This article has been written by Sriradha Rai Choudhuri.
Table of Contents
Introduction
In today’s world of heavy advertising and trade malpractices, consumers are pushed to a risky situation. The slogan line of ‘Jago Grahak Jago’ is applicable today. What is advertised is not what is given, consumers are given expired products, consumers are not made aware of the dangers that he/she can be exposed to. This affects trade and the economy as demand for such products falls and the sale gets hampered. One consumer after using a defective product goes on to complain to all his relatives who then try to stay away from the product and the shop. Most of the time due to the fault of the manufacturer, the shopkeeper has a downfall.
How much should the consumer be aware of? If the product is defective, the consumer can only check it after usage which leads to the harm already being done. Rather than ‘Jago Grahak Jago’ we should say ‘Jago Vikreta Jago’. For the consumer to be protected, the seller and manufacturer should be as much aware if not more than the consumer. This is because the one who makes the product knows better about the product than the one who buys it. Moreover, the consumer has given money consideration with the thought that such a product would be good to use. There is now a shift in the concept from ‘caveat emptor’ meaning ‘let the buyer beware’ to ‘caveat venditor’ meaning ‘let the seller beware.
If the seller or manufacturer does not take proper precautions and does not issue enough warnings to let the consumer have the best product, the consumer through the Consumer Protection Act, 2019 (see here) can hold them liable. They cannot later contend that the buyer should have been more aware and shouldn’t have purchased a defective product in the first place.
Who is a consumer?
In the Consumer Protection Act, 2019 there is quite a long definition of a ‘consumer’. It is defined under section 1(7) of the Act. Reading the definition, we can infer certain points about a consumer:
- The consumer can either be a person who purchases/hires/avails the goods/services respectively or a person who simply uses/takes benefit of the goods/services respectively. The person purchasing and using can be one single person or two different persons.
- The one who purchases the goods should have either paid the consideration or promised to pay the consideration or paid as well as promised to pay part amounts or to be paid under any deferred payment system.
- The one who uses the goods/services will be a consumer only if he is using the same with the approval of the purchaser/hirer of the goods/services.
- If any person uses/takes benefit of the goods/services for commercial purpose, not including the purpose of earning livelihood by self-employment, then such person will not be considered as a consumer.
- Goods or services can be availed through both online and offline mediums. So, a person purchasing goods through teleshopping or online shopping will also be a consumer.
Only the persons satisfying the above conditions will be able to claim their rights and seek relief under the Act. Here the terms ‘goods’ and ‘services’ have been stated. Both these terms have also been defined in the same Act itself.
How are ‘goods’ and ‘services’ defined under the Act?
Under the Act, “goods” refers to movable property. It also includes within its ambit ‘food products’ as is defined under the Food Safety and Standards Act of 2006 (see here). Hence, the Consumer Protection Act does not protect in case of purchase of any immovable property.
The term ‘service’ under the Act signifies that except for any free service or any personal service without any remuneration, all services of all descriptions like banking, insurance are included. The definition is exhaustive and is not restricted to certain services provided in the definition itself.
How is ‘product’ defined under the Act?
From the definition under the Act, it is clear that product is a broader term than goods and products can also be used for commercial purposes. They can be raw materials or intermediate products. It would not include human body components.
A consumer as per the CPA, 2019 only purchases goods which is a part of a wider term of products. If any person uses or purchases a product for commerce, that person is not a consumer.
Hence, whenever any product suffers from any defect or damage the product manufacturer or seller can be held liable by the consumer.
Meaning of product liability
Product liability under CPA 2019 is defined as the responsibility of either the product seller or the product manufacturer to compensate the consumer for any harm caused because of the defective or deficient product. A product should meet the reasonable expectations that a consumer has regarding the quality and safety of the product.
The product should be both merchantable and marketable. Any defect in this part would bring liability on the one who sold the product or the one who manufactured it. The consumer cannot be expected by the seller or the manufacturer to specifically examine every aspect of the product. It is well understood that if the price liability would fall on the consumer, the product liability should fall on the seller or manufacturer.
CPA 2019 is the first legislation that expressly defines and contains provisions related to product liability. It codifies the principle of product liability concerning sale or supply of defective products or delivery of defective services to consumers against the product manufacturer, product service provider, product sellers, exceptions to product liability action.
Nature of product liability law
Product liability claims before CPA 2019 were lodged under the Sale of Goods Act, 1930 (see here); the Consumer Protection Act, 1986; and the Indian Contract Act, 1872 (see here).The principle of negligence and strict liability work in Torts and the principle of warranty is applied under the law of contracts to claim damages for product liabilities.
There is a statutory liability on product manufacturers and product sellers under CPA 2019 for any defective product. Moreover, such liability is strict in nature as it can hold them liable just based on the defective product without the consumer having to prove actual negligence.
It derives its base from the concept of ‘caveat venditor’ which means that the seller must beware thereby making the seller liable for any harm caused by the product to the consumer.
Generally, product liability claims are brought under the legal grounds of negligence (see here), strict liability (see here), or breach of warranty (see here). Selling of the concerned product in the market is a prerequisite condition to incur a product liability.
Privity of contract and product liability
Privity of contract means that no third party who is not a party to the contract can sue. ‘Privity of contract’ is no longer a requirement to sue for product liability– any person whom the defendant could foresee that he would suffer from injury can sue.
To explain the nature of product liability and the concept of absence of ‘privity of contract’ we can take the case of Donoghue v. Stevenson (see here) wherein when a drink was offered to the consumer with a decomposed snail in it that caused health injury to the consumer, the consumer could hold the manufacturer of the product liable even though the contract existed between the consumer and the seller.
Again, in Henningson v. Bloomfield Motors Inc. (see here), where the Plaintiff bought a car from a dealer and the car started to malfunction within 10 days of delivery which resulted in the Plaintiff’s wife suffering injuries, it was held that the Plaintiff had to get remedy because it was a breach of the implied warranty of safety. The fact that it was the plaintiff’s wife and not the plaintiff who got hurt is no excuse as the product liability extended to every foreseeable user.
Types of product liability
Here, we would deal with the various types of product liability claims that a consumer can bring against the seller or manufacturer. They can be of 4 types:
- Manufacturing defects are caused when certain products get manufactured differently or miss any part because of defects or negligence during the manufacturing process. Here only a few products and not all suffer from the defect.
- In case of a design defect, the design of the product itself is wrong thus resulting in an entire set of products that are incapable of performing their required functions. This is a mistake caused not during the manufacturing stage but while creating the blueprint of the product.
- In case of marketing defects, the design and manufacture of the product are perfect but the seller while selling the product in the market does not give proper instructions to the consumer on how to exactly use the product that results in the damage.
- When a claim is brought based on a breach of warranty, it is because the product has failed to last and function properly for the stated warranty period.
Illustration
- Let us suppose that while manufacturing a set of pencils, the lead fails to be put in one of the pencils- in that case, the consumer can file a product liability claim based on manufacturing defects.
- Now, if a new type of car is being created to be suitable for desert sands but the tyre of the car was designed negligently such that those tyres are sinking into sand- then a product liability claim on design defects can be brought.
- If in another instance, the seller while selling an iron did not make the consumer aware that a particular thing if not removed could increase its temperature uncontrollably fast, it is a marketing defect.
- In another case, where a consumer buys a washing machine with an express warranty of good functioning for 12 years but the machine malfunctions within 6 years, there would be a product liability claim for breach of warranty.
Remedies available to consumers under the Consumer Protection Act, 2019
Remedies for product liability apply against the product manufacturer, product service provider, and product seller. Any claim can be brought against them in case the consumer has suffered any kind of harm or injury from using the defective product or product service.
Remedy against a product manufacturer
Section 84 under the Act states the conditions under which a consumer can claim remedy against a product manufacturer. They are as follows:
- There is a manufacturing defect.
- There is a design defect.
- There is non-confirmation to an express warranty. It does not matter if such a warranty was made negligently or honestly.
- There is a marketing defect, that is no warning of danger in the wrong usage was given to the consumer in the product itself.
- In the case where there were certain specifications to be followed while manufacturing the product and they have not been complied with.
Unreasonably dangerous goods are defective because they are likely to jeopardize the safety of a reasonable user. The danger may be due to defective design and non-meeting of expectations of the user.
Remedy against a product service provider
Section 85 under the Act deals with the liabilities of a product service provider. A product service provider is any person who gives services in respect of a product.
A product service provider would be liable to the consumer if-
- The service that was given in respect of the product was not of sufficient and good quality as was required by the law that was in force at that time or as per the contract if any.
- There was a conscious or negligent act or omission on part of the service provider which resulted in harm to the consumer.
- The service provider was required to give warnings about some danger in using the product in a wrong way which was not given which caused the injury to the consumer.
- There was a breach of warranty or terms of the contract of service.
Remedy against a product seller
Lastly, the consumer also has a remedy available against any liability by the product seller. This is provided in Section 86 of the Act. The liabilities are:
- There was an exercise of enough control by the seller in the manufacturing, designing, testing, and labelling of the product, and this caused harm to the consumer.
- While selling the product, the product seller has done certain modifications to the manufactured product and the harm caused is a direct consequence of that.
- There was no express warranty by the product manufacturer, but the product seller gave an express warranty which was not met.
- A personal obligation may come on the seller if the manufacturer cannot be recognised or made known, that is the manufacturer is undisclosed OR it is impossible to sue the manufacturer due to some justifiable reason OR the law in force does not apply to him. For example, if the seller is selling a product for a foreign manufacturer, the Indian law would not apply to him. In such a case the Indian seller would be made liable.
- The product seller did not take proper care of the product, inspect or maintain them or was negligent in passing certain warnings as given by the manufacturer to the consumer and the harm resulted from it.
It must also be noted that in the above situation, the product seller and product manufacturer are two different persons.
In all of the above-given situations, the consumer can claim compensation for the harm.
Cases of claiming remedy
Wherein a dealer of air conditioners wanted to avoid liability after selling a second-hand defective air conditioner by stating that he was not its manufacturer, he was prevented from doing so and made liable for the same. (see here)
A television set was bought and was serviced. Just after one week, the television stopped functioning and throughout a period, 11 repairs had to be done. This was considered as a deficiency of service and hence the consumer could claim compensation. (see here)
When a pressure cooker burst while using it and the buyer’s wife, who was an engineer, lost her right hand, compensation of 1 lakh was awarded to the consumer. (see here)
Where for a children’s park, certain musical fountains were asked to be installed by the supplier and the fountains failed to work even after repairs due to inherent defective design, the entire money was asked to be refunded.
Defences against product liability claims
It may happen that the consumer had an ill motive in bringing up the claim or simply that the consumer was ignorant of his/her own mistake. In such cases, it would be wrong and unfair to hold the manufacturer or the seller, or the product service provider liable and ask him to pay compensation. Hence, whenever cases are adjudged not only is the law important but the entire fact scenario. There are instances within the conditions given in the previous chapter too where defence is available to the opposite party if the same can be proved. Section 87 of the Consumer Protection Act, 2019 itself points out the cases in which the liability would be absolved. They are the exceptions to product liability claims.
First of all, in case the consumer himself had modified the sold product at the time of harm which caused the harm/injury then the consumer cannot bring an action against the product seller. If the consumer gets a remedy in such a case, it would be the same as if taking advantage of one’s wrong.
Defences available to a product manufacturer
In case a product manufacturer has not given adequate warnings and based on that a claim is being brought against him/her, the claim would be invalid if:
- The employer had bought the product to be used for work and adequate warnings were issued to the employer or the product mentioned such warnings which the employer knew about but the employee, who brought the suit was not made aware of the same.
- The product was a component to be used in a separate product. All warnings regarding the component product were already given. The harm was not caused by the component product separately but only after using it with the other product.
- The product was to be only used under the guidance of an expert and all warnings were given to the expert.
- The consumer himself was not in his senses while using the product due to the intake of some intoxicating agent or drug that was not prescribed by a medical practitioner to him. Due to such intoxication or drug effect, harm was caused.
- Also, if any such characteristic or danger of a product is to be known by a reasonable consumer, the manufacturer is not compelled to give any warning of that danger. For example, it is no fault of the manufacturer if a consumer does not know that a knife if run on the skin can cause cuts.
If the defendant can prove any of the above, he/she would not be liable to pay compensation.
Cases of defences available
There may be certain other instances also like if a consumer brings a claim of a manufacturing defect after 30 years of using that product, it would be automatically rejected unless good evidence can show some inherent defect as the product has got damaged simply because it has worn out after long usage. A similar thing happened in the case of EID (Parry) India Ltd. v. Baby Benjamin Tushara (see here).
Wherein an air conditioner had developed loud noise but was later replaced by the manufacturer on the request of the consumer and it was working fine the consumer could not further claim any remedy. (see here)
In the case of the consumer claiming free replacement of the picture tube of television after the expiry of the warranty period, it was not allowed but instead, a discounted price was given. (see here)
In one more case where the parents of the consumer died due to gas leakage from the LPG cylinder due to wrong handling of the knob by the buyer, the defendants were not responsible for the accident. (see here)
Online shopping and product liability
In modern times, most people have gone online for shopping purposes. Even the new Consumer Protection Act, 2019 includes an online consumer. This trend has become more prevalent during the Corona crisis. People have become lazy and want to get products and product services sitting at home. But with the advent of online shopping consumers are getting more defrauded. They would order some product but would get something else, or the product would cause harm to the consumer simply because no warnings were issued when the product was delivered or on the product body. It is true that in online shopping the liability on the defendant increases because here the consumer had no chance of looking or examining the product and the consumer depended upon the seller to sell a product that works properly and that does not cause any harm to the consumer. But the problem in online shopping is that it becomes difficult to hold the opposite party liable. In the case of online shopping, the product deliverer is also to be considered.
Liability of a product retailer or delivery service
Sometimes the online retailers like Amazon, Flipkart, etc. take the help of the argument that they have merely delivered the product of some seller and hence they were not liable. But in a California Court decision, this thing was repealed and it was held that online retailers would be liable for any third-party defects of a product that is sold on its website. (see here)
Hence, now if there is any defective product, the consumer need not find the third party but can directly claim compensation from the product retailer.
Examples when liability can be ascertained
The product manufacturer or retailer would also be liable for any kind of false advertisement on the website- like falsely describing a product or giving false guarantees or conveying such representations that involve unfair trade practice or deliberately concealing important information.
There are many problems of online shopping for which there can be a liability on the defendants. For example:
- Receiving wrong products.
- Damages to the product while in delivery.
- Product not being delivered on time.
- Where the product has been delivered by a foreign company and it is difficult to sue for the defective product.
Sometimes there is the delivery of gray market items which are illegally sold and which are labelled with a non-actionable warranty. Consumers can hold the seller liable for such fraud.
Liability related to online food products
In the case of online food products, the safety measures to be taken by the seller or manufacturer should be increased. Food traceability in the case of online food products is important as it provides the possibility of identifying food that has a safety-related defect. The identification of the food with the safety-related defect may also result in the supplier being identified which is important for the food operator to know. Whenever there is a food web-shop, the consumer must be able to know the identity and required information about the trader, proper information about the product. If there is any defect, there would be an obligation to pay compensation.
How to file the consumer complaint?
There are four steps of seeking remedy:
District consumer forum
- Complaint on paper to be sent by way of a post. Such paper must be notarised.
- The complainant must submit 4 copies of the complaint along with copies for each respondent against whom the complaint is filed.
- Value of the product should not exceed 20 lakhs.
- The complaint must be filed within 2 years from when the product was known to be defective.
State Consumer Forum
- For the value of products that are above 20 lakhs and below 1 crore.
- 30 days is the limitation period for filing the appeal if required from the order of a District Consumer Forum. 4 things are a must for the appeal-
- The passed order of the District Forum.
- A document containing the details of the parties.
- 4 copies of the complaint for appeal.
- A deposit of 50% of the compensation granted by the District Forum and if this is more than Rs. 25000, then a deposit of Rs. 25000.
National Consumer Disputes Redressal Commission
- Direct complaint for the value of products over 1 crore OR appeals from orders of State Consumer Forum.
Supreme Court
- This is the ultimate step of seeking remedy in case the complainant is aggrieved even by the order of the National Consumer Disputes Redressal Commission.
How to file an online consumer complaint?
STEP 1- Open consumerhelpline.gov.in.
STEP 2- Click on NEW USER.
STEP 3- Register on the portal by entering all required details like name, address, mobile number.
STEP 4- Once registered, click on LOG IN.
STEP 5- Enter the username and password that got created while registering.
STEP 6- Go to the FILE COMPLAINT tab.
STEP 7- Select the type of complaint, the product type, the service provider. Once this is done, a registration form would automatically open. State the issues in the form.
STEP 8- Click on SUBMIT once the form is filled.
The Consumer Coordination Council would then take the required action within 3 months of submission of the form.
Conclusion
To conclude, we can state that through the introduction of the Consumer Protection Act, 2019 there has been an extreme and definite shift from ‘caveat buyer’ to ‘caveat venditor’. Product liability occupies Section 82 to 87 of the CPA, 2019. The consumer has a remedy of claiming compensation from the seller/ manufacturer/ service provider of the product if the product has any defect in it for which it cannot be used or which causes injury to the consumer. They cannot say that the consumer should have noticed the defect before buying. Product liability claims are generally in the nature of negligence and strict liability claims and the concept of privity of contract does not matter here.
Just because the consumer is protected from product liabilities, it does not mean that the same protection would be given for malicious or unreasonable, or ignorant attempts on part of the consumer to sue the other. Due to this, various defences are also available to the opposite party in the Act of 2019 itself.
Even when we come to the ambit of online shopping, product liability claims matter with a slightly different approach because of certain variations of the problems. Given the Corona crisis and the wide amount of online shopping, such protection should be made stronger and more certain.
A consumer complaint may be filed either offline or online. One should always try the online portal to get a hassle-free remedy and specifically when the value of the defective product is not much. In case the consumer does not get any remedy after 3 months of the online complaint, one can definitely go for the offline procedure that ultimately reaches up to the Supreme Court.
References
- Anindya Ghosh & Nabarun Chandra Ray, Product Liability Law in India: An Evolution, MONDAQ, https://www.mondaq.com/india/dodd-frank-consumer-protection-act/974270/product-liability-law-in-india-an-evolution.
- Avtar Singh, Consumer Protection Law and Practice, EBC READER, https://www.ebcreader.com.elibraryhnlu.remotexs.in/library.php.
- Consumer Grievances, DEPARTMENT OF CONSUMER AFFAIRS (GAMA PORTAL), https://gama.gov.in/ConsumerGrivences.aspx.
- Consumer Protection Act, 2019
- Lomme van der Veer, Product Liability for online food suppliers, JSTORE, https://www.jstor.org/stable/43958307.
- Mr. Juneesh K Kuriachan, Online shopping problems and solutions, 23 IISTE 1, (2014).
- P. Umesh, India: The Consumer Protection Act,2019- Exposures and liability Insurance protection, 19(3) BIMAQUEST 10, (2019)
- Priyamvada Surolia, The Liability of Online Marketplaces under the Consumer Protection Bill, 2018, LEGAL SERVICE INDIA, http://www.legalserviceindia.com/legal/article-536-the-liability-of-online-marketplaces-under-the-consumer-protection-bill-2018.html.
- Product Liability under the Consumer Protection Act, PINSENT MASONS, https://www.pinsentmasons.com/out-law/guides/product-liability-under-the-consumer-protection-act.
- Sidharth Sethi & Bindu Janardhanan, Product Liability under the Consumer Protection Act, 2019: let the manufacturer/seller beware! , BAR AND BENCH, https://www.barandbench.com/columns/product-liability-under-the-consumer-protection-act-2019-let-the-manufacturer-seller-beware.
- Types of Product Liability Claims, JUSTIA, https://www.justia.com/products-liability/types-of-products-liability-claims/.
- What is Product Liability, FINDLAW, https://www.findlaw.com/injury/product-liability/what-is-product-liability.html.
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