ANALYZING THE PRODUCT

LIABILITY ISSUE WITH THE

CONTRACTUAL LAW

INTRODUCTION
Product Liability, at its core, is about consumer protection

and safety. Firms have a legal obligation to not purposefully

sell harmful products to consumers, also they have the
responsibility to recall defective products when it is
determined they cause injury or danger.
In India, Product liability law governs the liability of
manufacturers, wholesalers, distributors and vendors for
injury to a person or property caused by dangerous or
defective products. The goal of product liability laws is to
help protect consumers from dangerous or defective
products, while holding manufacturers, distributors and
retailers responsible for putting into the market place
products that they knew or should have known were
dangerous or defective.

 The following Acts and Laws in India deal with the issue

of Product Liability.
(I) Law of Torts as laid down by Courts through
Precedents;
(ii) The Consumer Protection Act, 1986 (the CPA);
(iii) The Sale of Goods Act, 1930;
(iv) The Indian Contract Act, 1872.

The Research Study in question being a submission

relating to the Contracts Act and the Sale of Goods
Act, it would majorly emphasize on these two topics
in the essence.

THE CASE OF LIEBECK Vs. MCDONALDS

On a fateful day of February, 1992, the foundation for

the biggest lawsuit against McDonalds occurred when

79 year old woman, Stella Liebeck from Albuquerque,
New Mexico rode with her grandson through the drive
through lane to purchase a 49 cent coffee cup. On
receiving the cup, she placed it between her legs and
proceeded to open the cup in order to add some
condiments when the scalding hot coffee poured unto
her thighs, bottoms and groin. The cotton sweat pants
she wore made matters worse be absorbing the hot
liquid, resulting in some serious third degree burn over
6% of her body (OBrien, Shafner, Stuart, Kelly &
Morris, 1999).

 The elderly lady was admitted at the hospital and was

there for eight days; her skin was grafted, lost 20

pounds and also went through over a year of medical
treatment, missing work. The initial amount sued for was
just $20,000.00 and the daughters lost wages (OBrien,
Shafner, Stuart, Kelly & Morris, 1999) which McDonalds
met with a counteroffer of only $800.00 with a defense
that the lady did not exercise diligent care and was
negligent because it is public knowledge that coffee is
hot. As if taking offense to McDonalds response, her
attorney increased the requested compensatory damages
and punitive damages to $100,000.00.
The six man, six woman deliberated for four hours to
arrive at $200, 000 compensatory damages which was
reduced by 20% and $2.7m in punitive damages, which
also was reduced to $480,000 (Gallivan, White & Boyd).
By mutual agreement, McDonalds and the plaintiffs
settled out of court for an undisclosed amount.

Issues specifically relating to contractual law

1. Caveat Venditor

Caveat Venditor is a Latin term which means let the seller

beware. The person selling goods is accountable for
providing information about the goods to the seller. It is a
counter to caveat emptor and suggests that sellers can also
be deceived in a market transaction. This forces the seller
to take responsibility for the product and discourages
sellers from selling products of unreasonable quality.
2. According to Section 12 of the Sale of Goods Act, a buyer
is conferred with the right to repudiate the contract and
sue for damages in case of breach of a condition, whether
relating to quantity, quality or description. Breach of
warranty, on the other hand, entitles the buyer, to sue for
damages but not repudiate the contract

3. Under section 16 of SOGA, it can be very aptly

concluded that the seller has the implied obligation to
be make sure that the goods are of merchantable
quality and there is an implied warranty for the same.

Where a radio set purchased by a layman from a local

distributor on hire purchase basis started giving
trouble after two months of purchase, it was held that
the article supplied ought to have been reasonably fit
for a specific purpose ,and sellers liability in such cases
where he knows the purpose to supply goods that are
reasonably fit, is an absolute one. It was held that the
case fell within the purview of section 16 (1) and 16(2).
In the case of sale of an article under its tradename or
patent, there is no implied condition as to its fitness
for any purpose.
Ranbirsingh Shankasrsingh Thakur v Hindustan General Electric corp ltd AIR 1971 Bom 97

4. Measure of damages is governed by Section 73 of

the Contract Act, 1872.In the case of warranty of
quality, the presumption is that the measure of
damages is the difference between what the goods are
intrinsically worth at the time of delivery, and what
they would have been worth, if they had been according
to contract, and this must be ascertained by reference
to the market price at that time, whether it has fallen
or risen since the date of the contract. However, the
buyer has a duty to act reasonably in mitigating the loss
or damage.

CW Simson v koka Jagannadha Row Naidu AIR 1914Mad 633.

CONCLUSION
In the light of the above discussion, it should be noted that

it is important for a consumer to identify the correct law

before filing a product liability claim. If chosen wrongly,
the claim may not be sustained in the respective court or
forum.
Further, considering that damages such as incidental,
special, punitive and exemplary are not specifically provided
for under the Indian law, the compensation amount which
the customer receives may at times be insignificant
compared to the hardship suffered in pursuing the case.
One may, therefore, conclude this study stressing on the
urgency to codify and consolidate the law governing
product liability under one specific statute.

THANK YOU :)