Business Law

Small Business, Manufacturing & Product Liability

If you operate a small business that manufactures a product and your product is defective, you can be sued if someone is injured by your defective product. Many of these kinds of personal injury cases are based on negligence. The injured party claims that the manufacturer was negligent or careless in making the product, that the product was defective, and that the defective product caused his or her injuries. Other cases are based on breach of warranty, meaning that the product did not perform as promised. Yet other cases are based on strict liability, which means that the manufacturer placed a defective product on the market and that the product causes injury.

Negligence

A manufacturer may be held responsible or liable in negligence if harm is caused by its failure to exercise reasonable care in manufacturing a product when it is known in advance that the product will be dangerous if the manufacturer is careless in its manufacture or sale.

In addition, a manufacturer may be held responsible for damages caused by a product which is:

  • Incorrectly labeled
  • Inherently dangerous or
  • Dangerous to all or to certain consumers if not used correctly

Because it can be known in advance that the product may cause harm, the manufacturer may be responsible in these instances for failure to warn of the danger, failure to label adequately, or failure to provide directions for safe use.

The issue of whether a manufacturer was careful enough in making a product is a question of fact. That is, it depends on what actually happened. Factors to be considered include:

  • Whether adequate tests of the product were made, including what the industry's custom is in making such tests
  • Whether the manufacturer complied with applicable laws and regulations
  • Whether the manufacturer has kept up with scientific developments and advances relating to the product

A plaintiff who brings a personal injury lawsuit against a manufacturer based on a defective product does not have to prove the specific product defect. The defect may be inferred from proof that the product did not perform as intended by the manufacturer if other causes of the malfunction have been excluded.

The manufacturer of a product may be held liable for injuries caused by negligent design of the product even if the defect causing the injury is obvious. A manufacturer can also be held liable if it incorporates into its product a defective product made by someone else.

A manufacturer has a duty to give reasonable warning of dangers involved in the known uses of its product, when the manufacturer knows or should know that use of the product involves danger. This duty extends to the original or ultimate purchaser and to third persons exposed to expected and unreasonable risk of harm by the manufacturer's failure to warn.

A manufacturer's failure to properly perform its duty to exercise reasonable care will result in liability for all reasonably foreseeable damages. These damages include personal injuries as well as property damage.

Breach of Warranty

The facts which give rise to a lawsuit for negligence may also give rise to a lawsuit for breach of warranty. One lawsuit often contains claims based on negligence and breach of warranty.

A breach of warranty means that guarantees were made about the product and that those guarantees were not fulfilled. The warranties can be express or implied. Express warranties may be created in several ways:

  • Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods will conform to the affirmation or promise
  • An express warranty is created where the seller's description of the goods is made part of the basis of the bargain
  • Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods will conform to the sample or model

An implied warranty is one imposed by law which writes into a sales agreement certain obligations imposed upon the seller by law and requires the seller to be responsible for certain qualities to be possessed by the goods sold, unless expressly disclaimed in the agreement. The implied warranties most commonly involved in lawsuits involving negligence and breach of warranty by manufacturers are:

  • The implied warranty of merchantability, which means that the product is fit for the general purpose for which it is sold, and
  • The implied warranty of fitness for a particular purpose

Strict Liability

A lawsuit based on strict liability may be brought when a manufacturer places a defective product on the market and the product causes injury. The foundation for this kind of lawsuit is that the product was defective when it left the hands of the manufacturer, regardless of whether the manufacturer had exercised reasonable care, and that the defect made the product unreasonably dangerous, thereby causing the plaintiff's injuries.

Res Ipsa Loquitur

Res ipsa loquitur is a specific doctrine of negligence. In order to successfully invoke this doctrine against a manufacturer, the plaintiff must show that:

  • The injury at issue is the kind which ordinarily does not occur in the absence of negligence
  • It was caused by an agency or instrumentality within the exclusive control of the manufacturer, and
  • It was not due to any voluntary action or contribution on the part of the plaintiff

If you have any questions about your liability for injuries caused by products manufactured by your company, contact a Small Business Lawyer in your area.

Questions for Your Attorney

  • If my company manufactures a piece of equipment that is dangerous to use unless the user follows the instructions and the equipment is purchased by a buyer, who then sells it, without the instructions, to a second buyer, and the second buyer is injured in using the equipment, is my company liable for the injuries?
  • If my company manufacturers a product which includes parts made by another company and the parts are later found to be defective, is my company responsible for any injuries that result from use of the product?
  • Is a manufacturer of a product responsible for guarantees that were made by an independent seller of the product when the seller's guarantees were different from those made by the manufacturer?

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