2. Categories Of Product Defect

 

A product is defective when, at the time of sale or distribution, it contains a manufacturing defect, is defective in design, or is defective because of inadequate instructions or warnings. A product:

(a) contains a manufacturing defect when the product departs from its intended design even though all possible care was exercised in the preparation and marketing of the product;

(b) is defective in design when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the alternative design renders the product not reasonably safe;

(c) is defective because of inadequate instructions or warnings when the foreseeable risks of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the instructions or warnings renders the product not reasonably safe.


Comment:

a. Rationale. The rules set forth in this Section establish separate standards of liability for manufacturing defects, design defects, and defects based on inadequate instructions or warnings. They are generally applicable to most products. Standards of liability applicable to special product categories such as prescription drugs and used products are set forth in separate sections in Topic 2 of this Chapter.

The rule for manufacturing defects stated in Subsection (a) imposes liability whether or not the manufacturer's quality control efforts satisfy standards of reasonableness. Strict liability without fault in this context is generally believed to foster several objectives. On the premise that tort law serves the instrumental function of creating safety incentives, imposing strict liability on manufacturers for harm caused by manufacturing defects encourages greater investment in product safety than does a regime of fault-based liability under which, as a practical matter, sellers may escape their appropriate share of responsibility. Some courts and commentators also have said that strict liability discourages the consumption of defective products by causing the purchase price of products to reflect, more than would a rule of negligence, the costs of defects. And by eliminating the issue of manufacturer fault from plaintiff's case, strict liability reduces the transaction costs involved in litigating that issue.

Several important fairness concerns are also believed to support manufacturers' liability for manufacturing defects even if the plaintiff is unable to show that the manufacturer's quality control fails to meet risk-utility norms. In many cases manufacturing defects are in fact caused by manufacturer negligence but plaintiffs have difficulty proving it. Strict liability therefore performs a function similar to the concept of res ipsa loquitur, allowing deserving plaintiffs to succeed notwithstanding what would otherwise be difficult or insuperable problems of proof. Products that malfunction due to manufacturing defects disappoint reasonable expectations of product performance. Because manufacturers invest in quality control at consciously chosen levels, their knowledge that a predictable number of flawed products will enter the marketplace entails an element of deliberation about the amount of injury that will result from their activity. Finally, many believe that consumers who benefit from products without suffering harm should share, through increases in the prices charged for those products, the burden of unavoidable injury costs that result from manufacturing defects.

An often-cited rationale for holding wholesalers and retailers strictly liable for harm caused by manufacturing defects is that, as between them and innocent victims who suffer harm because of defective products, the product sellers as business entities are in a better position than are individual users and consumers to insure against such losses. In most instances, wholesalers and retailers will be able to pass liability costs up the chain of product distribution to the manufacturer. When joining the manufacturer in the tort action presents the plaintiff with procedural difficulties, local retailers can pay damages to the victims and then seek indemnity from manufacturers. Finally, holding retailers and wholesalers strictly liable creates incentives for them to deal only with reputable, financially responsible manufacturers and distributors, thereby helping to protect the interests of users and consumers. For considerations relevant to reducing nonmanufacturers' liability, see 1, Comment e.

In contrast to manufacturing defects, design defects and defects based on inadequate instructions or warnings are predicated on a different concept of responsibility. In the first place, such defects cannot be determined by reference to the manufacturer's own design or marketing standards because those standards are the very ones that plaintiffs attack as unreasonable. Some sort of independent assessment of advantages and disadvantages, to which some attach the label "risk-utility balancing," is necessary. Products are not generically defective merely because they are dangerous. Many product-related accident costs can be eliminated only by excessively sacrificing product features that make products useful and desirable. Thus, the various trade-offs need to be considered in determining whether accident costs are more fairly and efficiently borne by accident victims, on the one hand, or, on the other hand, by consumers generally through the mechanism of higher product prices attributable to liability costs imposed by courts on product sellers.

Subsections (b) and (c), which impose liability for products that are defectively designed or sold without adequate warnings or instructions and are thus not reasonably safe, achieve the same general objectives as does liability predicated on negligence. The emphasis is on creating incentives for manufacturers to achieve optimal levels of safety in designing and marketing products. Society does not benefit from products that are excessively safe--for example, automobiles designed with maximum speeds of 20 miles per hour--any more than it benefits from products that are too risky. Society benefits most when the right, or optimal, amount of product safety is achieved. From a fairness perspective, requiring individual users and consumers to bear appropriate responsibility for proper product use prevents careless users and consumers from being subsidized by more careful users and consumers, when the former are paid damages out of funds to which the latter are forced to contribute through higher product prices.

In general, the rationale for imposing strict liability on manufacturers for harm caused by manufacturing defects does not apply in the context of imposing liability for defective design and defects based on inadequate instruction or warning. Consumer expectations as to proper product design or warning are typically more difficult to discern than in the case of a manufacturing defect. Moreover, the element of deliberation in setting appropriate levels of design safety is not directly analogous to the setting of levels of quality control by the manufacturer. When a manufacturer sets its quality control at a certain level, it is aware that a given number of products may leave the assembly line in a defective condition and cause injury to innocent victims who can generally do nothing to avoid injury. The implications of deliberately drawing lines with respect to product design safety are different. A reasonably designed product still carries with it elements of risk that must be protected against by the user or consumer since some risks cannot be designed out of the product at reasonable cost.

Most courts agree that, for the liability system to be fair and efficient, the balancing of risks and benefits in judging product design and marketing must be done in light of the knowledge of risks and risk-avoidance techniques reasonably attainable at the time of distribution. To hold a manufacturer liable for a risk that was not foreseeable when the product was marketed might foster increased manufacturer investment in safety. But such investment by definition would be a matter of guesswork. Furthermore, manufacturers may persuasively ask to be judged by a normative behavior standard to which it is reasonably possible for manufacturers to conform. For these reasons, Subsections (b) and (c) speak of products being defective only when risks are reasonably foreseeable.

b. The nonexclusiveness of the definitions of defect in this Section. When a plaintiff seeks recovery under the general rule of liability in 1, in most instances the plaintiff must establish a prima facie case of product defect by satisfying the requirements of 2. Section 2 is not, however, the exclusive means by which the plaintiff may establish liability in a products case based on the general rule in 1. Some courts, for example, while recognizing that in most cases involving defective design the plaintiff must prove the availability of a reasonable alternative design, also observe that such proof is not necessary in every case involving design defects. Sections 3 and 4 and Comment e to 2 provide approaches to the establishment of defective design other than that provided in 2(b).

Section 3 provides that when circumstantial evidence supports the conclusion that a defect was a contributing cause of the harm and that the defect existed at the time of sale, it is unnecessary to identify the specific nature of the defect and meet the requisites of 2. Section 3 frees the plaintiff from the strictures of 2 in circumstances in which common experience teaches that an inference of defect may be warranted under the specific facts, including the failure of the product to perform its manifestly intended function. When the defect established under 3 may involve product design, some courts recognize consumer expectations as an adequate test for defect, in apparent conflict with the reasonable alternative design requirement in 2(b). But when the claims involve a product's failure to perform its manifestly intended function and the other requisites of 3 are met, the apparent conflict disappears.

Section 4, dealing with violations of statutory and regulatory norms, also provides an alternate method of establishing defect. A plaintiff is not required to establish the standard for design or warning under 2, but merely to identify a government-imposed standard.

Comment e provides a further qualification of the rule in 2(b). This Restatement recognizes the possibility that product sellers may be subject to liability even absent a reasonable alternative design when the product design is manifestly unreasonable. When 2(b) is read in conjunction with these other provisions that allow for other avenues for determining defective design, it reflects the substantial body of case law suggesting that reasonable alternative design is the predominant, yet not exclusive, method for establishing defective design.

c. Manufacturing defects. As stated in Subsection (a), a manufacturing defect is a departure from a product unit's design specifications. More distinctly than any other type of defect, manufacturing defects disappoint consumer expectations. Common examples of manufacturing defects are products that are physically flawed, damaged, or incorrectly assembled. In actions against the manufacturer, under prevailing rules concerning allocation of burdens of proof the plaintiff ordinarily bears the burden of establishing that such a defect existed in the product when it left the hands of the manufacturer.

Occasionally a defect may arise after manufacture, for example, during shipment or while in storage. Since the product, as sold to the consumer, has a defect that is a departure from the product unit's design specifications, a commercial seller or distributor down the chain of distribution is liable as if the product were defectively manufactured. As long as the plaintiff establishes that the product was defective when it left the hands of a given seller in the distributive chain, liability will attach to that seller. Such defects are referred to in this Restatement as "manufacturing defects" even when they occur after manufacture. When the manufacturer delegates some aspect of manufacture, such as final assembly or inspection, to a subsequent seller, the manufacturer may be subject to liability under rules of vicarious liability for a defect that was introduced into the product after it left the hands of the manufacturer. Although Subsection (a) calls for liability without fault, a plaintiff may seek to recover based upon allegations and proof of negligent manufacture. See Comment n. For the rule governing food products that contain impurities or foreign matter, see 7. For the rule governing commercial used-product sellers' liability for harm caused by manufacturing defects, see 8.