The liability of the producer for defective products

Posted on 27 Feb 2018

A rapidly growing field of law in the European Union (EU) is undoubtedly the protection of consumers. That is because the EU has perceived that the consumer is the market leader and, in order to help him become more active in the market, the EU has established legislation to help the consumer feel secure and confident in his everyday transactions.

To this end, Directive No. 85/374/EEC (the ‘Directive’) was established, which deals with the producer’s liability for defective products and the consumer’s rights for damage suffered as a result of such defective product. This Directive is essentially the legal framework regarding the relationship between the producer and the consumer - if the latter is harmed by a defective product. It is essential for both sides to understand the content of the Directive in order to act accordingly in any given situation. 

Based on the Directive, a claimant, in order to obtain compensation, has to prove three things:

(a) that the product is defective,

(b) that he/she has suffered damage, and

(c) that the damage was caused by the use of the defective product. 

On that note, the most important thing that the claimant must prove is the defectiveness of the product. According to the Directive, a product is defective when it does not provide the safety which a person is entitled to expect. For the purposes of the above definition, and in order to identify whether a product is defective or not, we shall take all the relevant circumstances into account, including: 

a) The presentation of the product: This means that the quality of the warnings and the given instructions for use should be examined. That is to say, both the warnings and the instructions should be clear, they must expose the risk and be viable so that the consumer can follow them with reasonable ease. Vague warnings, such as "It may pose risks", are unacceptable.

b) The way in which it could reasonably be expected that the product would be used. This means that when we try to find out whether a product is defective or not, we shall examine if the product was used for the purpose for which it was intended. This is because one cannot expect safety when using a product in an inappropriate or unpredictable manner.

c) The time when the product was put into circulation. In other words, we shall consider if there were other products available which did not contain those risks at the time that the product was put into circulation. The Directive, however, states clearly that a product shall not be considered defective for the sole reason that a better product is subsequently put into circulation.

But who is the producer against whom the injured person can sue for damages and what damages can be compensated under the above Directive?

Under this Directive, the producer is the manufacturer of a finished product, the producer of any raw material or the manufacturer of a component part, and any person who, by putting his name, trade mark or other distinguishing feature on the product, presents himself as its producer.

Without prejudice to the liability of the producer, any person who imports to the public a product for sale, hire, leasing or any form of distribution in the course of his business shall be deemed to be a producer and therefore liable under the Directive. 

Lastly, if the producer of the product cannot be identified, each supplier of the product shall be treated as its producer unless he informs the person who suffered the damage, within a reasonable time, of the identity of the producer or of the person who supplied him with the product. The same shall apply in the case of an imported product if the importer cannot be identified, even if the name of the producer is indicated.

Under this Directive, the person who was harmed may claim compensation relating to:

a)      damage that results in death or personal injuries; 

b)      damage to, or destruction of, any item of property, other than the defective product itself, with a lower threshold of 500 ECU, provided that the item of property: 

            i.            is of a type ordinarily intended for private use or consumption, and 

            ii.            was used by the injured person mainly for his own private use or consumption. 

What is very important regarding the consumer’s rights under Directive 85/374 / EEC is the degree of liability. Under the Directive, the producer is strictly liable. In other words, when the injured person proves that the product was defective, he does not have to prove that the producer was at fault, (as opposed to torts).

If the injured party succeeds in proving the damage, the defect of the product and the causation between the defect and the damage, the only way that the producer can avoid responsibility is to rely successfully on one of the defences listed in the Directive. These defences are:

a)      that he did not put the product into circulation; or

b)      that, having regard to the circumstances, it is probable that the defect which caused the damage did not exist at the time when the product was put into circulation by him, or that this defect came into being afterwards; or 

c)      that the product was neither manufactured by him for sale or any form of distribution for economic purpose nor manufactured or distributed by him in the course of his business; or 

d)      that the defect is due to compliance of the product with mandatory regulations issued by the public authorities; or 

e)      that the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered; or 

f)       in the case of a manufacturer of a component, that the defect is attributable to the design of the product in which the component has been fitted or to the instructions given by the manufacturer of the product.

Finally, it is very important to note that this Directive covers all products and, unlike other Directives, applies to any person who suffered damages, even a non-consumer. In addition, one does not need to have purchased the defective product in order to be entitled to compensation for damage suffered as a result of the use of it. The Directive applies even if the person who was harmed had found the product somewhere or borrowed it.

The content of this article intends to provide a general guide to the subject matter. Special advice should be sought on your specific circumstances. For further information, please contact Costas Apokides