By Yash Mittal, Advocate at MP High Court, on November 12,2019
Product liability: A new concept under CPA
Product liability means the liability of a product manufacturer, service provider or seller to compensate a consumer for any harm or injury caused by a defective good or deficient service. To claim compensation, a consumer has to prove any one of the conditions for defect or deficiency, as given in the Act.
The basis for product liability action for a product manufacturer under section 84 is:
a. Manufacturing defect
b. Design defect
c. Deviation from manufacturing specifications
d. Product not conforming to express warranty
e. Product failing to contain adequate instruction of correct use to prevent any harm or any warning regarding improper or incorrect usage.
The basis for product liability action for a product service provider under section 85 is:
a. Services provided are faulty, imperfect, deficient or inadequate in quality, nature or manner of performance, required to be provided by or under the prevalent law or contract as the case may be.
b. Action of omission or commission or negligence or conscious withholding of information which caused harm.
c. Service didn’t confirm to express warranty or terms and conditions of the contract.
A product seller who is not a product manufacturer shall be liable in a product liability action under section 86, if—
a. he has exercised substantial control over the designing, testing, manufacturing, packaging or labelling of a product that caused harm; or
b. he has altered or modified the product and such alteration or modification was the substantial factor in causing the harm; or
c. he has made an express warranty of a product independent of any express warranty made by a manufacturer and such product failed to conform to the express warranty made by the product seller which caused the harm; or
d. 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; or
e. he failed to exercise reasonable care in assembling, inspecting or maintaining such product or he did not pass on the warnings or instructions of the product manufacturer regarding the dangers involved or proper usage of the product while selling such product and such failure was the proximate cause of the harm.
The said definition has very effectively brought online market within the ambit of Consumer Protection Act. Online retail platforms can be made liable for the products available for sale on their websites. It is also interesting to note that, post coming into effect of the 2019 bill, celebrities endorsing misleading ads would also be liable for fine. The said provision of product liability also ensures that the product manufacturers or service providers do not supply defective products and provide deficient services.
Exceptions to product liability action:
Under section 87, product liability action cannot be brought against the seller, if at the time of harm; the product was misused, altered and modified.
In any product liability action based on the failure to provide adequate warnings or instructions, the product manufacturer shall not be liable, if—
a. The product was purchased by an employer for use at the workplace and the product manufacturer had provided warnings or instructions to the employer.
b. Product was sold as a component or material to be used in another [product and instructions or warnings were given by the manufacturer to the purchaser, but the harm was caused to the Complainant by use of the end product in which such component or material was used.
c. The product was legally meant to be used or dispensed only by or under the supervision of an expert or a class of experts and the product manufacturer had employed reasonable means to give the warnings or instructions for usage of such product to the expert or class of experts.
d. The complainant while using such a product was under the influence of alcohol or any prescription drug, no prescribed by a medical practitioner
A product manufacturer shall not be liable to instruct or warn about a danger which is obvious or commonly known to the user or consumer of the product or which such user or consumer ought to have known, considering the characteristics of such product.
This particular provision (c) provides a lot of levy to the product manufacturer wherein it is very easy for the product manufacturer to find loopholes to escape liability. A simple example would be of cigarette manufacturing companies, where they would escape liability under the cover of this provision.
Offences and Penalties:
Under section 88 – Contravention of the directions of the Central Authority against recall of goods or directions qua false and misleading advertisements shall be punished with imprisonment which may extend to 6 months or with fine which may extend to 20 lakh rupees or both.
Under section 89 – Manufacturers or service providers who cause a false and misleading advertisement to be made, prejudicial to the interests of the consumers shall be punished with imprisonment which may extend to 2 years, and fine which may extend to 10 lakh rupees. Every subsequent offence be punished with imprisonment for a term which may extend to 5 years and fine which may extend to 50 lakh rupees.