In this blog, you will read about the extent of manufacturers' product liability. As a producer, you may wonder whether you are liable for damages caused by a defect in your product and, if so, what damages you must compensate. The European Union has harmonized its product liability policy across all member states. This means that all member states are basically bound by the same product liability rules. This blog will focus on the main rules producers should keep in mind.
Product Liability Directive 85/374/EEC
The product liability regime throughout the European Union is governed by the Product Liability Directive. This directive has been implemented in the Dutch Civil Code. The producer is liable for damage caused by a defect in his product, according to Article 6:185 paragraph 1 of the Dutch Civil Code.
A product is defective if it does not provide the safety that may be expected, taking into account all circumstances and in particular the presentation of the product, the reasonably expected use of the product and the time when the product was put into circulation (Art. 6:185 paragraph 1 BW).
By presentation of the product is meant the inclusion of a leaflet or the affixing of warning signs or safety instructions. Reasonably foreseeable use refers to foreseeable misuse, as in the case where a consumer intentionally misuses a product causing damage. A product should also be safe when the user misuses the product but such misuse was reasonably foreseeable by the producer.
Producer means the manufacturer of a finished product, the manufacturer of a raw material or the manufacturer of a component, as well as anyone who presents himself as a producer by affixing his name, his trademark or any other distinguishing mark on the product (Art. 6:186 para. 1 BW). Also, anyone who imports a product into the European Economic Area (EEA) is considered a producer (Art. 6:168(3) BW).
What damages must the producer compensate?
The producer is liable for damage due to death, bodily injury or damage caused by the product to another object that is usually intended for use or consumption in the private sphere and was also mainly used or consumed in the private sphere by the injured party, with the application of a deductible in the amount of € 500,- (Art. 6:190 BW). With franchise is meant a kind of excess. If the damage is less than € 500,-, there is no obligation to pay compensation on the part of the producer. However, if this amount is exceeded, the producer must pay all damages. This is also called a threshold franchise. This is opposed to the deduction franchise, where the amount (in this case € 500,-) is deducted from the compensable damages.
The Netherlands has only a threshold franchise. If the damage is less than € 500,-, the consumer can still sue the seller. So the damage to the product itself does not have to be compensated by the producer. However, the consumer does have the burden of proof. He must prove that there is a causal connection between the defect in the product and the damage.
Is the producer always liable for that damage?
The answer is no, for example, the producer is not liable if the product had to be produced in accordance with mandatory government regulations. This section has a limited interpretation: only if the government has prescribed exactly how the product should be made can this defense be invoked by the producer.
Then there is also the so-called development exception. The manufacturer is not liable if it was impossible to recognize the safety defect at the time it was put into circulation. Again, this is subject to a limited interpretation. It is not sufficient that a certain specific producer did not know that a safety risk existed. The most advanced state of technical and scientific knowledge must be taken into account when assessing knowledge.
Furthermore, there is the parts exception. This is when the producer of a part of the finished product is sued and he can show that the part he manufactured is safe in itself and the safety defect resulted from the design or manufacture of the finished product of which the part is a part.
In addition, a consumer's claim for damages may be time-barred and expired. A legal claim for damages lapses three years after the beginning of the day following the day on which the injured party became aware or should have become aware of the damage, the defect and the identity of the producer. A somewhat different rule applies to the expiration period. The right to compensation expires after ten years from the beginning of the day following the day on which the producer has put the good that caused the damage into circulation (Art. 6:191 paragraph 2 BW). This is an absolute term, meaning that the producer can no longer be held liable after a period of 10 years after he put the product on the market.
Want to know more?
Should you have any questions about product liability or liability in general? Please feel free to contact one of our lawyers.
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