Product Liability 2009 - Arnold & Porter LLP

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Chapter 38
Scotland
McGrigors LLP
1 Liability Systems
1.1 What systems of product liability are available (i.e. liability
in respect of damage to persons or property resulting from
the supply of products found to be defective or faulty)? Is
liability fault based, or strict, or both? Does contractual
liability play any role? Can liability be imposed for breach
of statutory obligations e.g. consumer fraud statutes?
Liability for damages arising from the supply of products found to
be defective or faulty arises in contract, common law and statute.
There is some overlap. The principle statute is the Consumer
Protection Act 1987.
Contract
The law of contract implies a term that goods and services sold are
fit for their intended purpose and of satisfactory quality. The Sale
of Goods Act 1979 Section 14(2)A states that goods are of
satisfactory quality if they meet “the standard that a reasonable
person would regard as satisfactory, taking account of any
description of the goods, the price (if relevant) and all other
relevant circumstances”. “Safety” and “fitness for purpose” are the
markers for quality under the act. The liability of the seller to the
purchaser is strict and it does not matter whether or not the seller
was at fault in causing injury to the consumer.
Contractual liability is restricted to those in the contractual
relationship, i.e. the seller and the consumer in the context of the
Sale of Goods Act provisions. It is therefore important for retailers
to ensure that contracts with manufacturers include provisions to
indemnify that retailer against claims made by consumers.
The Unfair Contract Terms Act 1977 provides that liability for
death or personal injury resulting from negligence cannot be
excluded or restricted. Other liability for negligence can only be
excluded if the restriction is reasonable.
Negligence
The common law of negligence (delict) has developed to fill the gap
created by the non availability of a claim under the law of contract
for injury caused by defects in a product negligently manufactured
in circumstances where there is no direct relationship between the
manufacturer and the ultimate consumer. Liability of a
manufacturer to the ultimate consumer in delict (in England, tort)
was first enunciated by the House of Lords in the Scottish case of
Donaghue v Stevenson 1932 SC (HL) 31. The Court concluded in
the circumstances of that case that a duty of care may be owed by a
manufacturer to a consumer despite there being no contractual
relationship between the manufacturer and the consumer, there
having been no opportunity for intermediate examination by the
retailer or consumer. The retailer with whom the consumer had a
Jacqueline Harris
Heidi Archibald
contractual relationship had no liability because in the
circumstances he was unable to inspect the contents of the opaque
sealed bottle.
The basic duty of a manufacturer/supplier at common law is to do
what is reasonable in the circumstances. By its nature, the duty will
vary according to the situation involved. It may be reasonable in
one case to provide a warning to consumers, but in another to recall
a particular batch of products (see question 1.4). Other possible
steps which may be reasonable could include using an alternative
design where one is available or ceasing production temporarily or
permanently. In assessing what is reasonable in any particular case
relevant factors may include:
the severity of the risk, including the type of injury;
obviousness of the risk to the consumer;
the utility of the product;
cost and practicality of overcoming the risk; and
the state of scientific and technical knowledge in relation to
the risk.
There is generally no need to warn the public against known
dangers/risks. Other issues, such as the need to keep abreast of
scientific developments may be relevant. Given the obligation to
act reasonably in all circumstances, the actions of other
manufacturers in the same field may be relevant and manufacturers
should keep appraised of these.
The law of negligence is based on common law and is constantly
developing on a case by case basis; manufacturers should ensure
they have ongoing access to legal advice.
Statute
The most significant legislation in this area is the Consumer
Protection Act 1987 (“the Act”) which imposes strict liability (subject
to the availability of certain defences - see question 3.1) on producers
for harm caused by defective products. “Producers” will be liable if
they have supplied “defective products” in the course of business
which caused death or injury to the consumer or damage to property.
In order for a “producer” to be held liable, it must be established
that:
1. The producer supplied (which includes manufactured - see
below) a product.
2. The product was defective.
3. The defect caused injuries.
As liability is strict, it is not necessary for the consumer to show that
the producer was negligent (although a separate common law claim
under the law of negligence may also exist).
The producer includes the manufacturers, processors, growers and
miners. It also includes own-branders, where a person marks the
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