Product Liability: The Law in Germany
Companies based in Germany are affected by product liability law not only in their domestic business dealings but also in their dealings with other European Union countries and non-EU countries such as China and the United States. In Germany, a distinction is made between product liability and producer liability. Producer liability is covered by the tort claim for damages under § 823 of the German Civil Code (BGB) but is not regulated in detail by law. § 823 of the BGB stipulates:
- A person who, intentionally or negligently, unlawfully injures the life, body, health, freedom, property or another right of another person is liable to make compensation to the other party for the damage arising from this.
- The same duty is held by a person who commits a breach of a statute that is intended to protect another person. If, according to the contents of the statute, it may also be breached without fault, then liability to compensation only exists in the case of fault.
More concrete detail is provided for within the Act on Liability for Defective Products: Product Liability Act which outlines further information for the responsibility of the different parties within the supply chain as well as limitation periods as well as cases where reduced liability is involved. Among the details within the Product Liability Act is the definition of a defect, which is as follows under § 3 Product Liability Act:
- A product has a defect when it does not provide the safety which one is entitled to expect, taking all circumstances into account, in particular
- its presentation,
- the use to which it could reasonably be expected that it would be put,
- the time when it was put into circulation.
The Act also describes how manufacturers can have reduced liability for defects under § 1 Product Liability Act and it applies to the following situations:
- The producer’s liability obligation is excluded if:
- (they) did not put the product into circulation,
- under the circumstances it can be assumed that the defect which caused the damage did not exist at the time when the producer put the product into circulation,
- the product was neither manufactured by (them) for sale or any other form of distribution for economic purpose nor manufactured or distributed by him in the course of his business,
- the defect is due to compliance of the product with mandatory regulations at the time when the producer put the product into circulation or
- the state of scientific and technical knowledge at the time when the producer put the product into circulation was not such as to enable the defect to be discovered.
Damages to be paid by those involved can be very high in cases where a person suffers major injury or death due to the defect and the company is found liable for product liability. However, such cases are dependent on the facts of the situation and in many cases a judgment of contributory negligence can reduce the damages needed to be paid by the manufacturer / company in that case. Allow our lawyers to examine your case and they will provide you with the available solutions under German law.
Duty of Care & Responsibilities of Manufacturers in Germany
Concerning the violation of duties of care and manufacturers’ responsibilities, which may trigger liability for damages, a distinction must also be made between product and producer liability. In product liability under the Product Liability Act, the manufacturer is liable for hazards emanating from its own product without proving fault on its part. This type of liability is also called strict liability. The producer’s liability, according to § 823 BGB, is more narrowly defined. In the case of producer liability, the manufacturer must be at fault concerning a specific type of defect. He must, therefore, have acted negligently or intentionally. The manufacturer can be held liable for the following types of defect.
- Design or development liability: The manufacturer must observe the legally permissible specifications when designing and constructing the product in question. The safety of the user when using the end product must be the primary consideration in the design. A design defect, therefore, affects an entire series of products.
- Production liability: Within the production line, the company must have quality control mechanisms to ensure that the process is carried out to the required high safety standards. Only through quality control can potential problems and hazards to the end-user / consumer be detected and prevented during production. Only individual products are usually affected by this defect. However, the manufacturer is not liable for one-off “outliers”.
- Instruction liability: Product manufacturers, especially in pharmaceuticals, should have instructions clearly shown to demonstrate the potential risks of misuse of the product. Our lawyers will oversee your instructions to ensure that they have provided the legally required standard of instructions.
- Product Observation Failure: If problems are found with the product after it has been released to the public, the company must investigate how the problems arose, and what actions (if any) can be taken to resolve the problems as part of the product observation requirement. The manufacturer may be required to warn customers of the problem and, in some cases, even issue a recall of the product.
As can be seen from the amount of responsibly in place for manufacturers, they need to access on-going legal support. Breaching any of the above-listed liabilities can result in major legal actions being taken against them. Our German business lawyers will oversee your legal responsibilities in this area and provide the needed guidance for ensuring that you remain compliant in this matter.
Level of Liability and Burden of Proof
According to § 1 (4) Product Liability Act it is the responsibility of the claiming party to demonstrate that the manufacturer (or other party within the supply chain) is the one at fault for the damage caused to them. They must prove that the damage occurred as well as the link to the defect within the product.
- The injured person bears the burden of proving the defect, the damage and the causal relationship between defect and damage. If it is disputed whether the obligation to pay compensation is excluded… the producer bears the burden of proof.
If several manufacturers are found to be at fault in the case, they can all be found jointly liable depending on the circumstances. Should they be found liable for the damage caused, the level of fine or sanctions will be based on the facts of the case. They may be found liable to pay compensation for earnings lost, for damage to property or further costs for the person’s recovery. However, it should also be noted that there is a time limitation on when a case can be brought in accordance with § 12 Product Liability Act. Under this provision cases can only be brought within three years “from the day on which the party entitled to damages became aware, or should reasonably have become aware, of the damage, the defect and the identity of the party liable “.
The amount of compensation to be paid and other sanctions will also depend on the level of liability attributable to the parties involved. Our lawyers will examine your contracts in order to determine the level of contractual liability they provide for. When designing future contracts, we will seek to find legal solutions allowing for your contractual liability to be reduced where possible. Where your company has not put adequate structures in place as regards quality control or supervision, they will face an increased chance of being found liable, even where you have taken the required steps within your contracts. For this reason, it is vital to avail of not only contractual guidance but also continued, on-going legal support to ensure that you reduce the risk of a product liability case arising.