Product Liability

Historical Background

The Anglo-American law of liability until the end of the 19th century was largely governed by the doctrine of privity. Under the law of privity, injured persons could not legally collect compensation from parties with whom they did not have an explicit contractual relationship. Thus, since manufacturers who sold their products through retailers did not have a direct contractual relation with the final purchaser of those products, they were effectively immune from lawsuits for injuries to consumers brought about by those products. As such, the privity barrier essentially made it impossible for most victims of product-related injuries to recover damages from a manufacturer of a defective product unless they had purchased the product directly from the manufacturer. While the law of privity may have made sense when most products were bought directly from the persons who made them, its legitimacy began to come into question as retail distribution was becoming a hallmark of the modern economy.

In the United States, the landmark 1916 case of MacPherson v. Buick Motor Car more or less abolished the barrier of privity. In that case, a New York court rejected Buick's argument that it could not be held responsible for an accident due to a defective wheel that it had used in the production of its automobile simply because it had no direct contractual relationship with the person injured. The court ruled that Buick should have detected the wheel defect while the automobile was being assembled and that Buick had a reasonable duty to provide consumers with safe and reliable products.

The MacPherson ruling was soon adopted in most U.S. jurisdictions, and it ushered in a new theory of “due care” in product liability law. Under the due care theory, companies are held responsible for taking reasonable precautions to produce products that are free from potentially harmful defects. Generally speaking, under the theory of due care, a person could recover damages for an injury if it could be proved both that the product that caused those injuries was defective and that the defect in question was the result of negligence on the part of the manufacturer of the product. Demonstrating negligence involved showing that the manufacturer was at fault for the defect in failing to adopt reasonable standards in the design or production of the defective product.

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