Q: Who is ultimately responsible in the event someone uses our product and then tries to file a claim for injury, misuse, accidents and so on? If we get liability insurance, include disclaimers on our Web site and provide warnings on the product itself, are we still potentially liable?

Answer:

Manufacturing products is a high-liability area. For a manufacturer to be liable, the claimant must show not only that there's a defect in the product, but also that the defect was present when the item left the manufacturer's control. Sometimes, distributors and retailers can also be liable. Under liability for negligence and strict liability, disclaimers are irrelevant if property or personal injury damage occurs.

Product Defects

Here are the types of product defects:

• Manufacturing defects: The product is different and more dangerous than if the product were made properly.
• Design defects: If all units of a type of product are the same, and they all share dangerous results as a group, they may have a design defect.
• Inadequate warnings: A product can be defective if the warning given by the manufacturer does not highlight any danger not apparent to a user. To prove such a defect, a claimant can show either that the product failed to perform as safely as an ordinary consumer would expect (including anticipated misuse), or that the product could have been made more safely without a significant impact on the price or utility.

Despite this general rule, a manufacturer may not be liable for those dangers which he could not have foreseen at the time he marketed the product, and also may not be liable for inherently dangerous products where the danger is obvious and there's no way to make the product (such as a knife) safer.

Other Liability

There are several areas of liability, including:

• Liability for intentional acts: This area of liability requires not only a defective product, but also that the manufacturer intended or knew of the resulting harm.
• Manufacturing defects: The product is different and more dangerous than if the product were made properly.
• Liability for negligence: The manufacturer of the defective product failed to use a reasonable amount of care or reasonable procedures when making the product.
• Liability for implied legal warranties: Under the Uniform Commercial Code, which has been adopted in various forms nationwide, warranties are implied into the sale of goods. In other words, these warranties ensure that the item will function as intended (for example, a toaster will toast). Also, if a salesperson or manufacturer states the item is to be used for a particular purpose, then it will work for that purpose. (For instance, these tires work on this model car, or this ladder will hold 500 pounds.)
• Express representations: The manufacturer is also liable for any express written statements (and sometimes oral statements) about the product that appear in any literature, including advertising, packaging, manuals and so on. There are two levels of liability here: for breach of an express warranty and also for misrepresentation or fraud.
• Strict liability: Under strict liability, the claimant has to show that the product was defective (as defined above), unreasonably dangerous and that the defect existed when it left the manufacturer's control. Manufacturing products can be a costly and risky proposition. Therefore, it is extremely important and wise for your business to consult with an attorney early on to ensure your labeling and processes will lower your risks to the greatest degree.

All answers are general in nature, not legal advice and not warranted or guaranteed. Readers are cautioned not to rely on this information. Because laws change over time and in different jurisdictions, it is imperative that you consult an attorney in your area regarding legal matters and an accountant regarding tax matters.

1 Readers are cautioned not to rely on this article as legal advice as it is
no substitution for a consultation with an attorney and an accountant in your state. Based
on jurisdiction and time, the law varies and changes.