Start Here: 5 Things You MUST Know
Product liability has three theories: negligence, strict liability, and breach of warranty
Strict liability = no need to prove fault. Defective product + injury = liability
Three types of product defects: manufacturing, design, and warning/labeling
Privity of contract is NOT required under strict liability — anyone injured can sue
Key defenses: product misuse, assumption of risk, comparative fault, state of the art
1. Product Liability — Three Theories
What Is Product Liability?
Product liability is the legal responsibility of manufacturers, distributors, and sellers for injuries caused by defective products. A plaintiff can sue under one or more of three legal theories.
1. Negligence
Plaintiff must prove the manufacturer/seller failed to exercise reasonable care in designing, manufacturing, or warning about the product.
Burden: Plaintiff must prove fault
2. Strict Liability
No need to prove fault. If the product was defective and unreasonably dangerous, the seller/manufacturer is liable regardless of how careful they were.
Burden: No fault needed
3. Breach of Warranty
The product failed to meet an express or implied warranty (as covered in Part 2). Based on contract law, not tort law.
Burden: Prove warranty existed and was breached
Real-World Scenario: Three Theories, Same Product
The Setup: A power tool manufacturer sells a table saw with a defective blade guard that can detach during use. The instruction manual does not warn about this risk.
What Happens: A carpenter is seriously injured when the blade guard flies off.
The Result: The carpenter can sue under all three theories: (1) Negligence — the manufacturer failed to design a safe guard; (2) Strict liability — the product was defective and unreasonably dangerous; (3) Breach of warranty — the saw was not fit for its ordinary purpose (implied warranty of merchantability).
2. Strict Liability — Restatement (Second) of Torts, Section 402A
The Core Rule
Anyone who sells a product in a defective condition unreasonably dangerous to the user or consumer is liable for physical harm caused, even if the seller exercised all possible care in the preparation and sale of the product.
Elements the Plaintiff Must Prove
Product Was Defective
Manufacturing, design, or warning defect
Unreasonably Dangerous
Beyond what an ordinary consumer would expect
Caused Injury
The defect actually caused the plaintiff's harm
Product Reached User Without Substantial Change
No modification after leaving seller
Key Point: No Privity Required
Under strict liability, the injured party does NOT need to be the person who bought the product. Privity of contract is not required. A bystander injured by a defective product can sue the manufacturer directly.
Real-World Scenario: Strict Liability Without Fault
The Setup: A tire manufacturer produces 100,000 tires. Due to a rubber mixing error in one batch, 500 tires have weakened sidewalls. The manufacturer used state-of-the-art quality control and could not have detected the defect.
What Happens: A driver's tire from the defective batch blows out on the highway, causing a serious accident.
The Result: The manufacturer is strictly liable even though they exercised all possible care. The product was defective and unreasonably dangerous. Under strict liability, fault is irrelevant — only the defect and resulting injury matter.
3. Three Types of Product Defects
Manufacturing Defect
The product departs from its intended design. Something went wrong during production. The defect exists in one unit or batch, not in the design itself.
Example: A bicycle frame is welded improperly at the factory, causing it to crack during normal riding. The design is fine — the welding on this one bike was flawed.
Design Defect
The product was manufactured correctly, but the design itself is unreasonably dangerous. Every unit of the product has the same flaw because the flaw is in the blueprint.
Example: An SUV model is designed with a high center of gravity that makes it prone to rollovers during sharp turns. Every SUV of this model has the same problem — it is a design issue, not a manufacturing error.
Warning/Labeling Defect (Failure to Warn)
The product has inadequate instructions or warnings about known risks. The product itself may be fine, but users are not properly informed of dangers.
Example: A prescription medication causes severe liver damage when combined with alcohol, but the label does not warn about this interaction. The drug works as intended — the defect is the missing warning.
4. Who Can Be Held Liable?
Under strict product liability, every entity in the distribution chain can potentially be held liable — not just the manufacturer.
The Distribution Chain — All Potentially Liable
Manufacturer
Makes the product
Wholesaler
Distributes in bulk
Retailer
Sells to consumer
Consumer / User
Injured party
Real-World Scenario: Entire Chain Liable
The Setup: A toy manufacturer makes a children's puzzle with small pieces that break off easily. The toy goes from manufacturer to a distribution company to a national retail store.
What Happens: A 3-year-old child chokes on a piece that breaks off during normal play.
The Result: The child's parents can sue the manufacturer, the distributor, and the retailer under strict liability. All are in the distribution chain. The retailer may seek indemnification from the manufacturer, but all are potentially liable to the plaintiff.
5. Defenses to Product Liability
Exam Alert!
Even under strict liability, defendants have several defenses available. The exam will test whether you know when each defense applies.
Product Misuse
The plaintiff used the product in a way that was not intended or foreseeable. If the misuse was unforeseeable, it can be a complete defense.
Example: A person uses a lawnmower to trim hedges by lifting and holding it sideways. They are injured. This is an unforeseeable misuse — the manufacturer is not liable.
Assumption of Risk
The plaintiff knew about the defect or danger and voluntarily proceeded to use the product anyway.
Example: A worker notices a crack in a power tool's housing but continues to use it because they do not want to wait for a replacement. They are injured when the tool shatters. The worker assumed the known risk.
Comparative Fault / Contributory Negligence
The plaintiff's own negligence contributed to the injury. In comparative fault states, damages are reduced by the plaintiff's percentage of fault.
Example: A driver is injured by a defective airbag, but was also not wearing a seatbelt. A jury might find the driver 20% at fault and the manufacturer 80% at fault, reducing the damages accordingly.
State of the Art
The product was designed using the best technology and knowledge available at the time of manufacture. The defect was unknown and unknowable at the time.
Example: A building material later discovered to cause health problems was considered safe by all scientific standards when it was manufactured and sold. The manufacturer may argue state-of-the-art defense.
Substantial Alteration
The product was substantially changed after it left the seller. If the alteration caused the injury, the original seller may not be liable.
Example: A buyer removes the safety guard from a machine to increase production speed. An employee is injured by the unguarded machine. The manufacturer can argue that the removal of the guard was a substantial alteration.
Statute of Limitations / Statute of Repose
The claim was filed too late. Statute of limitations runs from the date of injury. Statute of repose sets an absolute deadline from the date of sale, regardless of when the injury occurs.
6. Consumer Protection & Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act is a federal law governing consumer product warranties. It does not require warranties but regulates how they must be presented.
Full Warranty
Must meet strict federal standards:
- Remedy within a reasonable time at no charge
- No unreasonable conditions on coverage
- If defect cannot be fixed after reasonable attempts, consumer can choose refund or replacement
Limited Warranty
A warranty that does NOT meet all full warranty requirements. Manufacturers often label warranties as "limited" to avoid "lemon law" provisions that require refunds or replacements.
Real-World Scenario: Why "Limited" Instead of "Full"
The Setup: A laptop manufacturer offers a 1-year warranty covering all defects with free repair.
What Happens: The warranty looks like a full warranty, but the company labels it "limited."
The Result: By labeling it "limited," the manufacturer avoids the Magnuson-Moss requirement that if the product cannot be fixed after reasonable attempts, the consumer can demand a full refund or replacement. Under a "limited" warranty, the manufacturer has more flexibility in remedies.
McCarran-Ferguson Act & Insurance
Insurance is generally exempt from federal antitrust laws under the McCarran-Ferguson Act because states regulate insurance. However, if a state does NOT have antitrust legislation applicable to insurance, federal laws (FTC Act, Deceptive Trade Practices Acts) can apply.
Cheat Sheet
Print this page for quick referenceStrict Liability Elements
- Product was defective
- Defect made it unreasonably dangerous
- Defect caused the injury
- Product reached user without substantial change
- No privity required — anyone injured can sue
- No need to prove fault or negligence
Defenses
- Product misuse (unforeseeable use)
- Assumption of risk (knew danger, proceeded anyway)
- Comparative fault (plaintiff partly at fault)
- State of the art (unknowable defect at time)
- Substantial alteration (product changed after sale)
- Statute of limitations/repose (too late to sue)
Three Defect Types
Manufacturing = one bad unit (production error)
Design = all units flawed (blueprint problem)
Warning = inadequate instructions/labels
Exam Trap Alerts
1. Strict Liability Does NOT Mean Automatic Liability
"Strict" means no need to prove fault, but the plaintiff still must prove the product was defective and that the defect caused the injury. There are also valid defenses (misuse, assumption of risk, etc.).
2. No Privity Required for Strict Liability
Unlike breach of warranty (which traditionally requires a contract relationship), strict liability allows ANY injured person to sue — even a bystander who never bought the product.
3. Manufacturing vs. Design Defect
Manufacturing defect = one specific unit was flawed during production. Design defect = every unit has the same flaw because the design itself is dangerous. The exam will test whether you can identify which type.
4. Entire Distribution Chain Is Liable
Not just the manufacturer — the wholesaler and retailer can also be held strictly liable. The retailer may not have caused the defect, but they are still in the chain of distribution.
5. "Limited" Warranty Trick
Manufacturers label warranties "limited" even when they are essentially full warranties to avoid Magnuson-Moss "lemon law" obligations (refund/replacement after failed repairs). The exam loves this question.
6. McCarran-Ferguson and Insurance
Insurance is generally exempt from federal antitrust law because states regulate it. But if a state lacks applicable antitrust laws for insurance, federal laws step in. This exception is commonly tested.
Quick Reference Summary
Three Liability Theories
Negligence (prove fault), strict liability (no fault needed), breach of warranty (contract-based).
Strict Liability
Defective + unreasonably dangerous + caused injury + no substantial change.
Three Defect Types
Manufacturing (one bad unit), design (all units flawed), warning (bad labels/instructions).
No Privity Required
Anyone injured can sue under strict liability. No contract relationship needed.
Key Defenses
Product misuse, assumption of risk, comparative fault, state of the art, substantial alteration.
Magnuson-Moss
Full warranty = refund/replace after failed repairs. Limited = fewer obligations.