Page 38 - Insurance Times December 2020

damages to Mrs. Donghue. This case laid the foundation of
the modern law of negligence. In the Indian context,
following certain laws touches the issue of product liability
such as
The Consumer Protection Act, 1986;

The Indian Contracts Act 1872;
The Sale of Goods Act 1930;
The Drugs and Cosmetics Act, 1945; and
The Prevention of Food Adulteration Act, 1954.

Food Safety and Standards Act, 2006;
Bureau of the Indian Standards Act, 1986;
Agricultural Produce (Grading and Marking) Act, 1937; claims which may arise due to personal injury, property
damage harm by the products sold or supplied through the
Product Liability and Consumer business. The cost of product liability insurance varies on

Protection Act, 2019 various factors, coverages etc. However, the following case
may be of help to ascertain the importance to own
With the enactment of the Consumer Protection Act, 2019, adequate liability insurance.
the ambit of the earlier Consumer Protection Act, 1986 has
been broadened with the aim to simplify the dispute The famous case of product liability in the US history is the
redressal process, cater to fill the gap due to the ushering case of Liebeck vs. McDonald's in 1994. In this case, Stella
of the digital era, overhaul the process and settlement of Liebeck accidentally poured hot coffee bought from
consumer disputes, establishment of Central Consumer McDonald's over her thighs and groin area. The spillage of
Protection Authority are provisions which may necessitate hot coffee caused third-degree burns. Liebeck's lawyers
having product liability insurance for manufacturers, argued that the company served coffee at a temperature
retailers etc. of 180 to 190 degrees Fahrenheit while other companies
served coffee only at around 140 degrees. Liebeck was
The Act defines product liability as "the responsibility of a awarded a jury verdict of $2.7 million in punitive damages
product manufacturer or product seller, of any product or and $160,000 for medical expenses.
service, to compensate for any harm caused to a consumer
by such defective product manufactured or sold or by a In the wake of CPA 2019 which broadly covers product
deficiency in services relating thereto." This will impact not liability, the time has come to ponder the necessity of
only the manufacturer who will be liable to compensate a product liability for any business big or small it may be, which
consumer but also the seller if it fulfills the conditions manufacture, supplies the products as wholesaler/ retailer.
mentioned in the Act. The Act allows a person to raise a The products which appear entirely safe sometimes have a
product liability action by means of filing a complaint before tendency to go wrong or to cause damage due to product
a District Commission or State Commission or National failure. Manufacturers and suppliers can be held liable
Commission electronically, making the process simpler and jointly or severally as per the merits of the case. In Ram
consumer-friendly. Shankar Yadav vs JP Associate Ltd I (2012) CPJ 110 NCDRC
paragraph 5, the NCDRC observed: 'In any case, it is settled
Each year few products keep on making news sometimes law that for any manufacturing defect in a product, it is the
due to wrong reasons, it may be exploding battery of famous manufacturer and not the dealer who could be held liable.'
mobile phone company or issue of undesired content in
famous noodles in recent times. When it is difficult to held manufacturer liable due to many
other reasons like presale storage (e.g. storage of cement,
Product liability insurance is a branch of liability insurance. chocolates, ice-creams etc.) then manufacturer, dealer,
Product Liability insurance protects the insured against the retailers can be held jointly or severely liable (Bhopal Steels

The Insurance Times, December 2020