INTERNATIONALPRODUCT LIABILITY

General EditorDENNIS CAMPBELL

B.A., J.D., L.L.MMember Iowa State Bar and New York State Bar

EditorCHRISTIAN T. CAMPBELL

LL.B., L.L.M.Member New York State Bar

PUBLISHED UNDER THE AUSPICESOF THE

CENTER FOR INTERNATIONAL LEGAL STUDIESSalzburg, Austria

LLPLONDON NEW YORK HAMBURG HONG KONG

LLOYD'S OF LONDON PRESS LTD.1993

CONTENTS

Contributors xxiiiContributors' Contact List xxviiTable of Cases xxxiiiTable of Legislation xlix

CHAPTER 1. INTERNATIONAL PRODUCT LIABILITY

Introduction 1Product liability law and its reform in Europe 2. . . and in the United States 9What is different? 14Continued relevance of conflict of laws 16

CHAPTER 2. AUSTRALIA

Introduction 21Theories of manufacturers' liability 21

Negligence 21Fraud or misrepresentation 23Warranty 25Strict liability 28

Factors which define the concept of defect 30Defective manufacture 30Defective marketing 30Defective design 31

Obligations to warn or to recall defective products 32Defences available to the manufacturer 34

Contributing fault 34Assumption of risk 34Product misuse 35

CONTENTS

Comparative fault 36State of the art defence 36

"Proximate cause" limits 37Others affected by product liability rules 38

Retailers 38Wholesalers and distributors 38Manufacturers of component parts 39Franchisors and franchisees 39Licensors and licensees 40

Remedies 40Personal injury and death 40Punitive damages 41Emotional distress 41Economic loss 41Return or repair 42

Exclusion or limitation of contractual liability 43Statutes of limitations 44Liability of successor corporations 44Insurance 44

Availability and use of insurance 44Nature of general liability policies 45Usual extent of cover 45Usual exclusions 45Duties of insured 46

Role of courts and lawyers 47Frequency of litigation 47Attitude of courts 47Typical extent of damages awards 47Nature of lawyers' compensation 48Choice and application of law 48

CHAPTER 3. AUSTRIA

Introduction 49Historical evolution 50Purpose of the PHG 52Product and defective product 53

Product 53Defect 54

Warning and recall obligations 55Defences 56

Contributory fault 56Assumption of risk 56Product misuse 57State of the art defence yj 57

CONTENTS

Binding regulations, directions and orders 58Defect as "proximate cause" 58Liable persons 59

General 59Manufacturer 59Importer 60Merchants 61Licensor and licensee 62Joint and several liability 63

Remedies 63Disclaimer clauses 64Statutes of limitation 65Liability of corporate successors 66Insurance 66Role of the courts 67

Frequency of litigation 67Applicability of Austrian law 68

CHAPTER 4. CANADA

Theories of liabilityIntroductionAction in tort (negligence)

Concept of "defect"Defect in manufactureDefect in design

Duty to warnDangers arising from negligent design or manufactureDangers resulting from use"Thin-skull" usersLimiting the duty to warnThe future

Duty to recallDefences

Contributory negligenceVolenti non fit injuria (assumption of risk)Misuse of productComparative negligenceState of the artNovus actus interveniensIntermediate examinationConclusion

Proximate causeIntroduction"Thin-skull" rule

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CONTENTS

Intervening causeParties to the action

ManufacturersAssemblersDistributors, importers and wholesalersRetailers

RemediesTypes

Disclaimer clausesImplied warranties under the sale of goods legislationFundamental breachConclusion

Implications of statutes of limitationActions in tort as opposed to contractJurisdictional considerations

Liability of corporate successorsInsurance

Types of coverageLimitations or "gaps" in coverageSpecial exposure faced by retailersConclusion

Class actionsClass Procceedings Act, 1992

Role of courts and lawyersGeneralNature of lawyers' compensation

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CHAPTER 5. DENMARK

Introduction 127Theories of liability 128

Negligence 129Fraud or misrepresentation 132Warranty 133Strict liability 134

The concept of defects 135Defective manufacture 137Defective marketing 139Defective design 140Manufacturer's obligation to warn or recall defective products 142

Defenses available to the manufacturer 143Contributory fault 143Comparative fault 143Assumption of risk 143Product misuse ... 144

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CONTENTS

State of the art defense 144Liability of links in the chain of commerce 145

Makers of component parts 145Middlemen 145Wholesalers and distributors 146

Remedies 146Damages for personal injury 147Damages for property 148Disclaimers 148

Limitations 149Contractual limitations 149Statutes of limitations 149

Successor liability 150Insurance 150

Usual extent of cover 151Usual exclusions ' 153Duties of the insured 154

Product liability litigation 154Frequency of litigation 154Attitude of the courts 155Lawyers' compensation 155Choice and application of law 156

Appendix 157Optional provisions 157Differences from the directive 157

CHAPTER 6. ENGLAND

Negligence 159Standard of care 160Burden of proof 161Causation of injury 161

Breach of other civil duties 163Nuisance 163Rule in Rylands v Fletcher 163Breach of statutory duty 164

Fraud or misrepresentation 164Fraud 164Misrepresentation 165

Contract 167Express terms 167Implied terms 168

Impact on third parties 174Collateral contracts 175Quality control . 176^ ' IX

CONTENTS

Strict liability 176Consumer Protection Act 1987 176Employer's liability 181Other statutes 181

The concept of defect 182Defective manufacture 182Defective design 183Defective marketing 184

Obligations to warn and recall 184Warnings 184Product recall 186

Defences 187Negligence 187Contract 191Consumer Protection Act 1987 192

Proximity: causation and remoteness of damage 196Proximity in fact 196Proximity between the parties 196Proximity between the defect and the harm suffered 197

Impact of product liability considerations 199Retailers 199Wholesalers and distributors 200Makers of finished products 201Makers of component parts 202Franchisors and franchisees 202Licensors and licensees 203

Damages 203Contract and tort damages and the Consumer Protection Act 203Damage 203Damages recoverable 204Personal injury and death 205Punitive damages 206Emotional distress 207Economic loss 209Property damage 209Return/replacement of the goods 210

Limitations and disclaimers 210Clauses to limit negligence liability 211Clauses to limit breach of contract liability 211Consumer deals 213Exceptions from the Act 214The Consumer Protection Act: excluding strict liability 214Other statutes 214

Limitation of actions 215Contract and tort 215Special limitation periods 215

CONTENTS

Product liability and the corporate structure 219Corporate groups 219Corporate successors 220Dissolved companies 220

Insurance 221Availability and use 221Nature of general liability policies 222Extent of product liability cover 223Duties of the insured 224Control of the claim 225

Role of courts and lawyers 226Frequency of litigation 226Attitude of courts 226Typical extent of damage awards 227Lawyer's compensation 228Choice and application of Law 229

CHAPTER 7. FRANCE

Introduction 231Theories of liability 232

Contractual liability 232Tort liability 248

General tort action 248Article 1384(1) of the Civil Code 250

Concept of defect 252Warnings or recall of defective products 253Defences 255

Contributing fault 255Assumption of risk 256Product misuse 257Comparative fault 257State of the art defence 258

Proximate cause 260Chain of distribution 261

Impact on hidden defect warranty 261Impact on general contract or tort liability 262Manufacturers of component parts 263

Remedies 263Personal injury and death 263Emotional distress 264Economic loss 265Return or repair 265

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CONTENTS

Disclaimers and limitations 266Statutes of limitation 268Liability for corporate successors 268Insurance 270

Availability and use of insurance 270Nature of general liability policies 270Usual extent of cover 271Usual exclusions 271Duties of the insured 272

Role of the courts and lawyers 272Frequency of litigation 272Attitude of courts towards product liability claims 273Typical extent of damage awards 273Nature of lawyers' compensation 273Choice and application of law 274

CHAPTER 8. GERMANY

Introduction 275Contractual claims 276

Allocating quality control to contract partners 276Limitation period 279

Tort liability for negligence 280Duty to make product safe 280Areas of obligations for manufacturers - 281Burden of proof 285Property damage through a faulty product 287Limitation period 287

Absolute liability and the new law 287General 287Those liable 288Products covered 289Concept of defect 290Scope of damages 292Time for attaching of liability 293

Insurance 294Recourse when several persons liable 294Criminal responsibility for products 294

Distribution of responsibility 296

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CONTENTS

CHAPTER 9. GREECE

Introduction 299Pre-1991 legislation and the Civil Code 300

Real defect and contractual qualities 300Liability through accessory obligations 302Liability in tort 302

Law for protection of the consumer 302Strict liability 302

CHAPTER 10. ITALY

Introduction 305Historic evolution 305Theories of manufacturer's liability 306Normative European Community regulations 308

The concept of defect 309Exclusion clauses 311Duty to warn 312Useful disclaimers and limitations 314Defences and exemption 316

Contributory negligence 316Joint liability 317

Remedies 318Non-pecuniary loss 319

Statute of limitations 320Extension of liability to corporate successors 321Insurance 322The role of the courts and of lawyers 323

Lawyers 323Choice of law 323Trends 323

CHAPTER 11. LUXEMBOURG

Introduction 325Bases of manufacturers' liability 325

Contract 326Tort 3321989 Products Liability Act 336

Concept of defect 338Civil Code 3391989 Products Liability Act ^ 341

CONTENTS

Liability for the defect 343Civil Code 3431989 Products Liability Act 345

General defences 347External cause 347Specific defences in article 1641 action 350Specific defence to article 1384 action 354Specific defences to a Products Liability Act action 354

Recoverable damages 357Civil Code 3571989 Products Liability Act 361

Clauses limiting or excluding liability 362Exclusion clause inserted by an occasional seller 363Exclusion clause inserted by a professional seller or manufacturer363General conditions of sale 365

Time limits 366Civil Code 3661989 Products Liability Act 368Other limitations 369

Insurance 369Courts and lawyers 369

Competent jurisdiction ' 370Frequency of litigation 370Lawyers in Luxembourg 370

CHAPTER 12. THE NETHERLANDS

Legal basis for liability 373Contractual liability 373Statutory liability 374

Defective product 377Design defects 377Production defects 378Faulty instructions 378

Defences 379Fault of victim 379The abuse rule 380Acceptance of the risk 380Joint fault of a third party 381State of the art defence 381Manufacturer of a component 382

Causal connection 383Imputed causality and market share liability 384The "manufacturer"

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CONTENTS

Damage 386Bodily injury 386Material damage 387Transactional damage 388Immaterial damages 389

Exoneration 390Statute of limitations 391Insurance for product liability 392Conclusion 393

CHAPTER 13. NEW ZEALAND

Introduction 395New Zealand Constitution 395New Zealand courts 395

Manufacturer's liability in New Zealand 396Negligence 396Fraud or misrepresentation 398Warranties by manufacturers 401

Concept of defect 407Defective manufacture and design 407Defective marketing 409Copyright 410Trademarks 410The Commerce Act 411

Obligation to warn or recall defective products 411Defences 412

Contributory negligence and comparative fault 412Assumption of risk - "volenti non fit injuria" 413Product misuse 414State-of-the-art defence 414

Causation 414Onus of proof 415

Parties affected by product liability law 416Retailers 416Wholesalers and distributors 417Franchise and licence 417

Remedies 418Personal injury 418Punitive damages 420Emotional distress 421Economic loss 421

Exclusion clauses 423Parties in a contractual relationship 423Contractual Remedies Act 1979 426

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CONTENTS

Fair Trading Act 1986 426Position of parties not in a contractual relationship 426

Limitation 428Corporate personality 429Product liability insurance 430

Typical exclusions 430Policy conditions 430

Litigation in New Zealand 431Conclusion 432

CHAPTER 14. NORWAY

Theories of liability 433Fault liability 433Contractual liability 436Statutory strict liability 439Non-statutory strict liability 444

Concept of defectiveness 447Manufacturing defects 447Construction defects 448Instruction or marketing defects 449Development defects 449System defects 450

Remedies after marketing 451General 451Statutory provisions 452

Defences 453Contributing fault 453Assumption of risk 454Misuse of product 455State of the art 456Other defences 456

Causal connection 457General 457The manufacturer's defences 458

Other suppliers' liability 459Distributors 459Component makers 461Franchise and licence agreements 462

Damages 463Introduction 463Personal injury and death 463Non-economic losses 464Damage to property 465Mitigation rules 465

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CONTENTS

Disclaimers and limitations on liability 466Statutes of limitation 467Corporate successors 468

Introduction 468Assignment of ownership 469

Insurance 471Loss and injury insurance 471Liability insurance 472Duties of the insured person 474

Litigation 475Introduction 475Court procedure 476Burden of proof 478Litigation costs 479Choice and application of law 480

CHAPTER 15. PORTUGAL

Introduction 483Manufacturers liability: strict liability 485The concept of defect 486

Presentation 487Reasonable use 487Entry into circulation 488

Duty of information 489Defences 489Concept of manufacturer 491

Effective manufacturer 492Apparent manufacturer 493Presumptive manufacturer 493

Damages and remedies 494Death or personal injuries 495Damage to property 496

Limitation period and lapse of rights 496

CHAPTER 16. SPAIN

Introduction 497Contract 497Civil Code 498

Defective products 499Damages 500

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CONTENTS

General law for defence of consumers and users 501Products 501Negligence 502Strict liability in tort 503Defences 504Plaintiffs 506Defendants 507Quantitative extent of liability 509Time limits 509

Insurance 509Voluntary system 509Obligatory system 511

CHAPTER 17. SWEDEN

Legal theories 513Introduction 513

Product Liability Act 513General 515Product Liability Act and Community Directive 516Right of recourse 517

Contractual liability 517Acts on sales 517Warranties 518

Non-contractual liability 519Concept of defect 521Obligations to warn or recall 522Defences 523

Contributory negligence 523Assumption of risk 523Product misuse 523Proximate cause and burden of proof 524

Who can be liable? 524Remedies 525Disclaimers and limitations 527Statutes of limitation 528Corporate successors 528Product liability insurance 528

No-fault insurances and insurance schemes 528Private liability insurances 530

Courts and lawyers in liability litigation 531

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CONTENTS

CHAPTER 18. SWITZERLAND

Introduction 533Tort liability 534

Liability of the principal 535Contractual liability 537Defects 539

Design defects 539Manufacturing defects 540Failure to warn or inform 541Duty to recall 541

Defences 542Contibutory negligence or wilful misconduct 542Assumption of the risk 542Product misuse 543State of the art defence 543

Proximate cause 544Affected persons in commerce 545

Manufacturer 545Retailers 545Wholesalers and distributors 546Manufacturers of components 546Franchisor and franchisee 547Licensor and licensee 547

Remedies 548Introduction 548Punitive damages 549Reparation for pain and suffering 550Personal injury and death 551Economic loss 553Return or repair 554

Limitation and exclusion clauses 555Statute of limitation 556Succession of enterprises 557Role of insurance 558Role of courts and attorneys 558Choice of law and forum 559

Tort liability -559Contractual liability -560

Future developments 561Draft federal resolution 562Conclusion -562

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CONTENTS

CHAPTER 19. UNITED STATES

IntroductionTheories of liability

NegligenceFraud or misrepresentationWarrantyStrict liabilityObligations to warn or recall

DefencesContributory negligenceAssumption of riskProduct misuseComparative faultState of the art defence

Proximate causeCause in fact and proximate causeIntervening and superseding cause

Liability of others in the chain of distributionSuppliersMakers of component parts

RemediesPersonal injury and deathPunitive damagesEmotional distressEconomic loss

Disclaimers and limitations on remediesStatutes of limitationLiability of corporate successors

Express or implied agreementConsolidation or mergerMere continuation of the predecessor entity.Transaction fraudulent, not in good faith, or withoutsufficient considerationContinuity of enterprise and product line theories

Role of insurance in product liability mattersAvailability and use of insuranceNature of general liability policiesUsual extent of coverageDuties of insured

Role of the court and lawyersFrequency of litigationAttitude of courtsTypical extent of damage awardsNature of lawyer's compensationChoice and application of law

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CONTENTS

CHAPTER 20. THE EUROPEAN COMMUNITY

Introduction 603Historical background of the Directive 603Concept of the Directive 604

Theory of products liability 604Affected "products" 605

Definition 605Raw materials 605Agricultural products 606Immovables and intellectual works 606Computer software 606

Definition and types of "defect" 607Liable parties 608Parties entitled to recovery 610Types of remedies and extent of recovery 610

Personal injury, death 610Property 611

Questions of evidence 611Limits of liability 612

Wrongful behaviour of injured person 612Amount of damages awarded 613Time limits 613

Other remedies 614Disclaimer 615Transformation of the EC Directive 615

Member States 616Non-Member States 616

Further developments in the European Community 617Appendix 618

Article 1 618Article 2 618Article 3 618Article 4 619Article 5 619Article 6 619Article 7 619Article 8 620Article 9 620Article 10 620Article 11 621Article 12 621Article 13 621Article 14 621Article 15 621Article 16 622

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CONTENTS

Article 17 622Article 18 623Article 19 623Article 20 623Article 21 623Article 22 623

INDEX 625

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