Manufacturers: Do You Understand Your Product Liability Risks?

From an initial prototype sketch to the warning labels on a finished product, the decisions made during the course of bringing a product to the market can be intensely scrutinized if there is ever a product liability claim. Manufacturers need to focus on the potential risks across a product’s life cycle to help both prevent and defend against product liability claims. A product liability claim can be made long after the products were manufactured, however a manufacturer’s post-sale responsibilities may be questioned such as updated warnings or instructions when a hazard is later determined. 

Being able to consistently demonstrate that safety was the manufacturer’s first priority can help a company as it prepares to defend itself from a products liability claim. There are two types of product liability theories and they are: negligence and strict liability. Negligence focuses on the conduct of the manufacturer or product seller, and the alleged failure to use reasonable care in some aspect when manufacturing or selling the product. Under the strict liability theory, the focus shifts from the conduct of the seller to the product itself, and whether the product is defective, regardless of the degree of care exercised by the manufacturer or product seller. The rules of strict liability state that someone will be strictly liable- without a victim having to prove negligence or fault for an accident in certain circumstances or if the product is defective. What constitutes a defective product? It requires showing that the product presents a substantial likelihood of harm to consumers due to one or more of the following:

  • Design Defect – a product may be found to be defective when the design does not include a necessary and feasible safety feature.
  • Manufacturing Defect- a product may be found to be defective when it is not manufactured in compliance with the design
  • Warnings and Instructions Defect- a product may be found to be defective when its communications (instructions, warnings, manuals, labels) accompanying or affixed to it are inadequate, inappropriate, misleading or confusing.

Let’s go over each of these some more. 

There is always potential for defects that can result in a lawsuit for your business. Product Liability can help.

Design Defects

While a product is in the design phase, manufacturers can perform a hazard analysis focused on determining possible ways that an end user may be harmed or property may be damaged. This analysis can include both expected uses of products and anticipated misuses. Where possible, safety features can be designed in such a way that an end user cannot easily defeat, remove or modify them. Warnings and safety measures can help to avoid or mitigate product liability. You should consult with an attorney familiar with product liability so they can conduct a legal review to help you determine legal exposures.

Manufacturing Defects

A manufacturer may be liable if a product has a defective condition that makes it unreasonably dangers to a user. Quality assurance programs can specifically include inspections or testing at those stages in the production process where defects can be noted. All the liability doesn’t only fall on the manufacturer, as defects may result from components or parts that a manufacturer incorporates into the product from a supplier or vendor. The supplier may provide components that are poorly manufactured, don’t meet design specification, or fail to meet industry standards or government regulations. That’s why its of utmost importance to select suppliers and also, the inspections of incorporated parts or materials, regardless of source.

Part of an effective risk management program is ensuring that third parties can be held financially responsible if their products or services cause or contribute to an injury or loss. Companies that directly import raw materials, products or sub-assemblies may bear sole financial responsibility due to the inability to make a foreign entity a party in a product liability claim. Claims involving imports can be difficult to defend, as the defending company may not possess the documentation that they would normally retain if they had manufactured the product themselves. It is therefore important for manufacturers to recognize the legal risks that may be involved by imported products and to verify that they have risk management arrangements to best address their needs.

Warning and Instruction Defects

Some hazards that cannot be addressed by design or adequately guarded may be addressed by warnings and instructions. The adequacy of warnings can be the focus of a product liability claim. Warnings can be argued to be inadequate, inappropriate, misleading or confusing. It may be argued that an inadequate warning, in itself, was the defect that led to the user’s harm. As a general principle, when needed, warnings should be prominent and understandable. Having an attorney skilled in product liability review your warnings and instructions can be very beneficial. 

Understanding the legal theories of liability can help you understand the risks you face. The Bunker recommends you look at your entire product life cycle to better understand your liability exposures and identify opportunities to better protect your business, brand and reputation. We work with businesses of all types and sizes every day, and we look forward to working with you in helping you manage your total cost of risk. Enter your information to learn more below!

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