Product Liability under Consumer Protection Act

I am sure every one of you who is reading this has heard of the famous rule "Caveat Emptor" which simply means let the buyer be aware. Wherein the buyer has to take the responsibility of the products and services that he purchases or avails. This principle has now been reversed and the burden has been shifted on the seller. The Indian Parliament passed the Consumer Protection Act 2019 which repealed the Consumer Protection Act 1986. The Consumer Protection Act of 2019 has a greater focus on the protection of the interest of the consumer. The New Act has introduced the concept of Product Liability which aims at protecting the interest of the consumers. So let's take a look at this concept in Detail.

Product Liability is a new provision introduced by the Consumer Protection Act, 2019 under which a manufacturer or a service provider has to compensate if the goods or services provided by him cause any injury or harm to consumers in the event of goods or services turns to be defective or shoddy. 

Product Liability prior to the Consumer Protection Act, 2019

Prior to the New Act, there was no specific law on the concept of Product Liability. In the absence of a statutory provision, the courts were guided by the common law principles of Justice, Equity, and good conscience. The Landmark Judgement in this regard was Donoghue vs Stevenson¹ which lays down the position where one owes a duty of care to the another and if such a duty is breached, there is negligence irrespective of weather any contractual relationship exists between the parties or not. There are certain laws which in general protect the interest of the consumers. Among these laws are:-

1)The Consumer Protection Act, 1986
2)The Indian Contracts Act 1872 
3)The Sale of Goods Act 1930
4)The Drugs and Cosmetics Act, 1945

5)The Prevention of Food Adulteration Act, 1954.

Although all of these laws touched upon the concept of product liability to some extent, none of them could lay a comprehensive legal framework for the enforcement as they could not identify a particular individual or entity in a supply chain against whom the consumer can raise a complaint. Thus the need was felt to establish a comprehensive Product Liability doctrine to safeguard the interest of the consumer.

Product Liability Under the Consumer Protection Act 2019

The Consumer Protection Act 2019 defines Product Liability under Section 2(34) as "the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating thereto." The new provision has a large impact not only on the manufacturer who will be liable to compensate the consumer but also on the seller if it fulfills the conditions mentioned in the Act. It allows a person to raise a product liability action by way of filing a complaint before a District Commission or State Commission or National Commission. Section 2(35) of the Act defines Product Liability action as "a complaint filed by a person before a District Commission or State Commission or National Commission, as the case may be, for claiming compensation for the harm caused to him;"

Manufacturer Liabilities 

Under the New Consumer Protection Act, the manufacturer shall be liable in the following scenarios if

·       the product contains a manufacturing defect, or
·       the product has a defective design, or
·       there is a deviation from the manufacturing specifications, or
·       the product does not conform to an express warranty given by the manufacturer (even when the manufacturer proves that it was not negligent or fraudulent in making the express warranty for the product), or
·       the product does not contain adequate instructions or any warning regarding improper or incorrect usage of correct usage to prevent harm.²

 Service Provider Liabilities 

The Service Provider shall be liable for

•        providing services which were faulty, imperfect, deficient or inadequate, or
•        proving inadequate instructions and warning to prevent harm, or
•        providing services which do not conform to the warranty or the terms and conditions mentioned in the contract.³

Seller Liabilities

Now under the new Act, even the Seller can be held liable for a product liability claim if 

•        it has exercised substantial control over the designing, testing, manufacturing, packaging or labelling of the product, or
•        it altered or modified the product and such alteration or modification was a substantial factor in causing the harm, or
•        it has made an express warranty which is independent of the warranty made by a manufacturer and such product failed to conform to such express warranty made by the product seller which caused the harm, or
•        the identity of the manufacturer is not known or if known the service of notice or process or warrant cannot be affected on the manufacturer or if the manufacturer is not subject to the law which is force in India, or
•        the product seller has failed to exercise reasonable case in assembling, inspecting, or maintaining the product or it did not follow the warnings or instructions for the product provided by the manufacturer while selling such product and such failure was the proximate cause of the harm caused to such product.⁴

Exceptions to a product liability action claim

Section 87 of the Consumer Protection Act 2019 provides for the Exceptions to a product liability claim. It envisages certain scenarios wherein one cannot bring an action for product liability. There can be no liability on the product seller if, at the time of harm, the product was misused altered or modified.

A product liability action under the Consumer Protection Act 2019 will not be fastened on the product manufacturer if it fails to provide adequate warnings or instructions, if:

•        the product was purchased to be used at a workplace and the product manufacturer had provided warnings to such employer, or
•        the product was sold as a component to be used in another product and necessary instructions and warnings had been given by the manufacturer, and the harm was caused to the complainant from the use of the end product, or
•        the product was one which was legally meant to be used under the supervision of an expert or a class of experts and the product manufacturer had employed reasonable means to give warnings or instructions for usage to such expert or class of experts, or
•        the complainant was under the influence of alcohol or any prescription drug while using the product which was not prescribed a medical practitioner, or
•        such instructions or warnings are obvious or commonly known to a user or a consumer of such a product or which the consumer should have known, taking into account the characteristics of such a product.

What is a 'defective product'?

A 'product' can include goods, electricity, and the component parts of any product. Where a component of or raw material incorporated into a finished product is defective both the manufacturer of the component and the manufacturer of the finished products are potentially liable.

A product is defective for the purposes of the CPA if its safety, including not only the risk of personal injury but also the risk of damage to property is "not such as persons generally are entitled to expect". A product will not generally, be considered defective just because a safer version is later put on the market.

In assessing the safety of the product the court will take into account all of the circumstances, specifically including:

•       all aspects of the marketing of the product;
•       the use of any mark in relation to the product;
•        instructions and warnings;
•        what might reasonably be expected to be done with the product at the time the product was supplied.

This last factor allows the court to take account of the 'state of the art' at the time of supply.⁵

Who Can File a Complaint?

An Action for Product Liability can be brought under the Consumer Protection Act 2019 by multiple persons against a product manufacturer including a consumer, a registered voluntary consumer association, Central or State Government, and one or more consumers where a number of consumers have the same interest.⁶

Remedies 

Under the new Act apart from imprisonment and fine the act entitles an aggrieved person to claim compensation for any harm caused on account of the product being defective. The Consumer Protection Act further contemplates suspension of license up to 2 years for first offense and cancellation of license in case of a subsequent offense 

Additional safeguards placed for e-commerce companies

The central authority with a view to protect the interest of the consumers from the e-commerce websites which make direct sales to the consumers will provide for measures in the future which will protect the consumer from unfair trade practices in e-commerce.⁷

Conclusion

The New Consumer Protection Act 2019 passed by the Parliament is a welcome move to protect the interests of consumers in a better way and the introduction of Product Liability ensures that the product manufacturers, Seller, and Service Providers take due care and help in preventing the exploitation of consumers.

Refrences

1)    Donoghue v Stevenson [1932] UKHL 100 

2)    Section 84 Consumer Protection Act 2019

3)    Section 85 Consumer Protection Act 2019

4)    Section 86 Consumer Protection Act 2019

5)    https://www.pinsentmasons.com/out-law/guides/product-liability-under-the-consumer-protection-act

6)    http://www.legalserviceindia.com/legal/article-1064-let-the-seller-be-aware-product-liability-under-consumer-protection-act-2019.html

7)    https://www.mondaq.com/india/dodd-frank-consumer-protection-act/854022/product-liability-vis-a-vis-the-consumer-protection-act-2019#:~:text=The%20New%20Act%20defines%20product,it%20is%20not%20only%20the