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While poor governance can bring serious legal consequences, the law can also protect business owners and managers and help to prevent conflict.

Whether you want to raise finance, join forces with someone else, buy or sell a business, it pays to be aware of the legal implications.

From pay, hours and time off to discipline, grievance and hiring and firing employees, find out about your legal responsibilities as an employer.

Marketing matters. Marketing drives sales for businesses of all sizes by ensuring that customers think of their brand when they want to buy.

Commercial disputes can prove time-consuming, stressful and expensive, but having robust legal agreements can help to prevent them from occurring.

Whether your business owns or rents premises, your legal liabilities can be substantial. Commercial property law is complex, but you can avoid common pitfalls.

With information and sound advice, living up to your legal responsibilities to safeguard your employees, customers and visitors need not be difficult or costly.

As information technology continues to evolve, legislation must also change. It affects everything from data protection and online selling to internet policies for employees.

Intellectual property (IP) isn't solely relevant to larger businesses or those involved in developing innovative new products: all products have IP.

Knowing how and when you plan to sell or relinquish control of your business can help you to make better decisions and achieve the best possible outcome.

From bereavement, wills, inheritance, separation and divorce to selling a house, personal injury and traffic offences, learn more about your personal legal rights.

Product liability FAQs

23 FAQs about product liability

  1. What products and services are covered by product liability laws?
  2. If I supply a defective product, am I liable or the producer?
  3. Who is liable for a faulty product if several businesses are involved in the production and supply of the product?
  4. What is my potential liability and what are the penalties if I produce or supply a product that injures someone?
  5. Can I be sued or prosecuted for producing or supplying a defective product, even if it hasn't caused any damage or injury?
  6. If a product is inherently dangerous, am I still liable for damage or injury caused by it?
  7. Am I liable for damage or injury caused by misuse of my product by the customer?
  8. Am I responsible if a product defect is caused by a distributor mishandling or modifying it?
  9. How safe must my product be?
  10. Are there official safety procedures, standards or rules that help reduce my potential product liability?
  11. Can I be sued by someone who didn't buy my product if they are injured by it?
  12. Can I protect myself from product liabilty claims by getting customers to sign a contract saying that liability is excluded?
  13. Can I get my suppliers to indemnify me against product liability claims as a distributor?
  14. Can I insure myself against product liability claims, and how can I minimise the insurance premiums?
  15. What should I do if I find that I have supplied defective products?
  16. If I recall a batch of defective products, might that encourage people to take legal action against me and weaken my defence in any court cases?
  17. What happens if several people have been injured by my product?
  18. Is there any time limit on when I can be sued for damage or injury caused by my product?
  19. What should I do if someone is taking legal action claiming that my product caused damage or an injury?
  20. Will settling a product liablilty case encourage other people to sue me?
  21. Which country's product liability laws apply if my product is supplied to overseas markets?
  22. What defences are there if someone sues over an injury caused by my product?
  23. Am I liable for a defective product I have supplied from overseas?

1. What products and services are covered by product liability laws?

Product liability laws cover consumer goods and goods used at a workplace. If someone is injured by a defective product or suffers loss or damage to private property, they can sue for damages. Both producers and distributors can also face prosecution if they offer unsafe products for sale.

Product liability laws do not cover services, information (though a product with poor instructions may be defective - see 7) or buildings (but materials used in buildings such as bricks are covered). However, there are also a number of other laws under which you could face legal action. For example:

  • owners and occupiers of buildings can be liable for loss or injury caused by defective premises
  • employers are responsible for the health and safety of anyone affected by their business
  • unsatisfactory goods or poorly performed services may give rise to a claim for breach of contract
  • negligently (or deliberately) causing injury or loss may give rise to a claim for damages

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2. If I supply a defective product, am I liable or is the producer?

Normally, the producer would be liable. But if you fail to identify the producer when someone who has suffered damage asks you, you could be liable. You can also be liable if you have 'own-branded' the product (ie putting your name on the product so that it appears that you are the producer).

Even if you are not liable for the damage, you may still face prosecution if you have supplied unsafe goods without taking reasonable steps to avoid doing so.

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3. Who is liable for a faulty product if several businesses are involved in the production and supply of the product?

Responsibility generally lies with the producer of the product rather than supplier. That might be:

  • the manufacturer (or the producer in the case of raw materials)
  • the producers of components used in the product (but not if the fault was caused by the manufacturer's design or by the specification given by the manufacturer)
  • anyone else who processes the product (but not someone who simply packages it without affecting it)
  • for products originating from outside the European Union (EU), the importer who first imported the goods into the EU and possibly the manufacturer's representative in the EU
  • any supplier who has affected the safety of the product (for example, by reconditioning it)
  • any supplier who has made it appear that they are the producer by 'own-branding' the product

If more than one business fits these categories, they can all be jointly liable.

If you import goods from outside the UK, your responsibility for product safety may be affected by Brexit. You should take advice.

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4. What is my potential liability and what are the penalties if I produce or supply a product that injures someone

If you produce a product that injures someone, you can be sued for damages. You can also be sued if the product kills someone or causes damage to private property of £275 or more.

If your product has caused damage to property, you are likely to face a claim for the value of that damage. Where your product has caused injury, the value of the award that a claimant might receive is not fixed, but typically reflects how severe the injury is: say from a few thousand pounds for a clean break (which then heals properly) to a six-figure sum for the loss of both legs. In the case of death, the award is likely to reflect the total income that might have been earned in the rest of the dead person's life, and can run to a million pounds or more.

In each case, the award is also likely to include compensation for any loss of earnings, medical expenses and so on.

As a supplier, you would not usually be liable to be sued (see 3).

Both producer and supplier (and their directors) could also face prosecution (see 5).

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5. Can I be sued or prosecuted for producing or supplying a defective product, even if it hasn't caused any damage or injury?

You cannot be sued - as nobody has suffered an injury or loss - but you can face prosecution. A producer can be prosecuted for placing unsafe products on the market. A supplier can be prosecuted if they fail to take reasonable steps to ensure that products they supply are safe. In both cases, individual company directors could also face prosecution.

For certain products, typically those that present particular risks you can also face prosecution if you fail to follow specific safety regulations (see 10). A conviction can result in a fine of up to £5,000 and a prison sentence of up to six months.

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6. If the product is inherently dangerous, am I still liable for damage or injury caused by it?

If you produce a product that isn't as safe as people are reasonably entitled to expect, you can be liable. But if your product is no more dangerous than normal and you provide adequate warnings and instructions, you should not normally be liable.

For example, there will always be a risk that someone could injure themselves using a trampoline. You would not normally be liable unless the trampoline was defective, for example, it collapsed while being used.

Similarly, a kitchen knife is inherently dangerous. You would not normally be liable just because someone cut themselves with your knife. However, you might be liable if your knife had a badly designed handle that contributed to the knife slipping and causing the injury.

If a claim is brought against you, the court will take into account the circumstances:

  • how the product is marketed
  • safety instructions and product markings
  • how the product might reasonably be expected to be used
  • when the product was supplied by the producer

If you produce a product that is often misused, you should think carefully about what you might expect to be done with your product, and what instructions and warnings you need to give to reduce the risks.

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7. Am I liable for damage or injury caused by misuse of my product by the customer?

As far as misuse by the customer is concerned, the key question is whether people could reasonably be expected to misuse your product in that way. If so, you could be liable. Ensuring that you give adequate safety warnings and instructions will reduce the likelihood that a claim against you will succeed.

Even if you are liable, your liability may be reduced if you can show that the claimant contributed to the damage or injury through their own carelessness.

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8. Am I responsible if a product defect is caused by a distributor mishandling or modifying it?

If the defect that causes the damage or injury is not present at the time you supply the product, you are not normally liable. So you would not normally be liable if an installer or supplier mishandles the product.

However, you could be liable if the product needs special handling, but you failed to tell the installer or supplier about this. If, for example, your product needs to be installed in a certain way to operate properly, you need to provide adequate installation instructions.

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9. How safe must my product be?

You need to ensure that the product is as safe as people are reasonably entitled to expect. This generally means that you should have taken steps to control or eliminate all safety risks. You also need to comply with any specific safety regulations for your product (see 10).

If you supplied the product for sale some time ago, you may be able to defend yourself against a claim if you can show that the defect was something which you could not have been expected to discover at that time. In practice, this defence is only likely to help you if there has been some relevant scientific or technical advance since you produced the product.

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10. Are there official safety procedures, standards or rules that help reduce my potential product liability?

Some types of product are covered by specific safety regulations. These tend to be products where particular risks have been identified in the past. For example, there are regulations covering: gas and electrical appliances; toys, prams and various childcare products; fireworks; furniture and furnishings; and so on.

There may also be one or more British (or European) standards relating to your product which you can follow. Best practice guidelines may also have been produced by, for example, the relevant trade association.

Producing items that match the standards and best practice guidelines and comply with specific safety regulations will not necessarily protect you from a claim if your product causes loss or harm - the question is whether your product is as safe as people are reasonably entitled to expect - but might help reduce your potential liability. However, you will not be liable if you can show that the defect in your product that caused the damage was the inevitable result of complying with the law - for example, following a legally required safety procedure.

Conversely, failing to meet standards and follow regulations is likely to significantly weaken your defence against any claim. Failing to follow specific regulations will also lay you open to prosecution, even if your product hasn't caused any damage (see 5).

Read government guidance on product safety.

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11. Can I be sued by someone who didn't buy my product if they are injured by it?

Yes. Anyone can make a claim if they are injured by your defective product, even if it wasn't sold to them.

You can defend yourself against a claim if the product was stolen or is a counterfeit. You can also defend yourself if the product wasn't supplied in the course of business at all, for example, if you give away some second-hand goods in a personal capacity - but not as part of a company charitable donation.

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12. Can I protect myself from product liability claims by getting customers to sign a contract saying that liability is excluded?

No. It is not possible to exclude liability.

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13. Can I get my suppliers to indemnify me against product liability claims as a distributor?

Yes, you can. This would not protect you from a claim being made against you, but could require your suppliers to compensate you for any award you are required to pay.

In practice, however, this may be ineffective: the suppliers themselves might face claims that force them into insolvency. As a distributor, the only secure protection against a product liability claim is to take reasonable steps to ensure that products you supply are safe.

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14. Can I insure myself against product liability claims, and how can I minimise the insurance premiums?

You can buy product liability insurance. As with any other form of insurance, the premiums will depend on the insurer's assessment of the risk of claims against you and the likely scale of awards. If you can demonstrate effective product safety management, this may reduce your premiums.

Steps to consider include:

  • introducing quality management procedures
  • planning product recall procedures in case you discover a problem (see 15)
  • taking advice on all product-specific regulations affecting your products
  • investigating any safety standards relating to your product and considering modifying the product to meet them
  • as a distributor or 'own-brander', ensuring you keep adequate records of who supplied products you sell (which may later cause injury or loss)

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15. What should I do if I find that I have supplied defective products?

Start by assessing the risk that the defective products will cause harm or loss. If these are more than minimal, take immediate steps to recall the products - contacting customers to advise them of the problem and arrange the return of the defective products. Giving adequate warning of the risks will help protect you from a claim if a customer subsequently suffers any injury or harm.

Other issues you will want to consider include:

  • investigating how the defect arose and correcting any weakness in your systems
  • handling the recall in a way that sends a positive message to your customers
  • reintroducing the product (or an updated version of it)

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16. If I recall a batch of defective products, might that encourage people to take legal action against me and weaken my defence in any court cases?

Consumers can only take action against you if they have suffered injury or loss. While it is possible that issuing a recall might encourage someone to cause a deliberate accident, you will be able to defend yourself against a claim to the extent that you can show they contributed to the problem. You also need to weigh up this (normally relatively low) risk against the continuing risk of problems if you fail to recall the product.

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17. What happens if several people have been injured by my product?

Each of them is entitled to make a claim against you. They might do so individually or they might start some form of group litigation or 'class action' against you. Co-operation of this kind may put the claimants in a stronger position (for example, financially) to pursue their claim, and may also encourage other individuals to join the action. On the other hand, it does at least reduce the number of individual actions you need to deal with.

In either case, your position will be much the same: aiming to show an effective defence or reason why your liability should be reduced.

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18. Is there any time limit on when I can be sued for damage or injury caused by my product?

The plaintiff must bring their case within three years of the date of injury (or of the date when they became aware that they had a claim against you). In any case, you cannot be sued more than ten years after you supplied the product.

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19. What should I do if someone is taking legal action claiming that my product caused damage or an injury?

Take legal advice. You will need to establish the facts of the case and whether you have a reasonable chance of defending a claim or at least reducing any liability (see 21).

If the claim is valid it will almost always be worth trying to negotiate a settlement rather than going to trial. Given the risks and costs of going to court, it can sometimes be worth negotiating a settlement even if you feel you have a good defence.

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20. Will settling a product liability case encourage other people to sue me?

Other people may become keener to take action if they see the chance of winning a large settlement. However, cases are generally settled without any admission that you are at fault, and can include a confidentiality agreement. Settling one case does not necessarily mean that you will have to settle others.

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21. Which country's product liability laws apply if my product is supplied to overseas markets?

Product liability claims will generally be brought wherever the harm is suffered. So, for example, someone who is injured overseas by a product you exported will sue you in their local courts, under local laws.

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22. What defences are there if someone sues over an injury caused by my product?

There are six defences:

  • you did not supply the product (for example, if it was stolen or is a counterfeit)
  • you could not reasonably be expected to have discovered the problem at the time you supplied the product (for example, because scientific knowledge was less advanced then)
  • the defect was the inevitable result of complying with the law (for example, following a legally required procedure)
  • the defect was not in the product when you supplied it (for example, if the distributor later mishandled it)
  • the product was not supplied in the course of business (for example, it was a gift made in a personal capacity)
  • if you supplied a component, showing that the defect was caused by the design of the finished product or by a faulty specification given to you by the manufacturer

You may also be able to reduce your liability if you can show that the plaintiff contributed to the problem though their own carelessness.

Simply showing you took reasonable precautions to avoid defects is not a defence. No matter how much care you took, if you produce a defective product you are liable (unless you have one of the six defences listed above).

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23. Am I liable for a defective product I have supplied from overseas?

If you imported the product into the European Union (EU) from outside, you will be liable in the same way as if you had produced the product yourself.

If, however, you import the product from within the EU, as long as you identify your supplier when asked to do so, you should not be liable in this way. You might, however, still face prosecution (rather than being sued) if you did not take reasonable steps to ensure that the product was safe.

Liability for defective products imported from within the EU may be affected by Brexit.

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