A products liability claim usually falls into one of three possible types:

-- those claiming a design defect,

-- those claiming a manufacturing defect, or

-- those claiming a failure to warn.



Dangerous or defective product claims may succeed even when products were used incorrectly by the consumer, as long as the incorrect use was foreseeable by the manufacturer (or other party in the "supply chain").

Products liability claims are, in general, not based on negligence, but rather on a liability theory called "strict liability." The difficulties of an injured customer to prove what a manufacturer did or did not do during the design or manufacture of product has led to the development of newer product liability claims such as strict liability. However, some legal scholars consider claims of "failure to warn" to be negligence-based claims.

A basic negligence claim consists of proof of

-- a duty owed,

-- a breach of that duty,

-- that the breach caused the plaintiff's injury, and

-- an injury.

Over time, negligence concepts have arisen to deal with certain specific situations, including negligence per se (using a manufacturer's violation of a law or regulation in place of proof of a duty and a breach) and res ipsa loquitur (an inference of negligence under certain conditions).

Strict Liability

Products liability claims are, in general, not based on negligence, but rather on a liability theory called "strict liability."

Rather than focus on the behavior of the manufacturer (as in negligence), strict liability claims focus on the product itself. Under strict liability, the manufacturer is liable if the product is defective, even if the manufacturer was not negligent in making that product defective. Because strict liability is a harsh regime for a manufacturer, who is forced to pay for all injuries caused by his products, even if he is not at fault, strict liability is applied only to manufacturing defects (when a product varies from its intended design) and almost never applied to design and warning defects. The first case to apply strict liability to manufacturing defects involved an exploding Coca-Cola bottle.

Proponents of strict liability for defective products argue that strict liability is necessary because between two parties who are not negligent (manufacturer and consumer), one will still have to suffer the economic cost of the injury. The proponents argue that it is preferable to place the economic costs on the manufacturer because it can better absorb them and pass them on to other consumers by the way of higher prices. As such, the manufacturer becomes the insurer of consumers that are injured by its defective products, with premiums paid by other consumers.

A related argument arises from the fact that the distribution of information about any given product is highly asymmetrical; the manufacturer of any given product is in a better position than the consumer to know of its particular dangers. Therefore, in order to fulfill the public policy of minimizing injury, it is more reasonable to impose the burden of finding and correcting such dangers upon the manufacturer as opposed to imposing the burden of finding and avoiding unsafe products upon the consumer. These arguments is often mentioned in cases of design and warning defects and less so in the case of manufacturing defects, since the latter are thought to be less preventable by the manufacturer because he is already acting with due care.

Critics charge that strict liability gives incentive for product misuse (particularly in jurisdictions where this may not be a defense) and creates a moral hazard problem on the part of potential buyers. Reasoning that consumers will recover regardless of the amount of care they take in the product, critics assert that consumers will under invest in care even when they are the least-cost avoiders, thus leading to a lower aggregate level of care than under a negligence standard.

While proponents baldly assert that the producer can build the cost into the price as insurance, critics argue that this assertion is ignorant of economics and only holds true in inelastic regions of the demand curve. As a result of strict liability for their products, manufacturers may not produce the socially optimal level of goods. Particularly with elastic regions of the demand curve, where consumers are very price-sensitive, the manufacturer by definition cannot pass on the economic costs to the consumers as a form of insurance without pricing many of those consumers out of the market for that good.

Critics also argue that applying strict liability to products results in substantially higher transaction costs. One example of these transaction costs is the creation of maintenance of legal disclaimers on products that would be unnecessary to the reasonable person -- such as the improperly algorithmic "lather, rinse, repeat" instructions on shampoos and the ubiquitous "not for human consumption" labeling on an inordinate number of non-food items. This results in a waste of time and resources for the producers who have to create these warnings, decreasing the producer surplus from trade. This also lowers the consumer surplus from these transactions, as all reasonably diligent consumers will read the unnecessary instructions, whereas the consumers likely to misuse the product are unlikely to be sufficiently diligent to read the instructions.

Still others believe that the tendency of products liability law to set standards premised upon the lowest common denominators with respect to intelligence, common sense, and prudence creates an undesirable impediment to the natural, Darwinian forces that would otherwise shape our society.

Product liability and breach of warranty

Warranties are statements by a manufacturer or seller concerning a product during a commercial transaction. Unlike negligence claims, which focus on the manufacturer's conduct, or strict liability claims, which focus on the condition of the product, warranty claims focus on how these issues relate to a commercial transaction. Warranty claims commonly require privity between the injured party and the manufacturer or seller. Breach of warranty based product liability claims usually focus on one of three types: (1) breach of an express warranty, (2) breach of an implied warranty of merchantability, and (3) breach of an implied warranty of fitness for a particular purpose. Additionally, claims involving real estate may also take the form of an implied warranty of habitability. Express warranty claims focus on express statements by the manufacturer or the seller concerning the product (e.g., "This chainsaw is useful to cut turkeys"). The various implied warranties cover those expectations common to all products (e.g., that a tool is not unreasonably dangerous when used for its proper purpose), unless specifically disclaimed by the manufacturer or the seller.