April 08 Q8 – Product Liability

April 08 Q8 – Product Liability

The issue in this case is whether or not Vanguard Motors can be held liable for the injuries suffered by John while driving his VM 100 family saloon. A case such as this would usually be decided in contract law but in some instances can arise in tort law; usually where the injured party cannot pursue a claim in contract either because the product didn’t reach him via a contract of sale, or because the party next above him in the chain of contracts is bankrupt.

If we study the common law on this area, it really begins with the famous case of Donoghue v Stevenson where a majority of the House of Lords decided that liability could exist irrespective of contractual relationship or whether the product was ‘inherently dangerous’. Lord Atkin stated:

“a manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination and with the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumer’s life or property, owes a duty to the consumer to take that reasonable care.”

The Irish High Court imposed similar liability on a manufacturer in Kirby v Burke & Holloway. Since both these cases the duty of care has extended to embrace all the various parties involved in the chain from manufacturer to the end-user. Courts apply basic principles of negligence simpliciter. Liability tends to attach now to the party who last had control of the condition of the products whether in its original or repaired state. In Power v Bedford Motor Co. & Harris Bros. Ltd. the first defendant was deemed liable to a subsequent purchaser of the car for negligent repair work, and the second defendant was liable to the extent that it should have detected the defect when it carried out pre-sale maintenance work on the car. In Keegan v Owens the supplier of carnival swing boats was held directly liable to the plaintiff for injuries to her hand caused by a wire nail attaching the boat to a steel bar.

Though one could be successfully in their action cases in tort for defective products were looked on as a last resort because of their lengthy process. The Liability for Defective Products Act, 1991 was enacted to implement Council Directive 85/374 on Products Liability. The directive responded to the perceived need to adopt a strict/no-fault liability regime across the EC. By Article 1 the

“…producer shall be liable for damage caused by a defect in his product.”

This was justified as being the best and fairest means of distributing the losses necessarily incidental to technological progress, and a means of protecting the weaker parties. Section 2 of the 1991 Act provides that the producer is liable in damages in tort for ‘damage’ caused wholly or partly by a defect in the ‘product’. Therefore it is strict liability. The statute states that the plaintiff must prove that the damage was caused by a defect in the product. In regards to the defect; a product is said to be defective where

“…it fails to provide the safety which a person is entitled to expect, taking all the circumstances into account.”

From the previous case law we can see that the courts may find Vanguard Motors liable for the injuries caused as they were the ‘producers’ of the defective ‘product’ i.e. the manufacturers of the defective vehicle. Vanguard Motors intended the car to reach the user in the form it was in when it left the production line, therefore Vanguard Motors owed a duty of care to anybody who purchased one of their cars. The defect was not caused after the car had left the production line it was caused at the design stages so even if the car was bought by John second-hand and had been looked at by a mechanic, Vanguard Motors are still fully liable for the injuries caused.

Another issue in this case is the fact that when Vanguard Motors discovered the defect they failed to inform the owners of the VM 100 of their discovery, not even warning John who previously encountered this ‘very rare condition’ which causes the lead to fail. A similar case to this, but not in this jurisdiction, took place in the US in Grimshaw v Ford which involved a defect in the design of the Ford Pinto. The defect caused the death of a mother, Lilly Gray, and serious injuries to a 13yr old passenger, Richard Grimshaw. While driving the car was rear ended which caused the doors to lock trapping the two inside and the cars petrol tank ignited. In the tests that were performed on the car this problem was discovered but not dealt with as a result of trying to save money and weight. Ford did a cost/benefit analysis on a recall of all the defective models and what it would cost for the probable number of court cases arising from accidents caused by the defective model. Even though they worked out that to fix the defects it would cost $11 per car and could potentially save 180 deaths from burning and 180 serious burn injuries they decided against the any production changes thinking it would be more profitable to deal with the court cases. This cost/benefit analysis did not sit well with the courts and Ford were ordered to recall all defective models. In this jurisdiction just as in others manufacturers are under a duty to warn consumers of all possible dangers. Irish cases relevant to this point are Cassels v Marks & Spencers and also Rodgers v Adams where the adequacy of the warnings, regarding flammability, on items of clothing was discussed.

In regards to Vanguard Motors case a recall should have taken place despite the problems with the lack of supply of the required higher rated lead which would remedy the problem. Warnings of the potential dangers should have been issued to the car owners. Vanguard Motors owed a duty of care to anybody who purchased their cars, so once they discovered that there was a defect they owed a duty to the purchasers to inform them of the defect and remedy the problem. In Ford’s case the cost/benefit analysis, putting a price on life, shocked most people including the jury but in fact this kind of economic test goes on in every day life in numerous amounts of ways, in different business sectors. In Vanguard’s case the fact that the VM 100 was a ‘popular…family saloon, which has, since it’s introduction 18 months ago, held the number one sales slot.’ may shock people as it brings in the fact that there are children and parents lives at risk due to this defect which Vanguard Motors chose to conceal.

There are however six defences set out in Section 6 of the 1991 Act which if successfully invoked act as a full bar to liability. One of these is known as the ‘development risks’ defence which is outlined under section 6 (e) and argues that the state of scientific & technical knowledge at the time was not such as to enable the defect to be discovered. This was considered in EC Commission v UK where the ECJ ruled that ‘state of knowledge’ refers primarily to scientific knowledge at the time, and not just to established practices within industry. It may be a long shot but could apply to knowledge at the time the cars were designed.

Looking at this particular problem Vanguard motors may have a defence in the argument that there were secondary causal issues which may have potentially caused the accident. One must look at the road conditions, the speed John was doing at the time, was his recklessness the cause of the accident. Should he have been more careful in icy conditions? The courts may in fact find John partially responsible. The statute states that the onus is on the plaintiff to prove that the defect caused the damage.