7. The Tort System
Product Liability – Product liability refers to the legal responsibility of a manufacturer, distributor, or retailer to compensate any individuals who have suffered losses or damages due to a product they have sold or supplied. It is based on the principle that those who make, sell, or supply products owe a duty of care to users of those products to ensure they are reasonably safe for their intended use. This duty of care includes ensuring that products are properly designed, manufactured, labeled, and tested for safety. A breach of this duty of care may lead to the manufacturer, distributor, or retailer being held liable for any resulting damages suffered by an individual.
Design defects refer to products that have been designed in such a way that they are inherently unsafe and fail to meet a reasonable consumer’s safety expectations. This type of defect can occur in any type of product, from appliances to medical devices. In a lawsuit, a plaintiff must be able to prove that the product was defective at the time it left the manufacturer, and that the defect caused injury or loss.
In other words, the manufacturer poorly designed a product that caused injuries which could have been avoided. The law does not require products to be perfect. Litigation in these cases centers on what is a foreseeable risk and whether there was a reasonable alternative. As a result, plaintiffs must show that an alternative design was reasonable.
Manufacturing defects refer to products that have been made with a defect that renders it unsafe or unfit for its intended use. A manufacturer can be held liable for any injury or harm caused by a manufacturing defect, regardless of whether they exercised reasonable care in the manufacturing process. The manufacturer must prove that the product was fit for its intended purpose, and that the injury or harm caused was not due to any use of the product outside its intended purpose.
Failure to warn occurs when the defect is not in the product itself but in the instructions (or lack of them). The plaintiff argues that the manufacturer failed to warn users about the dangers of normal use or a foreseeable misuse. However, there is no duty to warn about obvious dangers.
Defenses to Product Liability – There are several defenses to product liability claims. First, a plaintiff’s assumption of risk can be a defense. The user must know of the risk of harm and voluntarily assume that risk. Someone cutting carrots with a sharp knife voluntarily assumes the risk of being cut by the knife. However, if the knife blade unexpectedly detaches from the knife handle because of a design or production defect, there is no assumption of risk.
The other defense is a product misuse. If the consumer misuses the product in a way that is unforeseeable by the manufacturer, then liability may not apply. Modifying a lawn mower to operate as a go-kart, for instance, is product misuse.
Fraud – Fraud is defined as an act or omission that misleads another with the intention of causing harm or taking advantage of them. It can involve false statements or omissions of material facts, or may involve a breach of trust or fiduciary duty. Fraud can also take the form of taking advantage of another’s vulnerability to obtain a benefit.
Professional Liability – Business professionals have a fiduciary duty to their clients requiring them to do what is in the best interest of those they serve or represent. A fiduciary duty is a legal duty imposed on a person to act in the best interests of another person or entity. Fiduciary duties are owed by a person in a position of trust and confidence such as accountants, doctors, lawyers, engineers, and others. It is typical for professionals to seek insurance (known as errors and omissions insurance) to reduce risks related to fiduciary duties.
Inducing Breach of Contract – Inducing breach of contract occurs when one party induces another party to breach a contract that is legally binding between them. This can be done through fraud, misrepresentation, intimidation, or other methods. The party who induced the breach may be held liable for damages caused by the breach.
There are four elements required to prove intentional interference with contractual relations:
- A contract exists between the plaintiff and a third party;
- Defendant knew of the contract;
- Defendant improperly induced the third party to breach the contract or made performance of the contract impossible; and
- Plaintiff was injured.
Passing Off – Passing off refers to the deceptive representation or marketing of goods or services by competitors in a manner that confuses consumers.