Liability Theory

Theories of liability are intended to explicate the conditions under which a party can be held legally responsible for harms to others caused by said party's activities. Harms for which a party can be held liable include personal injury, property damages, and certain intangible harms such as mental anguish and loss of future earnings. Questions of liability occur in many business contexts, including most prominently cases in which a distinct harm is brought about to an individual through the use of a company's product. Theories of product liability provide guidelines for determining the extent and level of redress available to injured persons. By providing consumers with a means of seeking redress for harms caused by unsafe products and companies with an incentive to produce safe products, product liability law can be seen as providing a socially efficient means of addressing issues of product safety. In the United States, the law of product liability generally falls under civil law and is governed by the common law of torts as well as the Uniform Commercial Code. While different theories of product liability have governed the law of product liability in the United States historically, the theory of strict liability is currently applicable to cases involving product liability claims in most jurisdictions.

The theory of strict liability holds that the manufacturer of a product can be held liable for harms caused by the defective nature of that product even if the manufacturer was not negligent in the production [Page 1285]of that product. Thus, for instance, under the doctrine of strict liability, a person injured by a defective product need not prove that the company had knowledge of or was at fault for the defect that resulted in the harm in question. According to the standard of strict liability, if the product was defective in a manner that created an unreasonable danger, and this was the cause of the injury at issue, the manufacturers can be held responsible even if they exercised due care in producing the product. Under some circumstances, assemblers, distributors, and retailers of products may also be held strictly liable for damages caused by defective products.

Proponents of the theory of strict liability have offered a number of justifications for the doctrine. On utilitarian grounds, proponents argue that holding manufacturers strictly liable provides them with an incentive to produce safer and more reliable products than they would otherwise. Similarly, proponents of strict liability often maintain that even when neither party is morally at fault for the harms caused by defective products, businesses are better able to bear the costs of injuries than are the harmed individuals. Furthermore, some proponents of the theory have argued that since proving negligence is extremely difficult in cases of product defects, requiring such proof in cases of product liability places an unreasonable burden of proof on the harmed individuals. In this vein, they often argue that when standards of negligence were the rule, a large number of individuals went uncompensated for their injuries.

On the other hand, opponents of the theory argue that the application of the doctrine of strict liability is unfair as well as harmful to the economy. Such critics hold that it is unfair to hold manufacturers responsible for defects in products even when they followed all reasonable precautions in producing those products. Furthermore, opponents claim that the application of the standard of strict liability inhibits product innovation and places a stifling economic burden on businesses as well. In regard to the latter claim, many of these critics point to the increasing costs of litigation and insurance premiums for business firms in the United States over the course of decades, since standards of strict liability became the norm, as illustrative of this problem. As such, in recent years, there has been a push by opponents of strict liability for tort reform in many jurisdictions that includes a return to standards of due care and negligence in cases of product liability.

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