The main moral principle involved in product safety issues is simple enough and quite uncontroversial: It is immoral to unleash a defective product on the public.

The more complex questions include:

What should happen when manufacturers violate their duty to make safe products?

How should we determine when a product is defective?

Should we hold manufacturers responsible for defects in their products even when they have done all they can to prevent them?

How should we assign responsibility in cases in which more than one party contributes to the unsafe situation or the accident resulting from it?

Since these questions about a company’s moral duties to produce safe products are closely related to the questions of what the law of product liability should be, it will be useful to examine, in general terms, both the history and the current state of products liability law.

 

Phase 1: Caveat Emptor and the Privity Requirement (1800s through 1916)

During the 1800s, the rule for product liability in the US was "Caveat Emptor" (let the buyer beware.

The mere existence of a defect in a product was not sufficient grounds for the buyer to sue the seller.

Rationale for Caveat Emptor

The "caveat emptor" rule was explicitly defended by the Supreme Court as follows, "there is no hardship in [the rule of caveat emptor], because if the purchaser distrusts his judgment, he can require of the seller a warranty that the quality or condition of the goods he desires to buy corresponds with the sample exhibited."

It is often said that this was a workable doctrine in the days when most people could tell whether a cart or a horse-drawn plow was put together well.

While a mere defect was not in itself grounds for a lawsuit under the theory of caveat emptor, someone injured by a defective product MIGHT have been able to:

Sue for negligence (claiming that the manufacturer of the goods was reckless when making them); or

Sue for breach of warranty (claiming that the goods were not as promised because they were defective).

Negligence with Privity: Lawsuits based on negligence would not be based merely on the fact of a defect, but on the allegedly reckless conduct of the seller. However, in most cases, such lawsuits were subject to the requirement of PRIVITY.

Privity is the idea of being connected by way of a contract. The requirement of privity meant that a person injured by a defective product could only a given party for negligence if s/he had a contractual relationship with that party. (A contractual relationship included a sales contract.)

The privity requirement derived from an influential British case, Winterbottom v. Wright (1842).

The privity requirement gave manufacturers a strong incentive to avoid selling products directly to consumers.

Thus, the privity requirement, along with the increasingly common practice of goods being sold by retailers rather than manufacturers, made life very difficult for consumers injured by defective products bought from retailers.

In short, for the most part, the rule continued to be one of caveat emptor.

Warranty. If the seller gave the buyer a warranty–a guarantee, in essence–that the product was safe, or free of defects, etc., then the buyer could sue if this turned out not to be the case.

However, there were two obstacles:

First, since warranty was a kind of contract, it was subject to the same kind of privity requirement that was imposed on lawsuits based on negligence.

Second, the seller might not offer a warranty. Over time, courts began to recognize the idea of an implied warranty, but in most cases a seller could "disclaim" implied warranties.

Question: Why might the early "caveat emptor" orientation of products liability law have been good for the development of the modern industrial system?

Question: Why might the "caveat emptor" system have seemed increasingly unfair to consumers as the modern industrial system developed?

 

Phase II: The Breakdown of Privity: Caveat Vendor

The Breakdown of Privity in Negligence-based Products Liability Lawsuits

Early on, a few exceptions to the privity requirement were carved out by courts, generally for particularly dangerous products or particularly negligent behavior.

MacPherson v Buick Motor Car (1916). The court held that a manufacturer has a duty of DUE CARE to make sure that its products are safe, and that there is no good reason to limit this duty to those with whom the manufacturer has a specific contract. This decision essentially rejected the existence of the privity requirement for lawsuits involving injuries because of negligently-manufactured products.

MacPherson was a New York case, but the reasoning behind this decision was widely adopted in other states, and soon became legal doctrine throughout the US.

Although this development helped consumers injured by defective products, it did have limitations. The consumer-plaintiffs had to PROVE that the product was not only defective, but that the defect resulted from manufacturer NEGLIGENCE.

The Breakdown of Privity in Warranty Actions

Even after MacPherson, injured consumers still sometimes tried to sue the makers of defective products for breach of warranty (including implied warranty).

The plaintiff in a warranty-based lawsuits did not need to prove negligence; all they needed to prove was that the product was defective.

However, since warranties were contracts, and they only applied to those who entered a contractual relationship (in other words, the privity requirement still applied to lawsuits involving breach of warranty).

Soon, however, courts began to make some exceptions to the privity requirement for lawsuits based on claims of breach of warranty.

In Henningson v. Bloomfield Motors (1960), a New Jersey court abolished the privity requirement in all cases involving implied warranty. This ruling was widely followed in other courts.

 

Phase IV: The Rise of Strict Liability

The developments that had been occurring in the first half of the 20^th Century in US product liability law culminated in a new legal doctrine, Strict Products Liability. This new course of action greatly shifted power to the consumers injured by such products.

The doctrine of strict products liability, and the reasoning behind it, was set out in a landmark case, Greenman v Yuba Power Products (California) 1963.

The idea of strict liability is that the maker of a product is responsible (liable) for any defect in the product, regardless of how careful it was in producing the product.

Rationale for strict liability

Strict products liability was controversial when it was first introduced, and it remains so today. Public policy questions: Does strict products liability go too far? Is it fair to hold manufacturers responsible for defects they could not have prevented?