Keep Your Customers Safe: The Perils of Product Liability

Business.com / Industry / Last Modified: February 22, 2017

The news has recently been filled with stories about product liability cases involving automobile manufacturers. Don't let it happen to you.

The news has been filled with stories recently about product liability cases involving automobile manufacturers.

These cases were the result of vehicle defects, in particular, defective airbags and faulty ignition switches. 

The defects were serious enough to cause accidents and injuries and in some cases resulted in the death of vehicle occupants. In the face of these lawsuits, the manufacturers were forced to issue massive vehicle recalls to fix the defects.

Related Article: Elevating Expectations: 5 Ways Product Quality Impacts Your Brand

In short, the costs of legal settlements, and repairing the defects had an impact on the manufacturers' bottom lines. Moreover, the negative publicity damaged their reputations and tarnished their brands.

Personal Injury and Product Liability

A personal injury lawsuit arises when a person suffers harm from an accident or injury for which someone else may be legally responsible. The plaintiff must show that the defendant acted carelessly or irresponsibly by causing the accident and harmful injury, which may be hard to prove. 

While many of these lawsuits are adjudicated in the court system, it is more common for these cases to be settled outside of court through an informal settlement negotiation involving the two parties, their attorneys, and the insurers. If a settlement is reached, the plaintiff is granted a monetary award and must agree not to take any other legal action.

While those above were high profile cases, any product with manufacturing defects or design flaws can be a potential hazard to consumers. In light of this, any business that provides consumer products needs to use its best efforts to ensure its design and manufacturing processes minimize the risk of defects and the potential for product liability lawsuits.

What Is a Manufacturer's Responsibility?

Manufacturers are required to ensure their products are safe before consumers buying and using them. There are federal and state laws in place that establish safety standards, but defective products still find their way into the marketplace with the potential for causing serious injuries. This has occurred with a wide range of products including tools, toys, automobiles, furniture, electronics, and even medicine. In the case of medicine, the Food and Drug Administration (FDA) is charged with regulating the pharmaceutical industry.

What Is a Manufacturing Defect?

Problems arising during the manufacturing process are typically the basis for product liability cases since manufacturing flaws are more easily identified. A manufacturing defect happens as the product is being made or assembled. Examples of manufacturing defects include items that leave a factory with missing or faulty parts.

What Is a Design Defect?

While defects during the manufacturing process are common, if there are flaws in the design phase that go unresolved, they will impact the entire manufacturing process and all of the products. This can pose a risk of injury to consumers even if the items are being used for their intended purposes. The question remains as to whether the defects in the recent automobile product liability cases occurred in the design or manufacturing phase. 

Failure to Provide Adequate Warnings or Instructions

Another potential product liability claim arises from a failure to provide adequate warnings or instructions about the product's proper use. These claims often involve a product that is dangerous in some way that is not apparent or requires the user to exercise caution when using it. The fact that a product is dangerous, however, does not mean that a person has grounds for a lawsuit. In the airbag case mentioned above, the car manufacturer may have warned consumers that the airbags are potentially dangerous. Had the airbags functioned properly, consumers may not have had a case because they had been forewarned.

Protecting You Business From Product Liability Claims

A consumer who is harmed by a product may not have suffered a sufficient injury to recover damages, but is more likely to become part of a mass tort or class action lawsuit. A business can protect itself from product liability claims in some ways. 

The best way to minimize the risk of exposure is by carefully designing contracts with other businesses in the supply chain. This objective can be achieved by negotiating for provisions that offer your business indemnification against any product liability claims stemming from defects elsewhere in the supply chain.  Furthermore, it is essential for a business to have policies and procedures in place regarding quality control. By regularly testing products and processes and updating these policies at regular intervals, a business can mitigate the risk of problems arising from its products.

Related Article: Why Your Product Will Fail

 As the products are brought to the market, there are critical issues related to packaging and marketing that come into play. Products should target the right consumers so that they are more likely to be used as intended. There should also be instructions for the appropriate use of a product and sufficient warnings to consumers of the dangers related to its misuse.

If problems arise with products, a business should be proactive if it becomes aware of a product defect or safety risk by taking steps to warn consumers and issue a recall if needed. Finally, a business can protect itself from the cost of liability lawsuits by obtaining liability insurance. In the final analysis, a consumer who is harmed by a product and/or a business faced with a product liability claim both require the advice of a qualified attorney.

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