Product Liability

Product Liability / Produkthaftung

October 26, 2022

Product liability is the manufacturer's liability for damage caused to the end user by the use of a defective product. For example, if a defective power supply is installed in a television, resulting in an apartment fire for the purchaser, then the customer can hold the manufacturer liable for the fire damage incurred.

The claims for damages arise regardless of whether a contract was concluded between the manufacturer and the end customer. The idea of product liability is that the person who manufactures products or places them on the market has a duty to ensure that these products do not pose a risk.

As with other areas of consumer protection, the European Union (EU) is also concerned with the area of product liability. A corresponding directive harmonizes regulations on product liability for all EU member states. On September 28, 2022, the Commission presented a draft for a new product liability directive with the aim of modernizing the current directive from 1985. In Germany, product liability is regulated by the Product Liability Act (ProdHaftG) and the German Civil Code (BGB).

Product Liability Act

According to the Product Liability Act, one can claim compensation from the manufacturer for damages caused by defective products to life, limb, health and property (§ 1 I ProdHaftG). In order for a claim for damages based on product liability to arise, various requirements must be met. First, the product must already have been defective when it was placed on the market. A product in the sense of § 2 ProdHaftG is any movable thing, even if it is part of another thing, so for example also electricity. Only objects that are immovable from the outset (e.g. land) do not fall within the scope of the law. According to § 3 ProdHaftG, a defect exists if the safety expectations of an average consumer, which are justified under consideration of all circumstances, are not fulfilled. If these conditions are met, the manufacturer of the defective product is liable. It does not matter whether the manufacturer is responsible for the product defect or not. Product liability under the Product Liability Act is a strict liability, i.e. a so-called strict liability. The ProdHaftG is mandatory law and, according to § 14 ProdHaftG, can neither be excluded nor limited by contract.

The manufacturer is liable for personal injury up to an amount of € 85 million (§ 10 ProdHaftG). In addition, § 8 ProdHaftG grants the injured party a claim for compensation for pain and suffering. Damage to property must only be compensated insofar as property other than the product itself has been damaged. For damage to the product itself, the regulations on liability for defects in the BGB are relevant. In the case of damage to property, the injured party must pay for damage up to an amount of 500 euros (§ 11 ProdHaftG). There is no upper limit for liability for property damage.

Producer liability

In addition to the product liability under the ProdHaftG, the injured party caused by a defective product has a claim for damages under § 823 I BGB. Unlike the Product Liability Act, the producer's liability in tort generally presupposes that the manufacturer is at fault.

Product liability and producer liability coexist in claim competition, § 15 II ProdHaftG. Product liability therefore does not exclude liability under § 823 BGB. The producer liability of the BGB is particularly important for cases in which the ProdHaftG does not fully cover the damage. For example, according to §§ 10, 11 ProdHaftG, there are maximum liability amounts and an excess.