PRODUCT LIABILITY UNDER CONSUMER PROTECTION ACT 2019: LET THE SELLER BE AWARE

This article is written by Muskaan Bangani of Mody University of Science and Technology, Lakshmangarh, Rajasthan and Curated by Naman Jain of Bennett University, Greater Noida.

For decades, there exists the traditional rule of Caveat Emptor, ‘Let the buyer beware,’ in which the buyer had to take all the responsibility for all the goods and services in the case of defect or default. At present, this tradition has been reversed to Caveat Venditor, which means ‘Let the seller beware,’ where the burden is shifted to the seller. The Consumer Protection Act 2019 has repealed the Consumer Protection Act 1986. The Consumer Protection Act 2019 provides protection for consumers’ interests, mechanisms to settle consumer disputes, the establishment of a central consumer protection authority, and regulates product liability and misleading advertisements explicitly.

While dealing with product transactions, one should always acknowledge the responsibility and accountability of buyers and sellers towards the products or services.

The term product liability got recently added in the amended Consumer Protection Act 2019. The term is defined under section 2(34) of the Consumer Protection Act 2019 which states, “the responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating thereto”.

Section 2 (35), defines Product Liability Action as a complaint filed by a person before a District Commission or State Commission or National Commission. The case can involve claiming of compensation for the harm caused to the claimant. 

Section 2(37) defines the term Product Seller. In relation to a product, a product seller is a person who, in the course of business, imports, sells, distributes, leases, installs, prepares, packages, labels, markets, repairs, maintains, or otherwise is involved in placing such products for commercial purpose and includes:

1. a manufacturer or
2. a service provider, but does not include:
3. a seller of immovable property, unless such person is engaged in the sale of a constructed house or in the construction of homes or flats.
4. a provider of professional services in any transaction in which, the sale or use of a product is only incidental thereto, but furnishing of opinion, skill or services being the essence of such transaction.

A person who-

(I) acts only in a financial capacity with respect to the sale of the product;

(II) is not a manufacturer, wholesaler, distributor, retailer, direct seller or an electronic service provider;

(III) leases a product, without having a reasonable opportunity to inspect and discover defects in the product, under a lease arrangement in which the selection, possession, maintenance, and operation of the product are controlled by a person other than the lessor;

Section 2(38) defines Product Service Provider as a person who provides any service in respect of such product.

The role of Product Manufacturer is:

• To ensure that the product does not contain any defect in manufacturing or design
• There should not be a deviation from the manufacturing specifications
• The product should conform to an express warranty, that is the material statement, description, sample of a product conforming to that of the product correspondence.

The duties of Product Service Provider are as follows:

•       To ensure that there should be no compromise in the quality of the product and the performance of the service provider must be according to the law.
•     To ensure that there is no negligence in the part of the service providers that can lead to the injury of the customers.
•     They should not hide any information about the product that can cause injury to the consumer.
•     To ensure that the service is in accordance with express warranty and terms and conditions of the contract.

The duty of the Product Seller are as follows:

•         To ensure that the alteration and modification of the product shall not cause harm or injury to the health of the consumer.
•       He should not exercise any substantial control over the designing, testing, manufacturing, packaging, or labelling of a product that causes harm.
•       He should ensure that the product or services are assembled and inspected thoroughly.
•         To provide adequate instructions to the consumer as passed onto him by the manufacturer

When a contractual relationship occurs between the seller, manufacturer, and the consumer, it is mandatory for all the parties in the contract to fulfill contractual obligations. The warranty period of any product or service is provided by manufacturers passed on by the seller to the consumer at a later stage. Thus, it creates privity of contract between the manufacturer and consumer.

In the event of contractual breaches to defects in products or services, liability can be apportioned contractually or by considering joints and several principles that may differ as per the provisions of the contract and facts of the case. Thus, if any consumer files complaint under Consumer Protection Act, the liability can be apportioned joint and severally, wherein, the manufacturer on account of the warranty provided, and seller or retailer or dealer on account of involving in selling and distributing the products or services, are jointly and severally liable for the sale of defective products.

For an action product liability, claims can be brought against a product manufacturer either by the aggrieved consumer or by multiple consumers, or a registered voluntary consumer’s association, Central or State Government, and one or more consumers having a common interest.

The remedies available to an aggrieved consumer for any harm caused due to defective products apart from imprisonment and fines are the suspension of the license of the accused up to 2 years for the first offense, and in case of a subsequent offense, it is permanent cancellation of the license.