Defective products: liability also extends to digital goods and services

The range of parties liable for the damage is also expanding: in addition to the manufacturer of a faulty product or component, the importer, the manufacturer’s authorised representative and, in the absence of these two parties, the logistics service provider may also come under scrutiny. Not only that: liability may also fall on on online platforms that enable consumers to conclude distance contracts with traders, and on anyone who makes a substantial modification to the product beyond the control of the original manufacturer and then places it on the market. Liability remains even if the identified profile is found to be operating outside the borders of the European Union.

Where it is not possible to identify the ‘offending’ economic operator from amongst those listed in the Directive, each distributor is liable if the injured party asks them to identify the operator or distributor who supplied the item and fails to provide the information within one month of the request (which must be made in writing, specifying the product, the place and the approximate date of purchase).

However, no liability for damage shall arise if any of the following situations occurs:

(a) the manufacturer or importer has not placed the product on the market or put it into service;

(b) the distributor has not made the item available on the market;

(c) the defect did not exist at the time the item was made available for sale or for use;

(d) where a party has made a substantial modification and the defect did not affect a significant part.Liability is not excluded if the placing on the market depends on a forced sale for which the distributor is responsible, unless the defect has been reported to the court by means of a specific document.

When carrying out the assessment of a defective product, a number of factors must be taken into account:

1) presentation and characteristics of the product, including labelling, design, technical specifications, composition, packaging, instructions for assembly, installation, use and maintenance;

2) ‘reasonably foreseeable use’ of the product;

3) the effects on the product of the addition of new functions after it has been placed on the market;

4) the reasonably foreseeable effects on the product of other items that are typically used in conjunction with it, including via interconnection;

5) the date on which the product was placed on the market or put into service or, if the manufacturer retains control after launch, the date on which it ceased to be under the manufacturer’s control;

6) the necessary security requirements;

7) the needs of the target audience for whom the article is intended.

For the injured party, it is made easier to prove the damage by providing sufficient facts and evidence to support the plausibility of the claim for compensation. Specifically, a mechanism is introduced whereby the injured party is required to present, before the court, all the evidence at their disposal. If the disclosure concerns information that constitutes, or is presumed to constitute, trade secrets, the judge shall, by default (or upon a reasoned request from a party), adopt the necessary measures to safeguard their confidentiality in all future proceedings.

The person who has suffered the damage is required to prove that the product was defective, that they have suffered damage as a result, and the causal link between these two elements. The first of the three criteria is presumed to be met if one of the mandatory conditions applies; therefore, if the injured party fails to produce relevant evidence, the claimant must demonstrate that the product does not comply with safety standards or that the damage was caused by an obvious fault ‘during reasonably foreseeable use or under ordinary circumstances’.

Where two or more economic operators are liable for the same damage, they are, of course, all jointly and severally liable, without prejudice to the exercise of the right of recourse.

The party who has compensated for the damage is entitled to seek recourse against the others to the extent determined by the extent of the risk in relation to each party involved, the severity of any fault and the nature of the resulting consequences. The apportionment is fair and in equal shares.

As regards software, non-commercial open-source software remains outside the scope of the new European provisions, whilst micro and small enterprises manufacturing components are granted a special regime waiving the right of recourse.

But, specifically, what types of damage are eligible for compensation? The directive sets out a list, which also includes damage resulting from death or personal injury to a person’s physical and mental well-being (both of which must be medically verifiable); damage to any property other than the defective product itself or a product damaged by a component integrated into it or interconnected by the manufacturer; the distribution or corruption of data not used for professional purposes.

The right to compensation is subject to a limitation period of three years from the date on which the person who suffered the damage became aware, or ought to have become aware, of it. It is, however, extinguished upon the expiry of ten years from the date on which the defective product was placed on the market or put into service. Alternatively, where the product has been significantly modified, it is extinguished from the date on which it is placed on the market following the substantial modification.

If it has not been possible to initiate the procedure within the time limits from this date for a period of delay of personal injury, the right to compensation expires 25 years after the product was placed on the market or put into service.

The new measures incorporated into the Consumer Code will apply to all goods sold or put into service from 9 December. For goods sold or put into service prior to that date, the previous regulations will continue to apply.