Manufacturers – Products Liability
As a manufacturer your product is why you exist, but anytime you design, create, and sell it, you open yourself up to the possibility of a product liability lawsuit – it is the reality of the manufacturing business.
You are most likely aware of this exposure to your business and have good risk management procedures in place, but we always believe in better awareness and better risk management so we wanted to share some risk management principals with you from a recent article we came across.
If you think about mitigating your risk, you won’t have to think about ceasing to exist
In the Harvard Business Review article titled "Product Liability You're More Exposed Than You Think," Marisa Manley evokes us to consider numerous ways of mitigating product liability, which include:
Handling the Product
Design: Examine the product and consider what could go wrong if someone uses it. Keep in mind that an end user may not always use the product in the ways you intended them to, so it is important that you expand your design evaluation to consider as many potential ways someone "could" use your product. Additionally, consider the packaging as it is a component of your product.
Product Defects: A product with no defects is likely to put you in a position of zero liability, but that is no simple task. It is important to continually test and refine your product, simulating the toughest conditions your product is likely to encounter.
Adequate Warning
Warning Placement: The purchaser is not always the end user of the product, which makes it more difficult for your warnings to reach the right people. The best way to avoid inadequate warning is to place the warning directly on the product itself.
Warning Content: When writing warnings, it is always better to be specific vs. general. This will help limit what the courts can deem you to be liable to. For example, stating "the product can catch fire" (general) is a lot different than you saying "the product is a fire hazard" (specific).
Distribution Channels
Educating Distributors: If your distributors are selling your product to those who shouldn’t have it, your chances of litigation will increase. While you cannot necessarily determine who will use your product, you can work closely with your distributors to limit purchases to consumers you’re aiming for.
Unwanted Users: It always helps to warn unwanted users that your product isn’t for them.
Conclusion
At the end of the day, if the user of your product experiences bodily injury or property damage, you can only be held liable for the flaw in your design, manufacturing defect, or failure to warn; however, even if you have done everything right, it doesn’t mean that someone won’t try to claim otherwise. If it makes it to that point, you will be thankful that you have a good insurance policy!
