What is product liability in contract and in tort?

Product liability and safety 

Product liability and safety includes for instance contractual liability of vendors or suppliers of goods. On the other hand there can be a tortious liability of producers and others. Contractual liability arises if the product is faulty or defective. This constitutes a breach of contract as there are implied terms in the contract which state that the goods must be fit for purpose. The contractual relationship between the parties implies also other implied terms as in accordance with the Statute. Tortious liability may arise if there was damage caused by defective product and if there is no direct contractual relationship between the parties however there has to be an element of negligence.

Liability in contract

This area is primarily governed by the Statute however the common law still has its importance here. Persons who sell products or deal with those products in a way which is different to the one agreed in hire purchase agreement can face contractual liability. If there is a contract for the sale of goods or for hire purchase of goods, such contract contains certain implied terms which must be complied with in order for the contract to be lawfully executed. These implied terms may be for instance satisfactory quality, correspondence with description or fitness for purpose etc. Such terms will not be able to be excluded from the contract. If they were excluded such a provision would be contrary to the Unfair Contractual Terms Act. In order for a person to face contractual liability, there has to be some sort of contractual promise or contractual term which would have to be breached and there must be a clear intention to create these contractual relations. These contractual relations must intend to be binding. Description of the goods must comply with the one stated in the contract. If the description does not comply this could constitute fraudulent or negligent misrepresentation. In this case a person could be eligible for damages. Contractual liability will enable the party to recover compensation for damage which was caused by the use of defective products and it gives the party the option to reject such defective goods. There is a significant disadvantage to contractual liability as only the parties who are the parties to the contract will be able to have a claim under the same. This doctrine is called ‘privity of contract’. If the buyer buys the goods which are defective, he or she can only have a claim under contract of sale against the Seller e.g. retailer. If the retailer is insolvent there are no further claims possible. The Buyer will therefore be left without any remedy. No third parties will be able to claim against the retailer either.

Relation to Rights of Third Parties Act

In some circumstances and depending on the terms of the contract a third party will be able to enforce a contractual term unless specifically excluded by the contract.

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For more information on:

  • Liability in tort
  • What are defective products?
  • Statutes
  • Connection with foreign jurisdiction