To a
generation reared upon stories of snails in ginger beer bottles and underpants
full of dermatitis causing sulphites, the very idea of life without Donoghue
v Stevenson [1932] AC 562 borders upon the sacrilegious. And, as far as
the wider implications of that famous decision (‘love thy neighbour or prepare
to pay him damages’) are concerned, it will no doubt continue to be as
important to legal development in the next half-century as it has been for the
last. However, the narrower principle laid down in Donoghue v Stevenson,
namely, that a manufacturer may in certain circumstances be liable in
negligence to the ultimate consumer of his products, will suffer an immense
reduction in importance on March 1 1988, when Part I of the Consumer Protection
Act 1987 comes into force.
That Act,
bringing to the United Kingdom what is commonly known as ‘Product Liability’,
is itself a product of our membership of the European Community.
It
implements (more or less) the European Commission’s Product Liability Directive
of 1985 and represents an attempt to ensure that, at least where this
particular area of law is concerned, Europe is seen to be as ‘harmonious’ as
possible. And, although its impact should be felt rather less keenly by the
majority of Estates Gazette readers than by, say, industrialists or supermarket
chains, its net is cast widely enough to make us feel that a brief survey of
the new law may be worthwhile.
Act
To date,
civil remedies in respect of defective products have consisted mainly of
actions for breach of contract (under the Sale of Goods Act 1979, section 14)
by a buyer against a seller, in which liability is strict, and tort actions by
a ‘consumer’ against a ‘manufacturer’, where negligence must be proved. It is
important at the outset to appreciate that these remedies are quite unaffected
by the Consumer Protection Act. What that Act does is to offer an additional,
strict-liability, remedy outside the realms of contract; this is achieved by
providing that the ‘producer’ of a ‘product’ is liable for any ‘defect’ which
causes ‘damage’. These terms, which are obviously at the heart of the Act, need
some amplification.
Producer. The basic liability under this statute falls on the manufacturer;
or (where a ‘substance’ has been ‘won or abstracted’, rather than being
manufactured) on the person responsible for winning or abstracting it; or
(where neither of these applies) on the person who carries out an ‘industrial
or other process’ which gives a product its ‘essential characteristics’.
Although the position is not altogether clear, the definition appears to exclude
those, such as farmers, who merely supply primary (ie unprocessed) agricultural
produce or game — the processor, such as a canner or freezer, is the
first in the supply chain to be caught by the new provisions, and it is worth
noting that he can be held liable for defects which are inherent in the
produce, and not merely for those which result from his processing.
Apart from
the actual producer, the Act imposes liability upon ‘own branders’ of a
product, and also upon anyone responsible for importing it into the European
Community for the purpose of supplying it in the course of his business.
Further, anyone else in the chain of supply between the producer and the person
who suffers damage will incur liability unless he complies promptly with a
request to identify either the producer or his own supplier (who then in turn
bears the same burden of identifying the next link). However, although a
defective component may render the whole product defective, the supplier of a
product is not treated as supplying the individual components as well, which
means that he can shuffle off his liability simply by identifying the person
from whom he acquired the product.
Product. Although this is defined to include ‘things attached to land’ (as
well as electricity, gas etc), the Directive makes it clear that the intention
is not to treat ‘immoveables’ such as buildings as ‘products’. However,
building materials clearly are included, although it is specifically
provided that ‘supplying’ goods does not include cases ‘where the supply is
effected by the creation or disposal of an interest in land’. The net result
appears to be that a builder who works on my property (eg by re-roofing
it or installing central heating) supplies the materials to me; but when I buy
a completed house, while I might be able to bring an action against the manufacturer
of a defective component in respect of personal injury (eg if a shoddy roof
tile falls on my head), I cannot treat the builder as a ‘supplier’ for the
purposes of the Act.
Defect. It is important to appreciate that this new form of liability is
concerned with safety rather than quality. This will be clearly shown
when we consider the question of ‘damage’, but for the moment let us merely
note that a product is defined as defective ‘if the safety of the product is
not such as persons generally are entitled to expect’ (and that this includes
both the safety of components and the risk of damage to other property).
Ducking the rather awkward question: ‘Are persons entitled to expect products
to be any safer than reasonable care can make them?’, we may simply point out
that some of the factors specifically mentioned by the Act as relevant to a
product’s safety bear a strong resemblance to those which determine a manufacturer’s
negligence at common law: what the product was expected to be used for; whether
any instructions for use, or warnings of risks, were given; when it was
supplied and so on.
Damage. In keeping with modern trends in the law of tort, the Act rules out
claims for pure economic loss. Damages can be recovered only for death or
personal injury or ‘any loss of or damage to any property (including land)’.
Indeed, claims arising out of property damage are further restricted in several
respects: they may not be brought in respect of damage to the defective product
itself (a very important limitation where one defective component
destroys the whole); they are available only for property which is both
suitable for and actually intended for the plaintiff’s private use, occupation
or consumption; and they must be fairly substantial — claims for less than £275
are not allowed.
liability
Although any
attempt to contract out of the new ‘product liability’ is declared void, the
Act specifically rules out liability in a number of circumstances. These are:
where the defect arises because of compliance with some legal requirement;
where the defendant has not ‘supplied’ the product to anyone; where the
defendant’s ‘production’ or ‘supply’ (as the case may be) did not occur in the
course of his business; where the defendant’s ‘component’ is only rendered
defective by the design of the product in which it is incorporated or by the
defendant’s compliance with instructions given by the producer of that product;
and where there was no defect in the product until after the defendant had
parted with it.
These
defences seem fair enough, but controversy surrounds the so-called ‘state of
the art’ or ‘development risks’ defence, under which a producer avoids
liability if ‘the state of scientific or technical knowledge at the relevant
time was not such that a producer of products of the same description as the
product in question might be expected to have discovered the defect if it had
existed in his products while they were under his control’. The British
Government, in deciding to include this defence (the European Directive made it
optional), was impressed by arguments from the CBI that, without it,
manufacturers would be afraid to innovate and would also lose their competitive
edge against the other member states which, it was said, were bound to include
it in their statutes. Time will tell, but it is worth recording that France,
Belgium and Luxembourg have not included such a defence and that West Germany
has not applied it to the most controversial case of all, namely, the
development of drugs.
One final
defence which deserves a mention is that of limitation. As if life were not
already sufficiently complicated in the wake of the Latent Damage Act 1986, the
new Act provides yet another set of rules. Roughly, these require a plaintiff
to issue his writ within three years of when his cause of action accrues (ie
when injury or damage occurs) or, if later, within three years of when he (or
his predecessor in title, in cases of property damage) had actual or
constructive knowledge of all the material facts. However, the Act lays down an
overall ‘longstop’ of 10 years from when the product was last ‘supplied’ by its
producer, ‘own-brander’ or importer, and this is an absolute bar — not only is
it incapable of being overridden at the court’s discretion (as in ordinary
personal injury cases), it is not even affected by such matters as fraudulent
concealment.
