PRODUCT LIABILITY ASSIGNMENT

Product liability assignment

Product liability assignment

With regard to the scenario, Charles's case is a infringement of a consumer right due to product liability. The potential liability and cost consequences associated with placing unsafe products on the market has made product liability and product recall insurance a commercial necessity for many manufacturers, distributors and retailers operating in the UK. Charles should know that producers and distributors who contravene the general safety requirement can be served with a notice by an enforcement authority. This notice can require them to suspend or halt the offending action, to withdraw or recall the product in question, label the product or otherwise warn consumers who are at risk of the dangers posed by it. Contravention of the regime can also lead to criminal liability in the form of a custodial sentence and/or a fine. (Manchester, C, Poppleston, S, Allen, J 2005 Pp. 78-81)

The main product safety statutory instrument in the UK is the General Products Safety Regulations 2005 (SI 2005/1803) (“the Regulations”) which entered into force on 1 October 2005. The Regulations implement the EC General Product Safety Directive (2001/95/EC) and complement the existing product specific regulations which continue to apply where there is a gap in the regulatory framework. The range of products covered by the ambit of the Regulations is fairly wide. “Product” is defined in broad terms and covers items which are sold or provided freely to consumers, as well as those goods which are not intended for consumers but are likely to be used by them. It is irrelevant whether or not the product is new, as used or reconditioned items are also covered under the scope of the Regulations.

The Regulations set down three main obligations on producers and distributers of products: to ensure that products are identifiable and traceable; to monitor the safety of products; and to take appropriate and speedy action (including instigating a recall) in circumstances where an unsafe product is placed on the market. Plainly, the concept of product safety is integral to the Regulations and there is a general obligation (referred to as the “general safety requirement”) which prohibits producers or distributors from placing or supplying (or offering or agreeing to offer) a product on the market, or exposing or possessing a product for placing on the market which is unsafe.

Pure economic loss

As product liability policies are principally directed to damage caused to persons and other property by a defective product supplied by the insured, the English courts tend to construe such contracts in accordance with the law of tort. Accordingly, product liability cover will not normally extend to liability for pure economic financial losses which are not consequential upon the damage. This is exemplified by Horbury Building Systems Ltd v. Hampden Insurance NV [2004] 2 CLC 543 where the insurance claim related to the costs associated with the collapse of a suspended ceiling installed in a cinema auditorium. The cause of the collapse was initially unknown and the whole cinema complex was closed for ...