LAW OF TORTS-II

TOPIC: PRODUCT LIABILITY: ISSUES AND CHALLENGES

SUB-TOPIC: COMPARATIVE ANALYSIS: INDIA AND USA

NATIONAL LAW UNIVERSITY, DELHI

2022
 DECLARATION

I hereby declare that the project on the topic Product Liability:Issues and Challenges
submitted at National Law University, Delhi has been an outcome of the research carried out
by me under the valuable guidance of Dr. Sushila. All the documents and papers from which
suggestions and ideas were borrowed have been recognised and given credit in the project.
To the best of my knowledge, the project is free from plagiarism.

MAYANK SINGH

93 LLB 21
 Acknowledgements

I would like to express my heartfelt gratitude towards Dr. Sushila for providing me this
wonderful opportunity to make a project under her directions. She was very approachable
throughout the process which helped me to cope up with all the difficulties.

Secondly, I am extremely thankful to my friends and family members who were ready to help
me anytime and contributed immensely in completion of this project through their moral
support.
 Table of Contents

Declaration

Acknowledgements

Synopsis

Literature Review

Statement of Problem

Hypothesis

Research Objective

Research Questions

Research Methodology

Chapterisation

Chapter I: Product Liability: Definition, Applicability and Important terms

ChapterII: : LIABILITY OF PERSONS UNDER THE PROVISION

CHAPTER-III: DEFENCES TO A PRODUCT LIABILITY CLAIM-

INDIA VS USA

Chapter-IV Means of Redressal: India And USA

CONCLUSION
SYNOPSIS

LAW OF TORTS

Product Liability: Issues and Challenges-Comparative Analysis between India and USA.

INTRODUCTION

Comparison is a great instrument to determine the level of progression in any domain and
hence the arena of law is not an exception. Introduction and development of new legislations
and statutory provisions provide ample scope for introspection through which pitfalls can be
ascertained and worked upon. Furthermore, comparitive analysis specifically in the legal
field also helps to learn about the legal framework of other jurisdictions which is again a
colossal advantage. The research paper substantively aims at understanding the issues and
challenges under product liability and to serve the purpose, a comparison would be drawn
between Product Liability in India and Product Liability in USA so that the above-mentioned
benefits are availed.

The Indian Ministry of Consumer Affairs, Food and Public Distribution came up with the
Consumer Protection Act(COPRA) 2019. It proved to be a milestone owing to the fact that it
complied with the needs of the consumers to a better degree than the previous act i.e. COPRA
1986. One of the key features of the newly introduced act is the icorporation of the idea of
product liability. Previously, Law related to product liability in India was governed by
contracts and generally under the Consumer Protection Act, 1986, the Sales of Goods Act,
1930, the Indian Penal Code, 1860 and certain specific statutes pertaining to specific goods
and standardization. USA on the other hand has a very comprehensive and well-developed
from a longer period of time. A thorough analysis of the same shall be the objective of the
research.

LITERATURE REVIEW

The research is mostly based upon some proficiently written articles published on the most
prominent legal sites such as live law, Bar and Bench, etc. Product liability is a safer
provision for all the consumers worldwide and hence several jurisdictions have paid attenton
on the need of having a statutory provision for it. The articles provide a comprehensive and
wider overview of product liability of jurisdictions all across the world. All the minute
differences are precisely have been wisely explained by the writers. To define the intricate
terms of the product liability law and understand the exceptions embedded in it, the
researcher has relied upon the article by Sidharth Sethi who is a Partner at J Sagar
Associates and Bindu Janardhanan and a Registered Foreign Lawyer at Squire Patton
Boggs (Hong Kong). In order to understand the pertaining case laws, a collective article by
Rajesh Kumar, Managing Director, "Rajesh Kumar and Associates" and Rupali Singh,
Associate Advocate with the firm. Both the articles give a vivid picture of the Consumer
Protection Act of 2019 with a special emphasis on product liability through the inclusion of
various case laws. These articles proved to be immensely useful in the entire research as they
aided in formatiocentn of the complete framework needed for the research.

STATEMENT OF PROBLEM

Product liability laws in a concrete form are new to India and USA has a co-existing
consolidated statute from a long period of time. A healthy comparison between the two
would help in identifying and filtering out the crucial and the insignificant compnents.

HYPOTHESIS

Provision for product liability has been recently added in a statutory form and thus it requires
scrutiny so that its executed in the best possible way.

RESEARCH OBJECTIVE

1. To have an authentic comparison between product liability laws of India and the US.
2. To identify the key distinctions and similarities in the provisions of the two countries
3. To discuss the ambit of product liability
4. To ascertain the limitations and exceptions under product liability

RESEARCH QUESTIONS

1. How is the product liability mechanism of India different with that of USA?
2. Under what circumstances can remedy be availed under product liability?
 3. What are the defences available to the accused under product liability?

RESEARCH METHODOLOGY

The research has been performed using the doctrinal research method which entails study of
several primary and secondary sources such as blogs, articles, journals, reports and so on. All
the sources have been duly analysed adequately in the course of the research work. The
selection of literature plays the most vital role in any kind of research.

CHAPTERISATION

This paper has been divided into 4 chapters in order to provide a comprehensive
understanding of the product liability clause that has been recently inserted into the
Consumer Protection Laws of the country. Every concept and keyword has been covered in
each chapter so that even a lame person gets a sense of the latest provision without being
buffled. Questions which might seem trivial in nature have also been included without any
biases. The very first chapter is an attempt to define the most rudimentary definitons so that
nothing remains camouflaged and at least evvryone gets a gist of it without any trouble. The
second chapter addressess the question of liability. All the persons(groups& individuals) who
may held liable have been enlisted and the explanation for the same has been given in the
best possible way. It is a known fact that the end result which law intends is justice and hence
defense is intutively a very important component. The third chapter has therefore been entirey
dedicated to defenses which can be availed by the manufacturers. The fourth and the last
chapter lays emphasis on redressal and thus includes mention about different costitutional
bodies which have been framed to ensure justice even in the arena of buying and selling. As a
whole, the project is a comparative analysis of product liability provisions in India and USA
and that is why, everything has been juxtaposed in a dual fashion and the chapters find place
in the provisions of both the countries.
 Chapter I: Product Liability: Definition, Applicability and Important terms

As per Consumer Protection Act 2019, Product Liability is defined 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”1. In simple words, Product liability refers to the liability of any or
all parties along the chain of manufacture/supply/service of any product or services for
any damage caused by that product2. In India, it was initially an integral part of statutory laws
such as the Sales of Goods act of 1930, Consumer Protection Act 1986, Indian Penal
Code,1860, etc. In so far as the applicability of product liabilty goes, it is certainly different
in India with that of the US. In India just like most of the laws, product liability is uniformly
applicable throughout the country whereas in USA, provisions are different across the states.

Prior to proceeding further, Defining the common terms turns out be a significant aspect.
They are3-

1. Product-It means any article or goods or substance or raw material or any

extended cycle of such product, which may be in gaseous, liquid, or solid state
possessing intrinsic value which is capable of delivery either as wholly
assembled or as a component part and is produced for introduction to trade or
commerce, but does not include human tissues, blood, blood products and
organs;
2. Product Liability Action-It means 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;
3. Product Manufacturer-A means a person who— (i) makes any product or parts
thereof; or (ii) assembles parts thereof made by others; or (iii) puts or causes to
1
Consumer Protection Act 2019
2
Sidharth Sethi, Bindu Janardhanan, ‘Product Liability under the Consumer Protection Act, 2019: Let
the manufacturer/seller beware! (Bar and Bench, 24 July 2020) <www.barandbench.com/
columns/product-liability-under-the-consumer-protection-act-2019-let-the-manufacturer-seller-
beware.

3
Consumer Protection Act 2019
 be put his own mark on any products made by any other person; or (iv) makes a
product and sells, distributes, leases, installs, prepares, packages, labels,
markets, repairs, maintains such product or is otherwise involved in placing
such product for commercial purpose; or (v) designs, produces, fabricates,
constructs or re-manufactures any product before its sale; or (vi) being a product
seller of a product, is also a manufacturer of such product;
4. Product Seller- in relation to a product, means a person who, in the course of
business, imports, sells, distributes, leases, installs, prepares, packages, labels,
markets, repairs, maintains, or otherwise is involved in placing such product for
commercial purpose and includes— (i) a manufacturer who is also a product
seller; or (ii) a service provider, but does not include— (a) a seller of
immovable property, unless such person is engaged in the sale of constructed
house or in the construction of homes or flats; (b) a provider of professional
services in any transaction in which, the sale or use of a product is only
incidental thereto, but furnishing of opinion, skill or services being the essence
of such transaction; (c) a person who— (I) acts only in a financial capacity with
respect to the sale of the product; (II) is not a manufacturer, wholesaler,
distributor, retailer, direct seller or an electronic service provider; (III) leases a
product, without having a reasonable opportunity to inspect and discover defects
in the product, under a lease arrangement in which the selection, possession,
maintenance, and operation of the product are controlled by a person other than
the lessor.
5. Product Service Provider- In relation to a product, person who provides any
service in respect of such product;4

It is a considerable fact that all the above-mentioned terms which are although extracted
from the Indian Consumer Protection Act are nonetheless equally pertinent with the
definitions in the American provision for product liabiity because of the similar nature of
the definitions. In both the countries, it has been a successful legal initiative that has
minimised the threat to consumers in numerous ways.

4
Ibid
 CHAPTER-II: LIABILITY OF PERSONS UNDER THE PROVISION

In context of COPRA 2019, the term ‘person’ has the following connotations5.

I an individual; ii) a firm, whether registered or not; iii) a Hindu undivided family;
iv) a co-operative society; v) any corporation, company, or a group of individuals,
whether incorporated or not; vii) any artificial juridical person, not coming under
any of the preceding sub-clauses.In the United States of America, following are
the circumstances that needs to be proved to get benefit of the product liability
legislation.

- The product was defective when it left the manufacturer's possession or control, making it
unreasonably unsafe for its intended use. - The defect existed when the product left the
manufacturer's possession or control. The injury was caused by the flaw.

Liability in India: The following persons can be held liable in the following circumstances.

 Product manufacturer-
i. The product contains a manufacturing defect
ii. The defect lies in the design
iii. Deviation from manufacturing specifications
iv. The product does not conform to the express warranty
v. The product fails to contain adequate instructions of correct usage to
prevent harm or any warning regarding improper or incorrect usage
 Product seller
i. he has exercised substantial control over the designing, testing,
manufacturing, packaging or labelling of a product that caused harm.
ii. Modifies/alters the product which consequently led to a harm.
iii. Product failed to conform to an express warranty made by the product
seller

5
Ibid
 iv. The product has been sold by him and the identity of product
manufacturer of such product is not known, or if known, the service of
notice or process or warrant cannot be effected on him or he is not subject
to the law which is in force in India or the order, if any, passed or to be
passed cannot be enforced against him.
v. Failure to exercise reasonable care in maintaining such product.

 Product service provider-

i. The service was faulty in terms of quality, nature or efficiency of
performance
ii. ii. There was a harmful act of omission, commission, neglect, or
intentional withholding of information.
iii. iii. Warnings and instructions are insufficient to avert injury.
iv. iv. The service did not meet the express warranty or the contract's terms
and conditions..

CHAPTER-III: DEFENCES TO A PRODUCT LIABILITY CLAIM-

INDIA VS USA

As we all are aware that defences are an inherent feature of law which helps to reach to a
rational decision. Likewise, product liability also has some exceptions which can be applied
to prove guilt or innocense of the seller/manufacturer. This chapter would thus focus on the
same in order to provide a more apparent overview of the respective provision.

i. If the scenario is such that the consumer himself had altered the
product which later caused the harm resulting in injury then the
product seller is not accountable.

ii. In any product liability action, if the manufacturer had not provided
sufficient warnings, the claim would still be invalid if any one of
the below mentioned conditions is satisfied.

- The product was bought by an employer for use at the workplace and the
product manufacturer had provided warnings or instructions to the employer
but the employee who filed the suit was ignorant of the same.
- If the product was sold as a component or material to be used in another
product and essential warnings or instructions were supplied by the product
 manufacturer to the purchaser of such component or material, but the harm
was caused to the complainant by use of the end product in which such
component or material was used
- The nature of the product was such that it ought to have been used only by or
under the supervision of an expert.
- The complainant, in course of usage of the product was intoxicated.
iii. A product manufacturer cannot be held liable for not issuing a
warning against a danger which is commonly understood by all by
the virtue of common sense.6

In USA, the emphasis is laid on causation. It takes an interesting turn in the American
Jurisdiction. A major benefit by taking account of causation curtails the scope of unnecessary
allegations and compensations. When the principle of causation is applied, defect is analysed
in respect with the proximate injury. In simpler words, even if a kind of defect exists, remedy
cannot be sought util and unless it is the true/ proximate cause of an injury or harm. Such
elements in a law enriches the very idea of justice. To further continue, In the American legal
system, they rely upon certain tests for the purpose of determining the intensity of a defect.7

A couple of tests were brought in America to determine whether a defect actually existed or
not. They are-

Consumer expectations test- Under this, the seller can be made liable if the product is
defective in the sense that it may cause unreasonable danger. A jury can deduce whether
defect existed or not if the product fails to meet reasonable expectations of consumers.

i. In absence of a concrete evidence, the plaintiff holds the right to recover by

proving that the product did not meet the reasonable expectations of the user. A
product falls beneath consumer expectations when the product fails under
conditions concerning which an average consumer of that product could have
fairly definite expectations. This test ultimately proved to be insufficient because
of its vague definition. There are several embedded flaws which makes it hard to

6
Sidharth Sethi, Bindu Janardhanan, ‘Product Liability under the Consumer Protection Act, 2019: Let
the manufacturer/seller beware! (Bar and Bench, 24 July 2020) <www.barandbench.com/
columns/product-liability-under-the-consumer-protection-act-2019-let-the-manufacturer-seller-
beware.

7
Kenneth Ross, ‘Product Liability and safety in the United States: Overview’ (2020)
 apply this test. Additionally, it is also inadequate in terms of conceiving the
defects and adjudicating the actual liability due to inability of understanding the
obscure components of products under complex circumstances of a particular
accident8.
ii. Risk-utility-test- It is a cost-benefit analysis wherein a product’s risk compared to
its utility is assessed. The factors which are looked upon under this test are-

a. Utility and Desirability of the product

b. The safety aspects of the product that is, the probability that the product would cause
an injury along with the seriousness of the injury.
c. The availability of a substitute of that product that caters the same need and does not
cause any threat
d. The ability of the manufacturer to eliminate the unsafe element without compromising
on its utility and maintenance cost.
e. The ability of the user to keep away danger by exercising due care while using the
product.
f. The anctipated viilance of the user/consumer regarding the dangers that were
inherently there and their ability to be avoided based on general public knowledge of
the obvious condition of the product or existence of apt instructions and warnings.
g. The feasibility of the manufacturer spreading loss by setting up the price or by
carrying liability.

If after examining all the above-mentioned factors, the factfinder still finds that the
product’s design are greater than the benefits then the product is deemed to be
unreasonably dangerous and holds a manufacturer liable under section 402 A of the
Restatement (Second).9

Chapter-IV Means of Redressal: India And USA

In India, there are majorly four means by which redressal can be sought. There are consumer
forums and courts which hear the grievances of a consumer. All of this works in a well-

8
Legal Information Institute, ‘Consumer Expectations Test’ (Cornell Law School)
<https://www.law.cornell.edu/wex/consumer_expectations_test accessed 01 May 2022
9
Rebecca Tustin Rutherford, ‘Changes in the Landscape of Products Liability Law: An analysis of the
Restatement (Third) of Torts’ [1997]
established manner. Following are the various levels at which consumer forum works along
with their jurisdictional limits.

District Level Forums:

Before filing a complaint in the District Legal Forum, certain procedure needs to be followed.

i. Complaint must be sent by post and the paper has to be a notarised one

ii. The complainant must submit four copies of the complaint. In addition to this, copies for
each respondent against whom complaint has been filled must also be submitted.

iii. The value or cost of the product should not exceed 20 lacks
iv. Complaint must be filed within two years from when the product was known to be
defective.

State Level Forums:

One must comply with the following regulations.

i. The cost/value of the product must be above 20 lakhs but below 1 crore

ii. Appeal must be filed within a limitation period of 30 days from the order of a District
Consumer Forum. It has four requirements.

- The order that had been passed by the District Forum

- A document comprising details of the parties
- 4 copies of complaint
- A deposit of 50% of the compensation granted by the District Forum
- In case, the compensation is more than 25000 then 25000 has to be deposited

National Consumer Disputes Redressal Commision

A direct complaint can be filed for the products whose value exceeds 1 crore or appeals from
orders of State Consumer Forum.

Supreme Court

The apex court can be approached as the ultimate step of seeking remedy if the complainant
is aggrieved even after the orders by the National Consumer Disputes Redressal
Commission.
Apart from all these, a complaint can be filed online as well. The official website for
addressing the grevances of a consumer is consumerhelpline.gov.in10

Redressal of issues pertaining to product liability in the American Legal System-

Product liability lawsuits can be filed in both the the state or federal court which is a subject
to the state citizenship of the parties and amount & nature of damages. If the case
commences in the state court, a state court judge presides over the case. If both the claimant
and defendant are citizens of two different states, the federal court can exercise its powers
and follow the sate substantive law and federal procedural law.

10
Sriradha Rai Choudhuri, ‘Product liability and consumer protection’(ipleaders, 11 July 2021) <
https://blog.ipleaders.in/product-liability-and-consumer-protection/> accessed on 04 May 2022
CONCLUSION

The project analysed various aspects of product liabiity in both Indian and American context.
One of the major discoveries of the project was the fact that product liability provisions of
India and the US are not so distict from each other and more or less the same. Both the
nations share an identical approach in the domain of safety and security of consumers. One of
the prominent reasons behind the existing distinctions is a different geo-political extension
and legal mechanism.

Accomodating favourable provisions such as product liability is an explicit opportunity to be

empowered in the vast sphere of market. Having aware consumers or citizens in the market
would definitely strengthen the economy as this legislation would bring in a better
syncronisation between the buyers and the sellers. Since, both of them can be equally held
liable with no partial clauses in the provision, both buyers and sellers would behave in
compliance of the social norms. In simple words, with the arrival of legislations like product
liability, it is pragmatically not possible for either of the actors of the market to deceit each
other and by this logic, it can be expected that these newly introduced provisions would have
a meaningful impact.

Giving place to such liberal provisions also add so much value to the fundamental legal
acumen of the general public. It is also a great medium to annihilate the suspicion that may
exist between the buyer and seller. Due to different demands of different consumers, it gets
hectic for both to build-in a healthy relationship that is needed for the enrichment of the
socio-economic culture. When both the service providers and the beneficiaries are under the
shelter of a protective law that ensures equal representation and security, the probability that
they would work with ethical virtues such as honesty and integrity gets multipied to a larger
extent. Such a security in the institution of market can further bring a prolific balance that is
beneficial to the entire society as it would not just reduce the economic tensions but would
also create a conducive environment.

Through the study of product liability , it can surely be stated that the ultimate goal which law
seeks to accomplish is justice to the people and the product liability section precisely serves
the purpose. It is a not-so popular when it comes to discussions in the legal field but does
have a proportionate contribution to strengthening the wholesome legal foundation.
Moreover, a comparative study with USA gave a much better exposure to the subject. It was
great to see some identical characteristics in provisions of both the countries. This research
study could undoubtedly substantiate the fact that law is an integrated discipline.