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THE GERMAN PRACTICE ALERT
June 2014
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Product Liability Law in
the United States of
America
German companies selling products into the
United States should consider legal risks related to product liability. Under
U.S. product liability law, manufacturers, distributors, suppliers, retailers,
and others who make products available to the public can be held responsible for
the injuries caused by those products. If a consumer, user or bystander gets
injured by a product that is defective or unreasonably dangerous, the
manufacturer or anyone else in the supply chain can be held responsible for that
injury. Product liability lawsuits brought by individual consumers or groups of
consumers can become costly and lengthy.
Types of Liability
The consumer's cause of action may be based on (i) negligence, (ii) breach of
warranty, or (iii) strict liability.
Negligence means that the
manufacturer or someone else within the chain of manufacture did not act with
reasonable care to ensure the safety of the design and manufacture of product.
What constitutes "reasonable care" depends upon the nature and risk of the harm
that can be caused by the product. The higher the risk of bodily harm is, the
stricter are the requirements in the manufacturing process. The consumer must
prove a breach of duty on the part of the manufacturer and the causation of
certain damage.
A warranty is an express or implied contract between a
manufacturer or vendor and its customer concerning the fitness of the product.
Express warranties can be created, for instance, by a salesperson's statements,
or the literature distributed with the product or included in advertising
materials. If the manufacturer doesn't fulfill the terms of the promise, claim
or representation concerning the quality or type of product he breached the
warranty. Implied warranties exist even if no such statements are made. Unless
expressly excluded, a seller implicitly warrants that a product is merchantable
and fit for the purpose for which the seller knows the buyer will use the
product.
Strict liability makes a manufacturer or vendor responsible
for all injuries that might be caused by a defective product that is
unreasonably dangerous to the user, consumer or to his or her property. Unlike
for warranty claims, it does not matter whether there is a connection between
the user or consumer and the manufacturer. And unlike for negligence claims, it
is not necessary to show that the manufacturer did not act with reasonable care.
The consumer must only prove that the product was defective, that the defect
existed when product left defendant's hands, and that the defect caused injury
to the consumer, who must be a reasonably foreseeable user.
Types of Defects
There are different types of defects:
-
Manufacturing defect:
The consumer has to show
that a construction or
manufacturing defect
existed, which made the
product unsafe for its
intended use.
- Design
defect: A
design defect refers to
a whole class of
products, that are
inadequately planned and
therefore unreasonably
hazardous for consumers.
- Failure to
warn: Often the
manufacturer has the
duty to warn the
consumer against a
hazardous use or
instruct him how to use
the product properly.
Typically, such warnings
are included in the
labeling or the
instructional material.
Additionally, the
manufacturer always has
a duty to warn consumers
against a defect
discovered after the
product was sold. U.S.
law generally imposes
much stricter product
warning requirements
than German law. While
German courts would
often not require a
warning because the
inherent danger of the
product is viewed as
self-evident, U.S.
courts often take a more
consumer friendly
approach.
Defenses
In order to escape liability,
the manufacturer may raise
various defenses. For instance,
he may argue that the consumer
modified the product or misused
it, or that the consumer assumed
the risk. Other typical defenses
include contributory negligence
or lack of proximate cause of
injury.
Damages
While types of liabilities and
defects are similar between the
United States and Germany, it is
in the area of damages, where we
see in our practice the greatest
differences. Consumers who were
injured by a product can recover
compensatory damages comparable
to those in Germany. They can
also receive compensation for
their economic damages including
medical costs and property
damage and for non-economic
damages such as pain and
suffering. Non-economic damages
awarded in the United States,
however, are regularly
significantly higher than in
Germany. More importantly,
punitive damages may be awarded
in the United States. The
concept of punitive damages does
not exist under German law.
Punitive damages do not
compensate the injured consumer
but, rather, they are intended
to punish the tortfeasor and
deter him and others from
comparable conduct in the
future. Therefore, malicious,
evil or particularly reckless
conduct on the manufacturer's
part is required. Punitive
damages are not awarded in every
case (in fact, they are awarded
very rarely), but where they
are, they can be very
significant.
* *
*
Product liability
is generally speaking a more
common source for lawsuits in
the U.S. than in Germany.
Usually, the U.S. product
liability law is more favorable
than German law to the consumer,
in particular with respect to
the determination of recoverable
damages. Also, requirements for
manufacturers regarding product
warnings are more demanding than
under German law. U.S. product
liability law is also seen as an
instrument to guarantee the
safety of products and to
protect the consumer and anyone
who might foreseeably come into
contact with products.
However, there are many ways to
minimize the risk of a product
liability lawsuit. The
manufacturer should control
carefully the quality of its
products and review all
procedures during manufacturing,
distribution and sales. If
governmental and industry
standards exist, the
manufacturer should know them
and comply with them. Finally,
manufacturers need to maintain
product liability insurance,
whether in the United States or
Germany, sufficient to cover the
increased U.S. product liability
exposures. |
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