges have no alternative to fitting existing law to the facts of each case as best they can.

WHAT IS PRODUCT LIABILITY?

1.18 Product liability law is an amalgam of statute and common law which regulates liability for personal injury and death, damage to property and financial loss caused by or resulting from the use of a product.

1.19 Until the passing of the Consumer Protection Act in 1987 which began the modern law of product liability, most of the law (at least in the absence of a contract between the parties) was judge-made and developed by a series of extensions of existing principles.

1.20 At this point it is necessary to make the distinction between contract and tort. Both are types of civil liability.

1.21 The law of contract, as the name implies, simply regulates legal relations between those who are parties to an agreement, a bargain or contract. Traditionally, the only people affected by it are the parties to the contract, no matter how monstrous the conduct or how huge the damage. In contracts entered into after 11 May 2000 the Contracts (Rights of Third Parties) Act 1999 will allow third parties to sue for breach of a term of a contract where that contract expressly gives them a right so to do or the contract purports to confer a benefit upon them. This new regime is unlikely to have a profound effect on product liability litigation.

1.22 The law of tort is a catch-all name for the law of civil wrongs, excluding breaches of contract. By far the most important of these for our purpose is the tort of negligence, although, as we shall see below, other torts play a part in the story.

1.23 It is worth mentioning that this field of law applies only to the supply of goods or products but not to that of services, legal relations between occupiers and visitors, between employers and employees, the ownership of designs or ideas, or indeed anything else.

THE DEVELOPMENT OF THE LAW OF PRODUCT LIABILITY

1.24 Until almost the turn of the last century, a purchaser of goods had little remedy if they turned out to be unsatisfactory or defective. The burden was on the purchaser and the maxim caveat emptor (let the buyer beware) generally applied. The only protection available to the purchaser would have been to make insurance arrangements to protect against the possibility that the goods were not all they seemed.

Contract

1.25 In this context the Sale of Goods Act 1893 was a radical step. The effect of it w...