A business tort is not a chocolate cake you bring to the office, Part 1: products liability A business tort is not a chocolate cake you bring to the office, Part 1: products liability A business tort is not a chocolate cake you bring to the office - Part 1: products liability
The next few posts will concern “torts” - the area of law that focuses on civil, non-contractual injuries with damages as the standard remedy. In the business context, torts fall under two categories: (1) injuries to customers (i.e. product liability) and (2) injuries to competitors (i.e. defamation and interference with contractual relations). We’ll discuss the former in this post. Bear in mind that products liability is, unsurprisingly, a heavily litigated area of the law and so my posts on this topic are very basic; any concerns you may have about products liability should be addressed by individual legal advice.
The word “injury” generally connotes ideas of bodily harm, which constitutes what is known as products liability. However, there is another area of law concerning injury to customers called misrepresentation, where the transaction between the seller and the consumer is flawed (as asserted by the consumer).
The theory behind products liability is that society has a right to be protected from catastrophic harm resulting from defective products. While such a goal is noble, it is certainly one that terrifies many manufacturers, hence the importance of getting rudimentary understanding of the area.
In a strict liability (read: the manufacturer is not favored) products liability action, there are five elements the plaintiff must prove (I won’t list them all here); the keystone element, and the most important to businesses, is whether a product is “unreasonably dangerous.” This term, translated, asks whether the average consumer would recognize that the product is dangerous and the degree of injury risked by using the product. On the other hand, a manufacturer gets a chance to be psychic and foresee all reasonable uses of the product it produces. As a bit of personal commentary, “reasonable uses” encompasses a wide array of asinine uses of any and all products - chainsaws used as can openers (ok, that’s a stretch, but my point is that a manufacturer needs to consider the creative skills of potential customers when producing goods).
Alternatively, there are negligence actions in products liability cases, which focus on the actions of the manufacturer, not the product itself (as in strict liability cases).
Products liability lawsuits can be quite harsh to a business. One avenue of prevention often taken is use of effective and attention-grabbing warning labels to get the attention of consumers. Warning labels are not a cure-all, but they do make it clear that caution must be used with a product. Another upside is that warning labels are often cheap. Another option, one that is far more costly but internalized as easily as labels, is to “childproof” your product - by that I mean you analyze the product’s safety for every possible use (not easy). Such work takes a lot of time and money on the front end of product development, but may well be worth it. Products liability suits are extremely expensive.
Bear in mind that most products liability cases focus on consumers, not businesses. Defective products in the business realm are often covered by the UCC (contract) law.
Chris Moander is an Attorney handling business law matters, business litigation, and collections matters throughout Wisconsin.
