Product Liability

Companies are exposed to massive risk in the US or the EU due to product liability claims. Product Liability Claims are often initiated against a manufacturer in the US

Definition- a manufacturer’s tort liability resulting from a buyer’s, user’s or bystander’s damage or injury due to a defective product.

A. Product Liability Costs Product liability and recall cases, besides hurting a

company’s Brand-will entail many costs and expenses, such as:

1. Costs and related to product incidents, including recall, retrofit, management and employee time, lost profits.

2. Legal costs. 3. Insurance costs. 4. Preventative costs -include loss control and risk

management programs.

Product Liability Costs To implement a risk management program that

covers the legal risks related to product liability in a specific jurisdiction look at :

1. Legal theories related to Product Liability

2. Legal defenses to Product Liability Claims

B. Typical Legal Theories on which a Plaintiff May Base a Products Liability Claim and Class Actions.

1. Breach of Express Warranty

a) Express Warranty can be created by:

i. “Affirmation of fact or promise” made by the Seller to the Buyer which relates to the product and becomes part of the basis of the bargain.

ii. Advertisements, labels, literature, samples or models, catalogues, brochures

2. Breach of Implied Warranty

a) Implied Warranty of Merchantability is implied by law in every contract with a merchant for the sale of goods; a guarantee that product will be merchantable (of commercially acceptable quality).

b) Implied Warranty of Fitness for particular purpose – arises when the seller has reason to know that buyer wants goods for a particular purpose and buyer is relying on seller’s skill to select suitable goods.

3. Negligence

A manufacturer of goods has a duty to use reasonable care in the design of goods so as to protect those who will use them from an unreasonable risk of harm while the goods are being used for their expected. This duty extends to unintended yet reasonably foreseeable, as well as intended uses.

To read more about product liability, visit http://seoullegalriskmgmt.com