A melamine look at sticking with strict liability

Summary:Amid the tainted melamine milk product scandal in China, fingers are pointing in all directions and soon the knives will come out. While there exists finger-pointing in order to salvage reputation, the legal position on liability is quite clear.

Amid the tainted melamine milk product scandal in China, fingers are pointing in all directions and soon the knives will come out. While there exists finger-pointing in order to salvage reputation, the legal position on liability is quite clear. As a manufacturer of a product, two obligations are imposed--one is a contractual obligation, and the other is an obligation not to be negligent.

The contractual obligation requires that the product you sell works exactly like the product you claim it is. This is known as a strict obligation--it does not matter whose fault it is, as long as the product to be delivered does not fulfil those claims, then you have liability. In addition, certain implied warranties kick in. For instance, that you do own the product you are selling, and that it is safe for its intended use.

On the other hand, the law of negligence requires the manufacturer to take due care in manufacturing his products and a breach of the duty of care would lead to a claim in damages.

So, what happens if it is the fault of someone else up the supply chain? Chances are that the manufacturer will be responsible for selecting and monitoring his suppliers, and judges tend to be more sympathetic toward consumers who have no clue or choice over the manufacturer's suppliers than the manufacturer with his deeper pockets.

Lawyers are commonly asked--can we then put in a statement saying that the manufacturer is not liable for anything? When it comes to death or injury caused by negligence, the law expressly prohibits the exclusion of liability by contract. Therefore, any term to this effect is not valid. [With this, many looking for an easy way out find their path inexorably blocked.]

A good reason exists for this--the consumer has very little bargaining power, and the manufacturing process is much more complex. Manufacturers will find it difficult to pass the burden for their liability on to the consumers. Instead, they should be examining measures such as a back-to-back indemnity from their suppliers, insurers and hardening their quality assurance processes.

For once, being lactose-intolerant seems like a good thing.

Topics: Legal, China, Outsourcing, Security, Tech Industry

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