Product liability, being a part of consumer protection laws, refers to the recourse available to the consumers of products who suffer injuries due to defective products. It governs the liability incurred by manufacturers, wholesalers, distributors and vendors upon injury caused to a person as a consumer or his property due to their defective or perilous products.
Product liability laws enable customers to protect themselves from the faulty products in the market, while making manufacturers, distributors and retailers liable for damages for the injury suffered due to products available in the market of which they had knowledge of.
Product liability laws in India have evolved in the past few years by means of amendments and judicial interpretation, being carved into a powerful weapon under the umbrella of consumer protection laws to protect the interests of consumers and ensuring socio-economic justice.
Initially, the Product liability legislations in India were narrowly construed by the Indian Courts. However in the recent times, the Courts have adopted a consumer-centric approach. The Courts have moved to awarding punitive rather than compensatory damages in cases involving product liability.
Certain legislations which protect the interests of consumers pertaining to defective products include:
- The Consumer Protection Act, 1986
- The Indian Contracts Act, 1872
- The Sale of Goods Act, 1930
Product liability includes both civil liability as well as criminal liability.
Civil product liability is a subset of personal injury law involving strict liability and negligence, which is concerned with the design, manufacture, distribution and sale of goods and services. Such a claim can be raised against one or more companies and businesses such as retailers, marketers and manufacturers. Further, product liability arises as per the provisions of warranty under the Contract law.
Criminal product liability arises when the concerned parties fail to comply with the provisions of certain Acts which protect the interests of consumers for different products. Such criminal action can be instituted in addition to a claim under civil law simultaneously in accordance with the Indian Penal Code, 1860.
PRODUCT LIABILITY UNDER CONSUMER PROTECTION ACT, 2019
The Consumer Protection Act, 2019 (hereinafter “2019 Act”) replaced the erstwhile Consumer Protection Act, 1986 after receiving presidential asset and being notified in the Official Gazette of India on 09.08.2019. The provisions of the 2019 Act came into effect on 20.07.2020.
The 2019 Act has made significant amendments to the erstwhile Act, along with addition of new provisions. The 2019 Act inculcates product liability theory as a statutory provision for the first time in India under Chapter VI of the Act.
Under Section 2(34) of the 2019 Act, product liability is defined as:
“the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating thereto.”
Therefore, the 2019 Act imposes product liability not only on the manufacturer, but also on the seller of the product, subject to certain conditions under the Act.
Further, the 2019 Act enables a person to raise product liability claim by filing a complaint before the District Commission or State Commission or National Commission against the manufacturer or seller of defective product through product liability action under Section 2(35).
The 2019 Act also defines “harm” in relation to product liability, which includes the following:
- damage to any property, other than the product itself;
- personal injury, illness or death;
- mental agony or emotional distress due to personal injury or illness or damage to property; and
- any loss of consortium or services or other loss resulting from a harm referred above;
- It does not include any harm caused to a product itself or any damage to the property due to breach of warranty conditions or any commercial or economic loss, including any direct, incidental or consequential loss related to it.
Product Recall refers to the process of formally ordering a person or an item back to the source of origin. Product recall is undertaken by the manufacturer of a product requesting the return, exchange or replacement of the product upon discovery of substantial defect in the product which could hamper its performance or cause injury to the consumers, resulting in legal claims against the manufacturers and sellers.
The act of recalling a product is done to restrict the liability arising out of corporate negligence and to protect the reputation of the firm. A company undertaking product recall has to incur extensive costs for the entire recall process, ranging from recalling the actual product to replacing or refunding the price of the product along with financial consequences of recalling the product on the business. However, such costs are significantly lesser than the costs and damages payable by the company when it fails to recall a harmful or defective product from market, being subject to various litigations.
In India, certain consumer protection laws require products to be recalled in different circumstances for various industries on a voluntary basis. The Consumer Protection Act, 2019 requires a company to recall products from the market when the competent authority passes an Order for the same.
Failure to recall such products attracts civil liability and may involve criminal actions as well. Few companies also indulge in voluntary product recall as a preventive measure to ensure consumer safety and maintain ethical image in the market.
The 2019 Act also sets out liability for different parties involved selling a product which will be dealt in Part- II of the Product Recall and Product Liability.
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