I INTRODUCTION TO THE PRODUCT LIABILITY FRAMEWORK
Product liability law in England and Wales derives from three sources. The first is the law of contract. Where two or more parties have entered into a contract, their relationship is governed by the express terms of their agreement. In contracts for the sale of goods, the express terms are supplemented by terms implied by the Sale of Goods Act 1979 (in relation to business-to-business contracts) and the Consumer Rights Act 2015 (in relation to business-to-consumer contracts).
The second is the common law of tort. Those involved in the manufacturing, importation and sale of products are under a general duty to avoid causing harm to those who might reasonably be affected by their negligence. The duty extends, but is not limited to, consumers and users of products. Manufacturers are also under a duty not to make deceitful or misleading representations in connection with the sale of their products.
The third is legislation, deriving predominantly from the European Union and constructed around the two pillars of the Product Liability Directive of 1985 and the General Product Safety Directive of 2001. Those Directives were implemented into English law by the Consumer Protection Act 1987 (CPA) and the General Product Safety Regulations 2005 (GPSR) respectively. The CPA creates a strict liability compensation scheme in respect of defective products and the GPSR requires consumer products to be safe.
II REGULATORY OVERSIGHT
Although there is a large volume of legislation that applies to specific products falling within specific sectors, the general requirements of product safety are set out in the GPSR.
The GPSR applies to all products that are intended for or are likely to be used by consumers,2 and requires that those products are safe. GPSR defines a safe product as one that, under normal or reasonably foreseeable conditions of use, does not present a risk, or poses only the minimum risk that is compatible with the product's use, considered to be acceptable and consistent with a high level of protection for the safety and health of persons.3
GPSR also governs the recall of unsafe products.4 The discovery of an unsafe product must be notified to Trading Standards, the government body that enforces product safety legislation in England and Wales. Trading Standards decides which steps should be taken, including whether to trigger RAPEX, the EU alert system for unsafe consumer products.5
Any person who places an unsafe product on the market is in breach of GPSR. This includes a manufacturer within an EU Member State, a company placing its name on the product, a company that reconditions the product, where the product is not manufactured in the EU, the importer of that product into a Member State and any professional in the supply chain whose activities may affect the safety of a product.6
Breach of GPSR constitutes a strict liability criminal offence that is punishable with a maximum of 12 months' imprisonment, a fine of £20,000 or both.7 The authorities have discretion as to whether to prosecute and will take into account any steps that the company has taken to remedy or mitigate the risk posed by the unsafe product.
GPSR imposes several other obligations on producers and distributors of products including the obligation on a distributor not to advertise or supply a product that it knows, or ought to know, is unsafe.8 The maximum penalty is 12 months' imprisonment, a £20,000 fine, or both.
A person in breach of GPSR can escape liability by demonstrating that all reasonable steps were taken to avoid committing the offence.9 In practice, however, this is a high threshold.
III CAUSES OF ACTION
In this section, we consider four causes of action: breach of contract; negligence; deceitful and negligent misrepresentations; and action under the Consumer Protection Act 1987.
i Breach of contract
A buyer may claim against the seller for any injury, damage or loss caused by a product's non-compliance with contractual terms. Such terms may be express or implied. The terms implied into business-to-business contracts are set out in the Sale of Goods Act 1979 (SOGA). The key implied terms are as follows:
- the product supplied will be of satisfactory quality.10 This is an objective standard, judged on the basis of what a reasonable person would consider to be satisfactory in the circumstances, taking into account all relevant factors such as, for example, the price of the product;
- the product supplied will be fit for purpose.11 If the buyer makes known to the seller (explicitly or implicitly) a particular purpose for which the product is being bought, the product must be reasonably fit for that purpose. This is the case even if the purpose is not the normal use of the product. However, this term will not apply where the buyer does not rely, or it is unreasonable for him or her to rely, on the judgment of the seller in relation to the suitability of the product;
- a product sold by sample should be of the same quality as the sample that was supplied to the buyer.12 This requires goods to be free from any defects that would not have been apparent on a reasonable examination of the sample; and
- a product sold by description should correspond with that description.13
In a business-to-business contract, a party can exclude or restrict liability for any of the SOGA-implied terms, provided that it does so consistently with the Unfair Contract Terms Act 1977.14 The terms implied into business-to-consumer contracts are set out in the Consumer Rights Act 2015 (CRA). The key implied terms of the CRA mirror those set out in SOGA:
- the product supplied should be of satisfactory quality;15
- the product supplied should be fit for purpose;16
- a product sold by sample should correspond to that sample;17 and
- a product sold by description should correspond with that description.18
A business cannot exclude or restrict liability to any consumer for breach of those implied terms.19
A person who has suffered injury or damage to their property as a result of the use of a defective product may have a right of action against the manufacturer, importer or seller of the product, even if there is no contract in place between them. A cause of action will arise if the claimant can show that:
- the defendant owed a duty of care;
- the defendant breached that duty of care;
- the breach caused the injury or damage complained of; and
- the injury or damage was a reasonably foreseeable consequence of the breach.
iii Deceitful and negligent misrepresentations
The law of tort imposes a general duty not to make misrepresentations in connection with the sale of products. Liability for misrepresentation can attach not only to the seller of a product but also, in appropriate circumstances, to the importer or manufacturer. For example, a motor company's alleged misrepresentation of vehicle emissions characteristics, repeated through its dealership network, forms a central part of the civil claims arising from the Dieselgate scandal of 2015.
A defendant may be held liable for making a deceitful misrepresentation if the claimant can show that:
- the defendant made a false representation to the claimant;
- the defendant knew that the representation was false, or was reckless as to whether it was true;
- the defendant intended that the claimant should rely on that representation; and
- the claimant relied on that representation to its detriment.20
If there is no evidence of deliberate wrongdoing, the claimant might instead choose to bring a claim under the Misrepresentation Act 1967, the common law of negligence, or both.
The ordinary remedies for misrepresentation are damages or the rescission of the contract. If the claimant succeeds in making allegations of deceitful conduct, the ordinary rules of remoteness of damage do not apply and the defendant may become liable for punitive or exemplary damages.
iv Consumer Protection Act 1987
The CPA imposes strict liability on manufacturers, importers and retailers for injury or damage caused by a defective product. The claimant is not required to prove fault on the part of the defendant as long as he or she can prove that the product was defective and that the defect caused him or her to suffer injury or damage.
What is a product?
The term 'product' includes any goods or electricity, and includes a product that is contained in another product as a component or a raw material.21
What is a defect?
A product is defective if the safety of the product is not such as persons generally are entitled to expect, taking into account all the circumstances, including the following factors:
- the way in which, and purposes for which, the product has been marketed or packaged, the use of any mark in relation to the product and any instructions for, or warnings with respect to, doing or refraining from doing anything with or in relation to the product;
- what might reasonably be expected to be done with or in relation to the product; and
- the time when the product was supplied by its producer to another.22
In practice, the identification of a product defect has given rise to considerable difficulty. In the case of A v. National Blood Authority,23 it was held that the generic risk of blood contamination with Hepatitis C was sufficient to make the producer liable for injury to users, despite the fact that scientific knowledge was unable to identify the blood products in which the contamination might arise. The court dismissed an argument raised on behalf of the defendant that the risks arising from the use of the product should be set against the product's advantages for society as a whole.
The approach in A v. National Blood Authority was questioned in the later case of Wilkes.24 In that case, the court preferred to frame the issue as one of safety, not fitness for purpose. The first step was to identify the defect, and the second step was to consider all the circumstances, including the balance of the product's benefits as against its risks.
Wilkes was followed by the case of Gee,25 which concerned metal-on-metal hip implants that shed metal debris through normal use, which caused some patients to suffer an adverse reaction. The court considered various factors, including the functional advantage of the product, the risk posed and the information available in respect of the same. It concluded that the shedding of debris was a characteristic that was part of the normal behaviour of the product, whereas a defect is the abnormal potential for harm, in other words, something about the condition or character of the product that elevates the underlying risk beyond the level of safety that the public is entitled to expect from a product of that type.26
Who is liable?
Liability under the act can rest with any of the following parties:27
- the producer or manufacturer of the product;
- any person that puts its name on the product and holds itself out to be the producer or manufacturer; and
- any person who imports the product into the EU.
The CPA confirms that liability between these parties is joint and several.28 This means that a claimant is able to claim against any one of the responsible parties for the entirety of his or her loss, and then that responsible party is free to seek a contribution for some or all of that loss from the other responsible parties.
Although the supplier of the product does not have primary liability, they may nevertheless be held liable under the CPA if the claimant requests the identity of one of the parties listed above, but the supplier is unable to identify that party.29
i Forum and jurisdiction
Under the European regime, a manufacturer, supplier or importer can be sued in England and Wales in any of the following circumstances:
- if the contract for the supply of the product in question contains a choice of jurisdiction clause conferring jurisdiction upon the courts of England and Wales;30
- if the defendant is domiciled in England and Wales;31
- if the place of performance of a contractual obligation is England and Wales;32
- if a tortious act causes loss or damage in England and Wales;33 and
- if there are multiple defendants and the claims are closely connected, the claimant can bring proceedings in the place where any one of the defendants is domiciled.34
The common law applies to cases that fall outside the European regime. Where the defendant is physically present in England and Wales, proceedings may be served on him or her regardless of whether the claim has any connection with the jurisdiction. If a claimant wishes to serve proceedings on a defendant outside the jurisdiction it is necessary to seek the permission of the court.
ii Burden of proof
The burden of proof rests with the claimant. In most cases, the civil standard is applied. This means that the claimant must prove its case on the balance of probabilities. Where a party makes allegations of deliberate wrongdoing, a raised civil standard may be applied. This is based upon the notion that a party is:
entitled to be protected against … a serious allegation by evidence of greater weight or by a higher standard of proof than would otherwise be required in an ordinary civil case.35
Limitation varies depending on the type of claim:
- in contract, limitation expires six years after the breach of the contract.36 In the context of product liability, this is commonly the date of supply;
- in tort claims in general, limitation expires six years after the date of damage;37
- in tort claims specifically relating to personal injury or death, limitation expires three years after the date of damage or the date of the victim's knowledge of the damage.38 This is subject to a 15-year longstop;39
- under the CPA, limitation expires three years after the date on which the claimant became aware, or should reasonably have become aware, of the damage, the defect and the identity of the producer.40 This is subject to a 10-year longstop.41 There is scope for divergence between the CPA and Product Liability Directive on this front; the former calculates the longstop from the time when the producer or importer 'supplied the product to another',42 whereas the latter calculates the longstop from 'the date on which the producer put into circulation the actual product which caused the damage'; and
- in claims for contribution, limitation expires two years from the date that the claimant is held liable for that damage by way of a court judgment, an arbitral award or a settlement.43
Contributory negligence and misuse
A user's own negligent conduct or misuse of the product may provide a defence to liability in tort, in contract (where there is a parallel liability in tort) and under the CPA.44 The user's negligence may be so serious as to break the chain of causation between the wrongdoing and the damage, in which case the manufacturer will face no liability.45 In less serious cases the user's claim will be reduced in proportion to his or her own negligent contribution to the injury or damage.46
State of the art
No negligence attaches to a product that is designed, manufactured and sold in accordance with current scientific knowledge.
A specific state of the art defence is available under the CPA.47 Its application has been considered in various cases including Gee,48 where the court focused on the reasonable beliefs of the producers and orthopaedic surgeons involved at the time rather than facts that became known in hindsight.
A state of the art defence will not assist in defending a claim for breach of the requirement that a product is fit for purpose, but it is likely to be helpful in defending allegations of unsatisfactory quality.
Sophisticated user or learned intermediary
To decide whether a product is defective, courts take into consideration all the relevant circumstances including the way in which the product has been marketed, and any instructions or warnings that come with the product.
The learned intermediary defence applies where the manufacturer supplies the necessary information about its product to an expert intermediary, such as an architect or doctor, who then deals directly with the end consumer. The rationale is that, where the learned intermediary fails to pass on any instructions or warnings regarding the product, it is the intermediary (and not the manufacturer) that should face liability for loss.
The 'learned intermediary' is a defence in tort. It is not strictly a defence under the CPA, but it is one of the factors to be taken into account in deciding whether a product is defective.49
No negligence is likely to attach to a product if the design, manufacture and sale comply with all applicable regulations. Regulatory compliance is not an automatic defence under the CPA, although it will be taken into account as an indication that the level of safety of the product was as persons generally were entitled to expect. Upon proof of regulatory compliance, it is generally for the claimant to persuade a court that the product was unsafe.50
Miscellaneous defences under the CPA
There are a number of additional defences available under the CPA:51
- the defect in the product is attributable to compliance with a requirement imposed by or under UK and EU law;
- the defendant did not supply the product to another person;
- the defendant supplied the product outside the course of its business and without a view to profit;
- the defect did not exist at the time of the supply of the product. For example, if the product developed the defect as a result of being handled, transported or stored incorrectly;
- the product was part of another defective product, and the defect arose in that other product. This defence does not apply if the manufacturer of the component was involved in the design of the final product, or if the component was partly responsible for the defect in the final product; and
- the claimant was engaged in illegal activity when the loss was suffered.
iv Expert witnesses
The Civil Procedure Rules permit parties to a dispute to appoint either a single joint expert or their own individual experts. In most cases, parties opt to have their own experts unless the court orders otherwise. The participation of expert witnesses is governed by Part 35 of the Civil Procedure Rules (CPR). The key points are as follows:
- the parties must obtain the court's permission to rely on an expert from a particular discipline.52 That expert's evidence must be 'reasonably required to resolve the proceedings'53 and the instructing party must provide an estimated cost of obtaining the evidence;54
- each expert's duty is to the court, not to the instructing party;
- each expert must provide its evidence by way of written report addressed to the court, unless otherwise specified. That report must be compliant with the form and content requirements set out in CPR Part 35 and the accompanying Practice Direction;
- each party then has the right to put questions to the expert to clarify any conclusions; and
- the court can direct the parties' experts to meet to discuss the issues in the proceedings and prepare a statement of points on which they agree and disagree.
Although expert evidence provides helpful guidance for the court, it should be approached with care. In Gee,55 for example, the court was required to consider expert evidence in the fields of biostatistics and epidemiology. It did so carefully, noting that 'some aspects' of the evidence were 'less satisfactory than others'.56
v Discovery or disclosure
There are two stages to the discovery of documents, which in England and Wales is called 'disclosure'. The first is pre-action disclosure in accordance with the Pre-Action Protocols of the CPR; the second is following the commencement of proceedings. The purpose of pre-action disclosure is to encourage the parties to disclose the documents that support their case, support the efficient management of proceedings and allow the parties to:
- understand each other's positions;
- make decisions about how to proceed;
- try to settle issues without proceedings;
- consider engaging in Alternative Dispute Resolution (ADR) to assist with settlement; and
- reduce the costs of resolving the dispute.57
Once proceedings have commenced, the discovery obligations become more onerous. Each party is required to disclose to the other the existence of:
- the documents on which he or she relies;
- the documents that adversely affect his or her own case; and
- the documents that support another party's case.58
Product liability cases often involve very extensive design documents and production records, which can run to thousands of documents. This can become strategically relevant – for example, when deciding on the best timing for settlement offers.
vi Apportionment and contribution
Under the Contribution (Civil Liability) Act 1978, a party can seek contribution from another party where that other party is responsible for the same harm.59 In the product liability context, a right of contribution frequently arises in the context of multi-party supply chains, or where a learned intermediary is involved in the chain of supply. In those cases, in deciding the appropriate apportionment of liability, the court will consider the relative blameworthiness and causative potency of each defendant's conduct.
vii Mass tort actions
There is no class action procedure. The closest concept is that of the Group Litigation Order (GLO).60 A GLO is an order that allows a number of different claims, which give rise to related issues, to be managed collectively. A GLO is not a separate cause of action. It is a procedural tool to help courts manage multiple cases efficiently. GLOs are rarely used: since they were introduced in 2000 only 105 have been issued.
There are four types of damages that can be awarded in England and Wales:
- general damages;
- special damages;
- punitive damages; and
- exemplary damages.
Punitive and exemplary damages are rarely awarded because the general approach is that damages are compensatory. The courts draw a distinction between losses arising from property damage or personal injury (consequential losses) and those that do not (pure economic losses, such as loss of profit). The recoverability of these types of loss is dependent on the cause of action.
Damages in contract are awarded on the basis of expectation – to put the claimant in the position it would have been if the contract had been performed as expected. This is subject to the rules on the remoteness of damage, which limit the scope of recovery to losses:
- that arise naturally from the breach; or
- whose existence in the event of breach should have been within the reasonable contemplation of the parties when the contract was made.61
If they meet the test for remoteness, damages for the following losses are recoverable: personal injury, property damage, pure economic loss and loss of enjoyment (in limited cases). However, the recoverability of damages can be excluded or limited by the express terms of the agreement between the parties.
Damages in negligence are awarded with a view to restoring the victim of negligence to their former position had the negligence not occurred. Damages for property damage and personal injury are most routinely awarded in negligence. Damages for pure economic losses are generally not recoverable unless a special relationship has arisen between the parties. This is rare, but occurs where the defendant has used its expertise to give advice and:
- the advice was required for a specific purpose of which the defendant was aware;
- the defendant knew that the claimant was likely to act on the defendant's advice for that purpose; and
- the claimant reasonably did so to his or her detriment.
The recoverability of losses also depends on the losses being reasonably foreseeable.62
Deceit and misrepresentation
Damages in deceit are recoverable for property damage, personal injury and pure economic loss. The rules of remoteness, however, differ from those in negligence. In relation to deceit, the defendant will be liable for all losses that flow directly from the deceit – whether they are foreseeable or not. This means that, where losses have been exacerbated by an unforeseen event, they will still be recoverable from the defendant. This is, however, subject to the claimant's duty to mitigate its potential losses.63
Consumer Protection Act
Damages under the CPA, as in tort, are intended to restore the injured party to the position had the product not been defective. There is no provision for the award of punitive damages. Damages for personal injury and property damage are recoverable only where the loss exceeds £275.64 The following are not recoverable:
- pure economic losses (this includes damage to the defective product itself);
- where the product is a component of a bigger product, damage to the greater product; and
- damage to business property.65
It is thought that the test of reasonable foreseeability would apply to the remoteness of loss under the CPA.
V YEAR IN REVIEW
There are two key developments to highlight.
i The meaning of 'defect'
The case of Gee66 was an important development, in that it approved the more holistic approach to the identification of a defect taken in Wilkes,67 and once again questioned the approach taken in A v National Blood Authority.68 The case has broadened the scope of considerations to be taken into account in future cases.
ii Automated vehicle statute
In anticipation of fully automated vehicles being on the roads in the near future, Parliament has passed the Automated and Electric Vehicles Act 2018, which makes inroads into establishing who will be liable for accidents involving automated and semi-automated cars. For example, the Act creates a direct right of action against the motor insurer of an automated vehicle that causes an accident, while also preserving the motor insurer's right to claim contribution from any other person who was responsible for the accident. This would include the manufacturer, if the issue arose from a product defect. We expect, however, that it will be some time before any of these provisions are put into practice.
1 Neil Beresford is a partner and Natasha Lioubimova is an associate at Clyde & Co LLP.
2 Regulation 2 GPSR 2005.
4 Regulation 7(3) GPSR 2005.
5 Rapid Exchange of Information System.
6 Regulation 2 GPSR 2005.
7 Regulation 20 GPSR 2005.
8 Regulation 8(1) GPSR 2005.
9 Regulation 29 GPSR 2005.
10 Section 14(2) SOGA 1979.
11 Section 14(3) SOGA 1979.
12 Section 15 SOGA 1979.
13 Section 13 SOGA 1979.
14 Section 6(1A) Unfair Contract Terms Act 1977.
15 Section 9 CRA 2015.
16 Section 10 CRA 2015.
17 Section 13 CRA 2015.
18 Section 11 CRA 2015.
19 Section 31(1) CRA 2015.
20 Eco 3 Capital Ltd and others v. Ludsin Overseas Ltd  EWCA Civ 413.
21 Section 1(2)(c) CPA 1987.
22 Section 3 CPA 1987.
23 A v. National Blood Authority  3 All ER 289.
24 Wilkes v. DePuy International Ltd  EWHC 3096 (QB).
25 Colin Gee and others v. DePuy International Ltd  EWHC 1208 (QB).
26 ibid., Mrs Justice Andrews at 112.
27 Sections 1(2) and 2(2) Consumer Protection Act 1987.
28 Sections 2(1) and 2(5) Consumer Protection Act 1987.
29 Section 2(3) Consumer Protection Act 1987.
30 Article 25 Brussels Regulation (Recast) (EU) 1215/2012.
31 Article 4 Brussels Regulation (Recast) (EU) 1215/2012.
32 Article 7(1) Brussels Regulation (Recast) (EU) 1215/2012.
33 Article 7(2) Brussels Regulation (Recast) (EU) 1215/2012.
34 Article 8(1) Brussels Regulation (Recast) (EU) 1215/2012.
35 Strive Shipping Corp & Anor v. Hellenic Mutual War Risks Association (Bermuda) Ltd ('The Grecia Express')  EWHC 203 (Comm) Colman J at 420.
36 Section 5 Limitation Act 1980.
37 Section 2 Limitation Act 1980.
38 Section 11 Limitation Act 1980.
39 Section 14B Limitation Act 1980.
40 Section 11A Limitation Act 1980.
41 Section 11A Limitation Act 1980.
42 Section 4(2) CPA 1987.
43 Section 10 Limitation Act 1980.
44 Section 6(4) of the CPA 1987 applies the Law Reform (Contributory Negligence) Act 1945.
45 Lambert v. Lewis  2 WLR 713.
46 Law Reform (Contributory Negligence) Act 1945.
47 Section 4(1)(e) CPA 1987.
48 Gee v. DePuy International Ltd  EWHC 1208 (QB).
49 Section 3 CPA 1987.
50 Wilkes v. Depuy, Hickinbottom J at 100.
51 Section 4.1 CPA.
52 CPR 35.4(1).
53 CPR 35.1.
54 CPR 35.4(2).
55 Gee v. DePuy International Ltd  EWHC 1208 (QB).
56 ibid., Mrs Justice Andrews BDE at 259.
57 Practice Direction on Pre-Action Conduct, Rule 3.
58 CPR 31.6.
59 Section 1(1).
60 Part III of CPR 19.
61 Hadley v. Baxendale 156 ER 145.
62 Overseas Tankship (UK) Ltd v. Morts Dock and Engineering Co Ltd (The Wagon Mound)  AC 388.
63 Downs v. Chappell  1 WLR 426.
64 Section 5(4) CPA.
65 Section 5(2) and (3) CPA.
66 Colin Gee and others v. DePuy International Ltd  EWHC 1208 (QB).
67 Wilkes v. DePuy International Ltd  EWHC 3096 (QB).
68 A v. National Blood Authority  3 All ER 289.