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Faizan
In business law, liability pertains to company's legal responsibility for selling a defective product or service. Strict liability refers to civil lawsuits where a faulty or poor-quality product has caused physical or mental harm to a customer. Strict liability cases require proof that the defective product caused the injuries, but they don't require proof that the manufacturer's negligence was directly responsible for those injuries. Strict liability has both advantages and disadvantages for manufacturers,
Positive Aspect: Higher Product Quality
Strict liability promotes the idea that manufacturers should check that their products are produced in a safe and consistent manner. When manufacturers know that their release of an unsafe product could lead to costly litigation, they likely will take extra care to ensure that their product meets safety standards. This idea fuels every stage of the product development process, from design and prototyping in automobiles to clinical trials for pharmaceuticals.Higher-quality products can improve brand loyalty and company reputation.
Negative Aspect: Higher Production Costs
All the additional safety considerations in the design and testing phases lead to higher production costs. The company incurs these costs from developing safety procedures, purchasing additional safety testing equipment and testing products before their release. Manufacturers may choose to pass these extra costs on to their customers in the form of price increases. The price increases could turn customers away from the safer product, which would cost the company in decreased revenue.
Positive Aspect: Higher Burden of Proof
Plaintiffs in strict liability cases are held to a higher burden of proof than in simple negligence cases. The plaintiff must prove that the company's actions when manufacturing the product contributed to its defects and that the defective product caused the plaintiff's injury when properly using the product. If the company can refute claims that their manufacturing process was substandard or that the plaintiff's injuries resulted from the proper use of the product, the company would not be held liable under strict liability laws.
Negative Aspect: Limits on Innovation
Companies that must cope with strict liability laws may be deterred from creating new and innovative products. This deterrence stems from fears of being targeted for lawsuits if the new products do not perform as expected. Investors may also be less willing to invest in companies that may be targeted by strict liability lawsuits. If a user of a new product suffers an injury from using the product, the company can be found liable for all negligent and non-negligent injuries suffered by the user.
Positive Aspect: Higher Product Quality
Strict liability promotes the idea that manufacturers should check that their products are produced in a safe and consistent manner. When manufacturers know that their release of an unsafe product could lead to costly litigation, they likely will take extra care to ensure that their product meets safety standards. This idea fuels every stage of the product development process, from design and prototyping in automobiles to clinical trials for pharmaceuticals.Higher-quality products can improve brand loyalty and company reputation.
Negative Aspect: Higher Production Costs
All the additional safety considerations in the design and testing phases lead to higher production costs. The company incurs these costs from developing safety procedures, purchasing additional safety testing equipment and testing products before their release. Manufacturers may choose to pass these extra costs on to their customers in the form of price increases. The price increases could turn customers away from the safer product, which would cost the company in decreased revenue.
Positive Aspect: Higher Burden of Proof
Plaintiffs in strict liability cases are held to a higher burden of proof than in simple negligence cases. The plaintiff must prove that the company's actions when manufacturing the product contributed to its defects and that the defective product caused the plaintiff's injury when properly using the product. If the company can refute claims that their manufacturing process was substandard or that the plaintiff's injuries resulted from the proper use of the product, the company would not be held liable under strict liability laws.
Negative Aspect: Limits on Innovation
Companies that must cope with strict liability laws may be deterred from creating new and innovative products. This deterrence stems from fears of being targeted for lawsuits if the new products do not perform as expected. Investors may also be less willing to invest in companies that may be targeted by strict liability lawsuits. If a user of a new product suffers an injury from using the product, the company can be found liable for all negligent and non-negligent injuries suffered by the user.
Posted in: Business Insurance
