Product Liability

Product liability law as enacted in the CPA is a significant

development in consumer protection law and it impacts heavily
on the standard of local manufacturing and supplying goods to
consumers.

Importers of goods are also expected to ensure that goods

imported and put into circulation are as safe as those produced
locally.

The law with modification follows closely the European

Community Product Liability Directive 1985 implemented in
member states and non-member states such as Australia.

This new law is in line with the emerging international standard.

 Under the present law, if a defective product causes loss due
to injury or damage, there are several ways in which a claim
for compensation may be formulated

 First, there can be a claim for damages for breach of contract

if the parties are in a contractual relationship.

 Second, there can be a claim in tort for negligence under the

principle established in Donoghue v Stevenson

 Third, there can be a claim for compensation under Part X of

the CPA
Types Of Defect
 There are two categories of defective product:
 a) unsafe product
 b) substandard product

Defect in product particular reference to lack of safely may be

divided into three parts.

 Manufacturing defect

 Design defect

 Marketing defect
Manufacturing defect
 Manufacturing defect refers to a defect which occurs during
the process of production or construction or assembly of
product

 A classic example of manufacturing defect is the inclusion of

an unintended ingredient or foreign object into the product

 A flaw during the production process may also be caused by

defective raw materials or defective containers
Design defect

 Design defect refers to the defect in a whole run of product.

 It may be caused by the imprudent choice of appropriate

materials, product formula, ingredients or specifications, or
failure to incorporate sufficient safety features.

 This kind of defect can normally be found in high-tech

products such as chemicals, vehicles, drugs and medicines
Marketing defect

 Marketing defect occurs when a product which is properly

designed and properly manufactured becomes unsafe due to
insufficient warning labels or direction for use.

 Warnings and instructions for use is one of the important

elements in determining the overall safety of a product.

 The liability for this type of defect will be attributed directly to

the manufacturer who has failed to provide sufficient
information about the hazard or risk in using the product.
Actions under contract and tort

• Contracts for the supply of goods normally contain express

and implied terms that are enforceable by the parties

• Failure to carry out these terms, both conditions and

warranties, gives the consumer the right of legal action against
the supplier of the goods or services, usually the retailer from
whom the goods are obtained
• The manufacturer or importer of goods are generally immune
from actions based on contract simply because there is no
privity of contract between the consumer and the
manufacturer.
• A consumer, however, can take an action against the
manufacturer or importer under common law in tort for
negligence
 A claimant in negligence must be able to establish the element of
fault.
 Duty of care,
 Breach of that duty
 Causation.
 Loss or damage

 The plaintiff must prove that the loss or damage was caused by
some defect in the product
 The defect was the fault of the person against whom the claim is
made.

 The defect can be a design flaw, production fault, component fault

or even a marketing fault.
• Case : Donoghue v Stevenson : “snail case”
• On manufacturer liability.

• Fact: Mrs Donoghue drinking a bottle of ginger beer in a café

in Paisley, Renfrewshire. A dead snail was in the bottle. She fell ill,
and she sued the ginger beer manufacturer, Mr Stevenson.

• Held: The House of Lords held that the manufacturer owed a duty
of care to her, which was breached, because it was reasonably
foreseeable that failure to ensure the product's safety would lead
to harm of consumers.
• Where consumer goods are defective. It imposes direct liability for defective
products on producers (usually the manufacturer or someone who holds himself
out to be one) and importers of goods.

• This cause of action is not dependent upon contract or tort. There is neither a need
to neither show a contractual relation between the consumer and the manufacturer
nor fault on the part of the manufacturer.

• The consumer in fact; can sue by using both contract and tort law; as which more
advantageous to him in respect of legal consequences.
• Contract: existence of contractual relationship between retailer/
manufacturer + consumer
• Tort : Breach of legal duty; duty of care etc.
• As mentioned by Lord Macmillan in Donoghue v Stevenson : “ The fact that
there is contractual relationship between the parties which may give rise to
an action of breach of a contract, does not exclude the co-existence of a
right of action founded on negligence as between the same parties,
independently of the contract, though arising out of the relationship in fact
brought by the contract.”
• Any person who is injured or suffers damages as a consequence of defective products
is entitled to pursue the statutory remedy.

• However, it is notable that the statutory scheme of liability does not affect rights that
may arise out of contract or tort. In other words, the statutory scheme is additional to
and not a substitute for rights existing under current law.

• But, the drawback;

• since suing at common law is that the action founded in contract; therefore need
to show a contractual relationship between the parties
• Negligence; hard to prove manufacturer’s fault.
Liability for Defective Products
• According to s 68(1) the following persons are liable for any
damage that is caused wholly or partly by a defect in a
product:
• The producer: The person who, by putting his name on the
product or using a trademark or other distinguishing mark in
relation to the product, has held himself out to be the producer
of the product;
• The importer (who has imported the product into Malaysia in the
course of his or her business).
• Statutory liability here is optional; not substitute to action
under tort and contract; ie still can bring action under those
 Strict liability for defective products

The manufacturer is liable even if his action is unintentional

and he has taken all precaution to prevent the defect

It discourages reckless behavior and needless loss by forcing

potential defendants to take every possible precaution

Strict liability is in respect of death, personal injury and

damage

In strict liability situations, although the plaintiff does not

have to prove fault, the defendant can raise a defense of
absence of fault, especially in cases of product liability
 The advantage of this approach for the plaintiff is that liability may be
imposed by reason of the existence of a defect alone.

 The producer may be held liable whether or not the defect in the
product was discoverable or avoidable.

 Under the rule, the plaintiff is relieved of the burden of proving fault or
negligence. Although he still needs to prove that the defect caused his
injury, it is not necessary that the defendant had caused the defect.

 Intermediate examination of the product will no longer exculpate the

manufacturer from liability for defects in the product existing at the time
when he supplied the product.

 Similarly the plaintiff may not have to take the risk of suing every
potential defendant, since s 68(1) provides a wide range of people, who
can be easily identified and are accessible, against whom to pursue an
action.
 Procedure
• Section 68 of CPA: must ascertain the identity of producer or
importer of a defective product
• Person who suffer the damage must within reasonable period
identify the producer from the supplier.
• Fail to comply with request; the supplier liable for loss/
damages
• Two or more persons liable for the same damage? Liability will
be joint/ several ; all of them can be sued together.
 Key Concepts
• Defined in ss 66 and 67
• Damage: “ death or personal injury, or any loss of or damage
to any property, including land”
• Producer means:
• (a) : the person who manufactured it
• (b) : not manufactured it; but is won (mined) or abstracted, the
person who won or abstracted it
• (c) if not fall under either above; the essential characteristic of
which are attributable to an industrial or other process having
been carried out, the person who carried that process.
 Key Concepts
• Product : “any goods” includes “product comprised in another
product”.
• Defect : “the safety of the product is not as such as person is
generally entitled to expect.
• Safety:
• Safety in respect to the product comprised therein
• Safety in the context of risk of damage to property;
• Safety in the context of risk of death or personal injury
 Exclusion and Defenses
• Exclusion:
• “A producer or a supplier may attempt to exclude liability for
damages arising from product defect. By virtue of s71, the liability
of a person under Part X may “not be limited or excluded by a
contract term, notice, notice or provision”.
 Exclusion and Defenses
• Defences :
1. S72(1) CPA 1999
a) Defect is attributable to compliance with any requirement imposed
under any written law
b) Did not supply defective product at any time
c) Defect not exist at relevant time
d) Limited scientific and technical knowledge at the time
e) The defect is comprised in other product or attributable to design of
subsequent product.