LIABILITY FOR DEFECTIVE PRODUCTS:

A COMPARATIVE STUDY UNDER ENGLISH, MALAYSIAN AND

ISLAMIC LAW

NOR AISHAH BTE ABU BAKAR

MASTER OF COMPARATIVE LAWS KULLIYAH OF LAWS

INTERNATIONAL ISLAMIC UNIVERSITY PETALING JAYA

SELANGOR 1995/96

ACKNOv,TI....EDGEMENT

First and foremost, I would like to thank Allah

who has given me enough streng~h, courage, endurance,

lucidity in order to face this not-less challenging but

noble task.

This dissertation could not have been completed

had it not been the contribution of many people to whom

I feel greatly endebted.

First of all I would like to thank to my

supervisor Prof. Dr. Misbahul Hassan for his advices and

supervising in completion this dissertation.

A very special compliment from me to a very

special friend, Brother Idi Fulayi, for his contribution

in ideas, energy, time and strong support which helped

me in the completion this dissertation.

A special love to my mother Hjh. Rahmah Hasan for

her understanding and great support, and to the one and

only younger sister Nor Asiah and to the whole family.

i

Very warm thanks to all my housemate in :Kampung

Kerinchi. Ani. Zie and Ila for sharing the tears and

laughters as well as the togetherness. Treasure all the

memories we shared. Lastly a very thank you for all my

friends and colleagues who give me the assistance

especially the translation of the arabic text. and for

their prayers.

NOR AISHAH ABU BAKAR

G 9410100

KG. ALOR PISANG, KUALA BESUT,

BESUT, TERENGGANU

15 July 1996

29 Safar 1417

ii

Ta.b1e of Statutes

Consumer Protection Act 1987

Sale of Goods Act 1979

Supply of Goods Act 1973

Malaysian Sale of Goods Act 1957

Malaysian Contract Act 1950

Malaysian Trade Description Act 1972

Malaysian Hire Purchase Act 1967

iii

Table of c~ses

Blacker v. Lake & Elliot (1912) 166 C.T 533

Carlill v. Carbolic Smokeball [1893} 1 QB 256

Chandelor v. Lupos (1603) Cro. Jae. 4

Daniels & Daniels v. R. White & Sons Ltd & Tabard

[1938] 4 All ER 258

Dodd & Dodd v. Wilson & Mc William [1946] 2 All ER 691

Donoghue v. Stevenson [1932] AC 562

Hadley v. Baxendale (1854) 9 Exch. 341

Lambert v. Lewis (1980] 1 All ER

Rylands v. Fletcher (1868) LR 3 HL 330

iv

LIABILITY FOR DEFECTIVE PRODUCTS:

A COMPARATIVE STUDY UNDER ENGLISH,

MALAYSIAN AND ISLAMIC LAW

Acknowledgement

Table of Statutes

Table of Cases

Table of Contents

INTRODUCTION

CHAPTER 1

1. Historical Background of Product Liability Law

l

iii

iv

V

1

Under Common Law 4

1.1 Historical Development of Product Liability Law. 4

1.3 The Application of the Doctrine of Caveat Emptor and Caveat Venditor in Consumer Protection. 22

CHAPTER 2

2. The Enforcement of English and Malaysian Laws For Defective Products 34

2.1 The Application of Law for Defective Products Under English and Malaysian Law. 34

2.1.1 Contractual Liability 35 2.1.2 Tortious Liability 49

V

2.2 The Deficiency of the Existing English and Malaysian Laws 62

2.2.1 English Laws 63 2.2.2 Malaysian Laws 73

2.3 Agencies for Consumer Protection in United Kingdom and Ha lays ia. 88

2.3.1 Government Agencies in UK 2.3.2 Voluntary Organisations 2.3.3 Local Consumer Groups 2.3.4 Other Organisations 2.3.5 Government Agencies in Malaysia 2.3.6 The National Advisory Council For

Consumer Protection (NACCP) 2.3.7 The Federation of Malaysian

Consumers Association (FOMCA)

CHAPTER 3

3. Historical Background of Consumer Protection

88 94 95 96 98

100

101

Under Islamic Law 110

3.1 Institution of al-Hisba and the Jurisdiction of al-Muhtasib 110

3.1.1 Historical Development of Consumer Protection under Islamic Law. 111

3.1.2 Jurisdiction of al-Muhtasib 114

3.2 The Doctrine of Caveat Emptor Under Islamic Law

CHAPTER 4

120

4.Remedies for Defective Products Under Islamic law 123

4.1 The Role of the Doctrine of Option (al-Khiyar) For Defective Products

4.1.1 The Rescission of Contract

4.2 The Role of the Doctrine of ad-Dhaman For Defective Products

vi

125

126

144

4.2.1 Definition 4.2.2 Authority 4.2.3 The Application of the Doctrine cf

ad-Dhaman

CONCLUSION AND SUGGESTIONS

BIBLIOGRAPHY

vii

142 143

144

150

154

INTRODUCTION

This is a comparative study of the law relating to

product 1 iabi 1 it y under Eng 1 i sh, Malaysian and Islamic

law. Since product liability is a major subject in the

area of consumer protection, this dissertation deals

with the subject from the perspectives of consumer

interest.

The development in the law of product liability in

Malaysia has not made much headway. Insofar.

Malaysia does not have its own consumer protection law.

It is however has been drafted and not yet passed. As a

result. unlike English law. the application of the

theories of defective products under Malaysian context

is somehow restricted. This is the reason why the writer

has not much touched the issues of defective products in

Malaysian context. It is widely reported in "Utusan

Consumer" by CAP (Consumer Assosiation of Penang) but it

is left as a theory. no legal action has been taken. The

writer will briefly talk about other issues of consumer

protection under Malaysian law such as price and measure

control and trade description. Islamic law had provided

the specified remedies for the defective products which

1

can be found under the

ad-dhaman.

doctrine of al-khiyar and

Chapter one of this study deals with the histori­

cal development of product li abi 1 i ty under Common 1 aw

and the application of the doctrine of caveat emptor and

caveat vendi tor. The developments have been discussed

cronologically including the pre and post Donoghue

period culminating in the enactment of the Consumer

Protection Act 1987.

Chapter two is divided into three parts. First

part is concerned with the application of laws. A

consumer who suffers damage caused by consuming the

defective products (either personal or property damage)

suing the manufacturer whether under contract or tort.

The pursuing of the case depends on the damage he/ she

receives and the relationship with the manufacturer. The

second part deals with the deficiency of the existing

laws. Eventhough there are many statutes which have been

enacted to protect consumers from defective products.

there are still deficiencies which need to be looked

into and call for law reform. Existing civil law

remedies under contract and tort are time consuming.

highly expensive and loaded with formalities. This marks

2

the system beyond the reach of the common consumers. The

third part deals with the role of the agencies which

enforce the protection of the consumers. The chapter

deals both with English and the Halaysian laws.

Chapter three is dealing with the historical

background of consumer protection under Islamic law. The

institution of al-Hisba and the jurisdiction of

al-Huhtasib which have played a big role in controlling

the abuse of consumer rights have been dealt with. The

role of this institution pertinent to consumer

protection has been examined. The position of the

doctrine of caveat emptor and caveat vendi tor under

Islamic law has been considered and the differences of

the application of this doctrine under English.

Malaysian and Islamic law has been noted.

The remedies for defective products under Islamic

law has been dealt with in the last chapter. The

provisions of such remedies have been provided under the

doctrine of al-khiyar and the doctrine of ad-dhaman. To

what extent these doctrines provide protection to the

consumer.

3

CHAPTER ONE

1. Historical Background of Product Liability Law Under

Common Law

1.1 Historical Development of Product Liability Law

The problem of defective products is often

regarded as a modern phenomenon. However, cases which

emphasize consumer protection have their origins in a

much earlier age. For example. there have 1 ong been

regulations on essential items such as bread, meat, ale

and fuel. The early laws emphasized much more on the

regulation in relation to prices and the provision of

short measures. They can nevertheless be regarded as

having been directed towards 'fair trading' rather than

'consumer protection' • as is evidenced by the

Merchandise Marks Act 1887 to 1957 which was to protect

honest traders against their unscrupuluos

competitors.l.

In the same juncture, in the 18th century

exercised functions which were associated with

consumer protection' and 'public health'.These were

1. David w. Oughton, Consumer Law, Text, Cases and Materials, London:Blackstone Press Ltd, 1991, p.12

4

primarily jurisdiction of the "Courts of the Justices of

the Peace" and "the Manorial Courts Leets". The

protection of common 'nuisances' involving misuse of

houses. streets and bridges we re, however, i nve stiga ted

by Public Health. 2

Product liability law history also accounts of

statutory powers which were designed to enforce the

uniformity in weights and measures. This law related to

consumer protection and was found in the Henry III' s

Assize of Bread and Ale in 1266 which was the first

legislative control over impure food. It also laid down

a scheme to control the amount of bread or ale

obtainable for a farthing or penny respectively.

depending on the current price of wheat. barley or

oats. The punishment for short weight or quantity was

fine, or, in more serious cases. flogging or the

pillary. 3

Courts have been other actors in the context of

product liability law. They were especially empowered

2.Brian W Harvey and Deborah L.Parry. The Consumer Protection and Fair Trading. London:Butterworth. 1987, p.2

3. Id.p.6

5

Law 3rd

of Ed.

to fix the weight and price of bread according to the

then market prices of grain, meal or flour and required

bakers to mark their loaves with their size and

quality. For instance. the court of Justices of the

Peace and the Courts Leet were entrusted with the

jurisdiction over the price and measure of ale starting

since 1664. This involved setting up the price and

ensuring that goods were sized, stamped or marked as a

quart or pint. A typical example pertaining to an agency

which was given responsibility to inspect weights and

measures of ale and beer was aleconner. The duties

included examining bread. weights. measures. ale and

beer for sale and reporting such as offended against the

assize or standard or vended unwholesome liquor. The

punishment for the law breakers was fine or imprisonment

if the fine was unpaid. 4

Early laws also aimed at prohibiting the

adulteration of food. This eventually led to the

passing of a law against the adulteration food called

the Adulteration of Food and Drink Act 1860. This law

was afterwards extended by the then Pharmacy Act 1868

to cover the protection of adulterated drugs. However.

4. Id .• p.3

6

the scope of these early 1 aws remained 1 imi te d to a

narrow range of products and dealt with

adul te redproduct as opposed to defective or dangerous

products. 5 The main reason for this was that products

sold at that time were relatively harmless, and that

dangerous products were not widely owned; the damage

they caused was then frequently put down to misuse.

The increase in product liability claims can also

be linked to the development of more sophisticated

products. Rapid scientific advances have created an

insatiable demand for more innovations and discoveries

of more sophisticated products. a fact which creates

more product liability 'problems'. For example, many of

modern and sophisticated products use gasous and

electricity power to operate them. Gas may explode and

excessive variations in electricity voltage can cause

damage. This show that the more complex the products

are the greater the damage they can cause.

Another aspect of these products is that the

danger in today's products are always hidden. Their

5. Geraint Howells, Comparative Product Liability. Aldershot:Dartmouth, 1993, p.3

7

risk is often more indirect and unseen. Children's toys.

for example. can be dangerous because of the toxicity of

the paint used or because of doll's eyes which easily

come away then exposing sharp metal. 6

Consumers will justifiably seek to be compensated

for injuries they receive from the use of defective

products. They can reach this goal through reference to

a host of developed legal systems. This study will deal

with the position under various legal system. including

the Directive issued by the European Community to

harmonize consumer protection law.

a.Pre-Donoghue position

As mentioned earlier,

introduced in England in

1 iabili ty for the supply of

the

1266

legislation first

imposed criminal

'corrupt' food. Although

this legislation could have failed to match the pre­

vailing standards, it nevertheless can boast of having

grounded a civil remedy. This remedy was initially

exigible independently of contract against those who

followed a common calling but the barrier of privity of

6. Id .• p.4

8

contract soon intervened resulting in the supplier of

goods having no liability to non-purchasers e.g the

bystander. At this time, there was no separation

between goods which were inherently dangerous and those

less dangerous. 7

The pre-Donoghue state of the law has been well

summed up by Lord Sumner in Blacker v. Lake & Elliot8,

The breach of the defendant's contract with A to use care and skill in and about the manufacture or repair of an article does not of itself give any cause of action to B when he is injured by reason of the article proving to be defective.

This general rule of no liability, however in­

volved two exceptions:

a) Liability arising from articles dangerous in them

selves; and.

b) Liability where the article is not in itself

dangerous but is dangerous, by reason of some

defect or for any other reason, and this is known

to the manufacturer.

7. Alistair M Clark, Product Liability, London:Sweet & Maxweel, 1989, p.2

8. ( 1912) 106 L. T. 533.

9

This traditional approach was adopted by Lord

Buckmaster, who delivered the leading dissent in

Donoghue v. Stevenson. 9

b)The post-Donoghue position until 1960

According to this position, the immediate choice

open to a plaintiff claiming in respect of loss caused

by a defective product was either to found the claim in

contract or in tort. Clearly, the former is more

attractive than the latter but, for contractual

liability to arise. the victim will have to be a party

to the contract.

If the claim is founded in contract then the

seller will be liable if the buyer could establish

breach of one or other of the implied terms of sections

12 to 15 of the Sale of Goods Act 1979.

Since Donoghue v. Ste venson10 there has. of

course, been no doubt about the existence of a duty of

care in the situation where goods are supplied by a

9. [1932] A.C 562

10. Ibid.

10

manufacturer to a consumer. Although it could be claim

under negligence, yet it is not always necessary for the

plaintiff to pinpoint a specific act of negligence, and

fault can be

product. 11

inferred in respect of a defective

The aforesaid decision greatly removed the privity

barrier in tort claims for physical loss. The victims of

defective products could recover if he showed that the

defendant,

careless in

typically the manufacturer,

its construction, design,

had been

marketing,

instructions or warnings and at least in cases of

personal in i ury and property damages. They could sue

under the strict obligations pertaining to quality set

out in the warranties implied under the Sale of Goods

Act. However, little change has occured in the relevant

UK common law until the turn of the 1960s where British

courts remained loyal to the 'classical' contract

requirement of pri vi ty. Thus. the third party was not

allowed to sue under these warranties. 12

11. Alistair M. Clark. op.cit .• supra. note 7 at 10

12. Jane Stapleton. Product Liability. London: Butter­worths. 1994, p.37

11

c) During 1960s and 1970s

During the 1960s the rise in public concern about

consumer protection across a wide range of situation,

brought controversy and change in important areas of

British law relating to product injury. On the other

hand, sales 1 aw was subjected to vigorous 1 aw reform

review in the light of modern mass marketing practices

and was reshaped to an extraordinary de;::cee by

Parliament bent on protect:ng the cons~ning p~~::c. One

of the central concerns cf the nascer.t consucer ~~vement

in the early 1960s was the ease and increasing :requency

with which manufacturers and sellers of goods were

excluding (from liability) under the guise of

'guarantees' which were provided under the statutory

warranties with respect to quality. Al though from the

beginning these statutory sales warranties had been

excludable, both the Molony Committee 1962 and Law

Commission 1969 recommended that these be made non­

excludable by a business as against a person dealing as

a· consumer' . 13

13. Ibid.

12

In the mid to the late 1960s, tort liability for

personal injuries had acquired cons ide rabl e notoriety.

Right in 1961 it was first recognized that the

pregnancy drug Thalidomide caused birth defects in the

children of some users. This disaster fuelled popular

and academic disquiet about the way tort was operating

from the perspective of providing compensation to those

suffering personal injuries via the slow, costly and

uncertain process of a claim in tort for negligence.

In fact. where the injury was due to the design of

the product itself, as in the above case. the only

option for plaintiffs was to allege negligent design or

negligent failure to warn of a foreseeable risk. The

threshold task of proving that risks were forseeable in

these design can be a very costly and difficult one. as

is shown indirectly by the fact that even as late as

1993. no pharmaceutical producer had been held 1 iable

for drug-related injury by an English court (although

there have been notable out-of-court settlements). 14

The disaster of Thalidomide proved to be the

catalyst for the whole debate on product liability

14. Id. ,P .43

13

throughout Europe, causing a number of maJor lnquires

into the subject to be mounted 1n the 1970s. The 1970s

were a crucial era during which concern mounted to

compensate personal injuries and impose strict liability

on producers of defective products. In their first

reports

Committee

on exemption clauses, neither the Holony

=er.trally nor the Law Con.rn1ssicns were

concerned with personal injury ccmpe~sat1on.

A shift, however, could clearly be seen in the

working paper (1971) and final report (1975) at the next

Rtage of the Law Commissions enquiry into exclusion

clauses which focused principally on attempts to exclude

liability for negligence and the awkward and inadequate

at tempts of the common law to control them. Parliament

then, adopted a more radical position and the 'Unfair

Contract Terms Act' banned al 1 cl a uses purporting to

exclude liability for personal injuries arising in the

course of a business. In respect of negligence claims

relating to property and economic loss, exemption

clauses were controlled only by a reasonableness

standard, but one which was to be applied in the light

of the relative bargaining power of the parties. 15

15. Id .• p.42

14

Meanwhile, there had been widespread debate in the

United Kingdom since the early 1970s and the rest of

Europe over the desirability of introducing a wider

measure of strict liability for defective products. It

were proved by the Law Commissions' joint report,

'Liability for Defective Products' in 1977 and the

Pearson Commission report 1978. Both reports recommended

that strict liability be imposed on producers of

defective products which cause death or personal injury.

At European level a similar proposal is to be found in

the Council of Europe (Strasbourg) Convention on

Products Liability in regard to Personal Injury and

Death. 16

This boom in product and tort claims in the 1960s

and 1970s brought the rapid law reform towards the EEC

Directive Act on product liability i. e the birth of

Consumer Protection Act 1987. Three developments occured

in the 1970s which led to the she 1 ving of these moves

for comprehensive personal reform, namely, UK entry into

EC. the worsening of economic climate, and the election

in 1979 of a Conservative government which championed

16.C.J Millier and B.W Harvey, Consumer and Trading Law. Cases and Ha terials. London: Butterworth, 198 5. p.196

15