h3. § 1. Liability Of Commercial Seller Or Distributor For Harm Caused By Defective Products One engaged in the business of selling or otherwise distributing products who sells or distributes a defective product is subject to liability for harm to persons or property caused by the defect. Comment:
a. _History_. This Section states a general rule of tort liability applicable to commercial sellers and other distributors of products generally. Rules of liability applicable to special products such as prescription drugs and used products are set forth in separate Sections in Topic 2 of this Chapter.
The liability established in this Section draws on both warranty law and tort law. Historically, the focus of products liability law was on manufacturing defects. A manufacturing defect is a physical departure from a product's intended design. See § 2(a). Typically, manufacturing defects occur in only a small percentage of units in a product line. Courts early began imposing liability without fault on product sellers for harm caused by such defects, holding a seller liable for harm caused by manufacturing defects even though all possible care had been exercised by the seller in the preparation and distribution of the product. In doing so, courts relied on the concept of warranty, in connection with which fault has never been a prerequisite to liability.
The imposition of liability for manufacturing defects has a long history in the common law. As early as 1266, criminal statutes imposed liability upon victualers, vintners, brewers, butchers, cooks, and other persons who supplied contaminated food and drink. In the late 1800s, courts in many states began imposing negligence and strict warranty liability on commercial sellers of defective goods. In the early 1960s, American courts began to recognize that a commercial seller of any product having a manufacturing defect should be liable in tort for harm caused by the defect regardless of the plaintiff's ability to maintain a traditional negligence or warranty action. Liability attached even if the manufacturer's quality control in producing the defective product was reasonable. A plaintiff was not required to be in direct privity with the defendant seller to bring an action. Strict liability in tort for defectively manufactured products merges the concept of implied warranty, in which negligence is not required, with the tort concept of negligence, in which contractual privity is not required. See § 2(a).
Questions of design defects and defects based on inadequate instructions or warnings arise when the specific product unit conforms to the intended design but the intended design itself, or its sale without adequate instructions or warnings, renders the product not reasonably safe. If these forms of defect are found to exist, then every unit in the same product line is potentially defective. See § 2, Comments d, f, and i. Imposition of liability for design defects and for defects based on inadequate instructions or warnings was relatively infrequent until the late 1960s and early 1970s. A number of restrictive rules made recovery for such defects, especially design defects, difficult to obtain. As these rules eroded, courts sought to impose liability without fault for design defects and defects due to inadequate instructions or warnings under the general principles of § 402A of the Restatement, Second, of Torts. However, it soon became evident that § 402A, created to deal with liability for manufacturing defects, could not appropriately be applied to cases of design defects or defects based on inadequate instructions or warnings. A product unit that fails to meet the manufacturer's design specifications thereby fails to perform its intended function and is, almost by definition, defective. However, when the product unit meets the manufacturer's own design specifications, it is necessary to go outside those specifications to determine whether the product is defective.
Sections 2(b) and 2(c) recognize that the rule developed for manufacturing defects is inappropriate for the resolution of claims of defective design and defects based on inadequate instructions or warnings. These latter categories of cases require determinations that the product could have reasonably been made safer by a better design or instruction or warning. Sections 2(b) and 2(c) rely on a reasonableness test traditionally used in determining whether an actor has been negligent. See Restatement, Second, Torts §§ 291-293. Nevertheless, many courts insist on speaking of liability based on the standards described in §§ 2(b) and 2(c) as being “strict.”
Several factors help to explain this rhetorical preference. First, in many design defect cases, if the product causes injury while being put to a reasonably foreseeable use, the seller is held to have known of the risks that foreseeably attend such use. See § 2, Comment m. Second, some courts have sought to limit the defense of comparative fault in certain products liability contexts. In furtherance of this objective, they have avoided characterizing the liability test as based in negligence, thereby limiting the effect of comparative or contributory fault. See § 17, Comment d. Third, some courts are concerned that a negligence standard might be too forgiving of a small manufacturer who might be excused for its ignorance of risk or for failing to take adequate precautions to avoid risk. Negligence, which focuses on the conduct of the defendant-manufacturer, might allow a finding that a defendant with meager resources was not negligent because it was too burdensome for such a defendant to discover risks or to design or warn against them. The concept of strict liability, which focuses on the product rather than the conduct of the manufacturer, may help make the point that a defendant is held to the expert standard of knowledge available to the relevant manufacturing community at the time the product was manufactured. Finally, the liability of nonmanufacturing sellers in the distributive chain is strict. It is no defense that they acted reasonably and did not discover a defect in the product, be it from manufacturing, design, or failure to warn. See Comment e.
Thus, “strict products liability” is a term of art that reflects the judgment that products liability is a discrete area of tort law which borrows from both negligence and warranty. It is not fully congruent with classical tort or contract law. Rather than perpetuating confusion spawned by existing doctrinal categories, §§ 1 and 2 define the liability for each form of defect in terms directly addressing the various kinds of defects. As long as these functional criteria are met, courts may utilize the terminology of negligence, strict liability, or the implied warranty of merchantability, or simply define liability in the terms set forth in the black letter. See § 2, Comment n.
b. _Sale or other distribution_. The rule stated in this Section applies not only to sales transactions but also to other forms of commercial product distribution that are the functional equivalent of product sales. See § 20.
c. _One engaged in the business of selling or otherwise distributing_. The rule stated in this Section applies only to manufacturers and other commercial sellers and distributors who are engaged in the business of selling or otherwise distributing the type of product that harmed the plaintiff. The rule does not apply to a noncommercial seller or distributor of such products. Thus, it does not apply to one who sells foodstuffs to a neighbor, nor does it apply to the private owner of an automobile who sells it to another.
It is not necessary that a commercial seller or distributor be engaged exclusively or even primarily in selling or otherwise distributing the type of product that injured the plaintiff, so long as the sale of the product is other than occasional or casual. Thus, the rule applies to a motion-picture theater's routine sales of popcorn or ice cream, either for consumption on the premises or in packages to be taken home. Similarly, a service station that does mechanical repair work on cars may also sell tires and automobile equipment as part of its regular business. Such sales are subject to the rule in this Section. However, the rule does not cover occasional sales (frequently referred to as “casual sales”) outside the regular course of the seller's business. Thus, an occasional sale of surplus equipment by a business does not fall within the ambit of this rule. Whether a defendant is a commercial seller or distributor within the meaning of this Section is usually a question of law to be determined by the court.
d. _Harm to persons or property_. The rule stated in this Section applies only to harm to persons or property, commonly referred to as personal injury and property damage. For rules governing economic loss, see § 21.
e. _Nonmanufacturing sellers or other distributors of products_. The rule stated in this Section provides that all commercial sellers and distributors of products, including nonmanufacturing sellers and distributors such as wholesalers and retailers, are subject to liability for selling products that are defective. Liability attaches even when such nonmanufacturing sellers or distributors do not themselves render the products defective and regardless of whether they are in a position to prevent defects from occurring. See § 2, Comment o. Legislation has been enacted in many jurisdictions that, to some extent, immunizes nonmanufacturing sellers or distributors from strict liability. The legislation is premised on the belief that bringing nonmanufacturing sellers or distributors into products liability litigation generates wasteful legal costs. Although liability in most cases is ultimately passed on to the manufacturer who is responsible for creating the product defect, nonmanufacturing sellers or distributors must devote resources to protect their interests. In most situations, therefore, immunizing nonmanufacturers from strict liability saves those resources without jeopardizing the plaintiff's interests. To assure plaintiffs access to a responsible and solvent product seller or distributor, the statutes generally provide that the nonmanufacturing seller or distributor is immunized from strict liability only if: (1) the manufacturer is subject to the jurisdiction of the court of plaintiff's domicile; and (2) the manufacturer is not, nor is likely to become, insolvent.
In connection with these statutes, two problems may need to be resolved to assure fairness to plaintiffs. First, as currently structured, the statutes typically impose upon the plaintiff the risk of insolvency of the manufacturer between the time an action is brought and the time a judgment can be enforced. If a nonmanufacturing seller or distributor is dismissed from an action at the outset when it appears that the manufacturer will be able to pay a judgment, and the manufacturer subsequently becomes insolvent and is unable to pay the judgment, the plaintiff may be left to suffer the loss uncompensated. One possible solution could be to toll the statute of limitations against nonmanufacturers so that they may be brought in if necessary. Second, a nonmanufacturing seller or distributor occasionally will be responsible for the introduction of a defect in a product even though it exercised reasonable care in handling or supervising the product in its control. In such instances, liability for a § 2(a) defect should be imposed on the nonmanufacturing seller or distributor. See § 2, Illustration 2.