The Law of Personal Property

We all know the story of the unfortunate Mrs Donoghue, whose encounter with a decomposing snail not only spoilt what she thought was going to be a quiet drink with a friend, but went on to form the basis of the case which is credited with giving birth to the modern law of negligence. One of the reasons why Donoghue v Stevenson1 was such a landmark is that before it, the remedies available to a consumer who was injured by a product were very limited.

Today, however, the picture is very different, and there are a range of remedies available for the users of defective products, coming from the common law of both contract and tort, and from statutory provisions, again both in contract and tort. Which actions are available in a particular case will depend on whether the claimant is the person who bought the product or not, whether the product is defective in the sense of not doing its job properly, or actually dangerous, and what type of damage is caused as a result of the product's defects.

There three types of action interlock with each more or less restrictive in these different areas. Before Donoghue the only real remedy for users of defective goods was the law of contract. This provided that someone who bought a product that was defective could sue the person they bought it from for a breach of contract. The protection that this offered was increased by a line of statutes, beginning with the Sale of Goods Act 1893, which stated that certain terms regarding the quality of the goods sold should be implied into sales contracts, even though the parties themselves had not specifically mentioned them.

Until the Contracts (Rights of Third Parties) Act 1999, with very few exceptions, only the person who actually bought the defective product could bring an action for breach of contract. Now a third party can enforce a contractual term where the contract either expressly states that term should give rights to a third party, or where a particular term purports to confer a benefit on a third party. The other side of the privity rule is that only the person or company who actually sold the product can be sued, and this part of the rule remains.

If the seller cannot be traced, is bankrupt or otherwise unable to pay damages, the consumer has no claim in contract against anyone else involved in the product's supply. There are two ways in which a product can be considered defective: first, it may simply fail to perform as expected, or to be of adequate quality; secondly, it may be dangerous, which includes having the potential to damage other property as well as to injure people. Damages for breach of contract can cover personal injury, damage to property, pure economic loss and even anxiety, distress and loss of enjoyment.

What has to be proved is that there was a term in the contract which stated that the product would be of a certain quality, and that the defect concerned means that this term has not been fulfilled. The term may be something agreed specifically between buyer and seller, but more commonly in consumer disputes, it will be one of the terms implied into contracts by the Sale of Goods Act 1979. In many ways, contract offers a very effective method of compensation for defective products. A claimant need only prove that a term of the contract has been breached, there is no need to prove fault.

However, despite the Contracts (Rights of Third Parties) Act 1999 addressing the privity rule problem, it is still easy for a seller to exclude their contracts from the Act, they only need to include an express term to this effect. In principle a buyer can refuse to agree to the exclusion term but in reality the consumer usually accepts the terms offered by the seller. This is the one area of product liability in contract that needs to be strengthened if we want to improve consumer protection against unsafe products.

Even since the passing of consumer protection legislation the tort of negligence has played an important role in consumer protection. Anyone injured by a defective product can bring an action in negligence. Unlike contract, this allows a remedy for people given a defective product and for users of something belonging to someone else. It also applies to someone who, not actually using the product, is injured as a result of the defect in it. Two examples of this are Brown v Cotterill2, where a tombstone fell on a child, and Stennett v Hancock3, where a pedestrian was hit by part of a defective wheel on a passing lorry.

In Donoghue, Lord Atkin spoke of a duty owed by manufacturers to the end consumer of their products. This duty was quickly widened and it now seems that anyone involved in the supply chain of a defective product can potentially be sued in negligence, including sellers. In Andrews v Hopkins4 a second hand car dealer who sold a car that a week later suffered a steering failure, owed a duty to have the car examined, or at least warn the buyer if no examination had been made. A product liability action in negligence can only be brought in respect of products which are dangerous.

An action requires proof of damage, so the product must not only be dangerous but must actually have caused some harm as a result. A claimant cannot bring a negligence claim on the basis that a product could cause harm, if that harm has not actually happened, this was confirmed in D&F Estates v Church Commissioners5. A claim will cover personal injury and damage to other property but not damage to the defective product itself. This can only be claim in contract. This means that difficulties can arise where the defect is an a component part of a bigger product.

Negligence requires proof of fault and of causation, the claimant must prove that the defendant's failure to take reasonable care caused the defect that made the product dangerous. The claimant does not need to show exactly what it was the defendant did wrong, this was seem in Mason v Williams & Williams Ltd6 where the claimant was injured by a chisel and the court held that it was enough to establish that the defendant had been negligent. This approach was challenged in Carroll v Fearon7 but the courts stood firmly behind it. This case concerned a car crash which left a girl dead, a woman blinded and six others seriously injured.

The crash was caused by faulty tyres made by Dunlop, and it became clear that the company knew there was a problem with the tyres but they had decided to conceal the risk rather than alert the public. One factor that will make a difference is whether there is sufficient evidence that the defect existed when the product left the defendant's hands. In Evans v Triplex Safety Glass Co Ltd8 the claimants windscreen shattered for no apparent reason but the court held that the defect could have been caused in the year after the glass left the factory, and it was known that the glass could be strained during installation.

The main drawback with negligence as a means of compensating users of dangerous products is the need to prove fault. Unless the claimant proves that a defendant has failed to take reasonable care, the defendant will not be liable for any risk caused by their products. This can be a difficult process given that in many product liability cases, the claimant will be an individual consumer and the defendant a large and wealthy company.

Add to that the fact that the most convincing evidence of negligence in a manufacturing or quality control process is likely to come from someone involved in that process, and the problems increase. This is a key area which needs to be changed if consumers are to be better protected against unsafe products. The need for the claimant to prove fault could be removed and a strict liability could be imposed so that manufacturers would be liable for any injury caused by their products, whether or not they were to blame for it. The risk could be insured against by the manufacturers and the cost distributed among the buying public.

It is clear that the manufacturer stands to benefit financially from launching products so it could be seen as reasonable that they have to stand the cost of any injury caused by those products. The main argument against imposing strict liability is that it would strangle innovation and enterprise and potentially raise the price of products too high. This discussion on the introduction of strict liability also applies to the Consumer Protection Act 1987 discussed below. Additionally, it may be an improvement if cases where not dealt with by the courts.

Take for example a cure for liver disease that is subsequently found to cause side effect that can kill some patients, it could be argued that judges are not the most qualified to decide whether the risks to some people outweighs the chance of life to others. This decision could be made elsewhere, where it is not linked to individuals' claims for compensation, and where the whole social context can be examined. The Consumer Protection Act 1987 was passed against a background of concern about the inability of the law of negligence to protect consumers against dangerous products, and in particular, the Thalidomide scandal.

It was felt that every day of our lives we consume, use, or simply come into contact with countless different products and we should be able to assume that those products are safe. Not absolutely safe, as that remains unattainable, nor safe at unbearable cost to industry as that would put innovation at risk, but as safe as is reasonable to expect. The aim of the Act was to help safeguard the consumer from products that do not reach a reasonable level of safety. However, the actual trigger for the new law was the drive towards establishing a single market across the countries of the EEC.

In 1985, the EEC issued the Product Liability Directive 85/374/EEC9 and the Consumer Protection Act 1987 was passed to give it effect. There are three types of product defect: a manufacturing defect occurs when a product fails to comply with the manufacturer's product; a design defect occurs when the product specifications are at fault and present a hazard; and a duty to warn defect refers to the producer's responsibility to provide appropriate warnings and instructions to enable the consumer to use the product safely.

Anyone who suffers personal injury or property damage caused by a defective product can sue under the Act. This includes bystanders as well as actual users of the product. The Act imposes liability on the producer of the defective product, and gives this term a wide definition. It includes the manufacturer, the person who wins or abstracts it, anyone responsible for a process which adds essential characteristics to the product and retailers who sell others companies products under their own brand name.

Where goods originate outside the EU liability is imposed on the person who first imported the goods into the EU. If the supplier fails to identify either the producer or their own supplier within a reasonable time, they will be liable as if they were the producer. The Act only covers defects that are dangerous. Section 3 states that a product will be held to be defective under the Act if 'the safety of the product is not such as persons generally are entitled to expect'.

This objective test means that the courts can set the standard according to what is reasonable, the fact that the claimant personally might have expected a higher standard is not relevant, nor is the fact that a safer version is subsequently put on the market. In assessing the standard of safety the Acts directs the courts to take into account 'all the circumstances' and mentions three factors which are considered relevant. The first is the way the product is marketed, this can affect the standard of safety which people are entitled to expect.

The second factor concerns 'what might reasonably be expected to be done with or in relation to the product'. The third factor relates to the time when the product was supplied by the producer to another. This test is unsatisfactory for design defects as consumers will not know what to expect because they will not usually know how safe it is possible to make the product. The Act only covers personal injury and damage to property worth more that i?? 275 with no financial limit on producer's liability. Property damage worth less is not covered, nor is economic loss, including damage to the defective product itself.

Damage to business property is also excluded. As we are looking for areas to improve protection for consumers these limitations could be lifted to ensure the consumer is fully compensated. The key difference between a claim under the Act and a product liability claim in negligence is that the act is said to impose strict liability. All the claimant has to prove is that the product is defective under the terms of the Act, and that on the balance of probabilities this defect caused them personal injury or damaged property worth more that i??

275. However it has been suggested that the Act actually offers little more than a standard of negligence, with the burden of proof reversed. There are arguments for and against imposing strict liability as my earlier discussion outlined. As liability is strict but not absolute there are a number of defences. The ordinary defence of contributory negligence applies under the Act, and can be applied where the claimant has been caused damage partly as a result of a defective product, and partly by their own fault.

Section 4 of the Act also sets down six specific defences which a defendant can put forward to avoid liability. A defendant can avoid liability by proving: that the defect is attributable to compliance with any requirement imposed by law; that they did not actually supply the product; the goods have not been supplied in the course of business; that the defect arised after the producer released the product (this is for the defendant to prove); that the defect is in the subsequent product not the component supplied; and most controversial, the development risks defence.

It is similar to the 'state of the art' defence developed in negligence from the case of Roe v Minister of Health10 and allows a defence, for example, to a drug company who create a new drug which turns out to have harmful side effect, but at the time when it was launched, no-one in the drug industry would have been able to spot the risk.

This can be examined in two ways: was the knowledge available and did the producer apply the knowledge? ; or the producer might come within this defence if he made the product as safe as possible bearing in mind cost, utility, consumer expectations and the availability of safe alternatives. A producer would not be expected to make a product safe if to do so would be prohibitively expensive or would reduce the product's utility.