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An estimated 3-minute read


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By -

Abhinav Thakur


The rationale of what the American term product liability is to allocate within the chain of distribution any loss caused by using a defective product, presumably with the following inter-related objectives;

a)      To achieve the optimum balance between the interests of the person in recovering the compensation and that of other uninjured consumers in minimizing the price of the product.

b)      To encourage accident prevention by good design and quality control in production, clear warning labels and an effective recall system where dangers subsequently appears. It may also give rise to civil Liability, either strict or Negligence.

Now talking about concept of the corporate veil which means separating directors, promoters, members, and employees from the company. This concept has arisen when a company is treated as separate legal entity when it is incorporated and therefore it is distinct from its directors, promoters, members, and employees. Court has commented and considered this issue of "lifting the corporate veil" from many years. But still no clear set of principles has emerged and it is difficult to predict when the courts will disregard the separate entity principle. The main emphasis of this paper is to relate the concept of lifting corporate veil from Product Liability. In Indian perspective, Product liability law famously called as “products liability”, which means to govern the liability of manufacturers, wholesalers, distributors, and vendors for injury to a person or property caused by dangerous or defective products. Main goal and objective of product liability laws is to help in protecting consumers from dangerous or defective products, while holding manufacturers, distributors, and retailers responsible for putting into the market place products that they knew or should have known were dangerous or defective. These are laws which deal with product liability:-

The Consumer Protection Act, 1986 was enacted for better protection of the interests of consumers. Consumer Protection Act imposes strict liability on a manufacturer, in case of supply of defective goods by him, and a service provider, in case of deficiency in rendering of its services.

The laws which are related with product liability are constantly evolving in India by way of judicial interpretations and amendments because nowadays it is becoming one of the most important socio-economic legislations for the protection of consumers. Now The Courts, in India, also started awarding compensation and damages which are more punitive than compensatory in nature


Comparative Study of Lifting of Corporate Veil in Product Liability in USA and Europe

The no fault liability in the case of product liability, Directive of Europe cannot be extended to distributors to secure, if they have committed negligence at their part they should must held liable.There are several instances in Europe where corporate veil is lifted in product liability to protect the interest of consumers. Product liability is that part of law in which the injuries caused to the public by the products sold or supplied by manufacturers, suppliers, distributors, retailers, and others who make products available are held responsible for that act. Product liability can be also refers as a legal claims in which an injured party may recover some type of monetary compensation from the seller or manufacturer of a product. And product liability litigation arises from a range of circumstances in which a specific product or product use comes under examination. Analysis of product liability claims normally involves determining how the product was used, what customers expected of the product, what representations were made to customers about the product, and the product's failure rate.
Before the 1980s, no European country had adopted a comprehensive product liability regime and it was left to the courts to the compensation of damage caused by products. They did so using traditional legal devices, mainly negligence liability. Even though the courts tried to bend the rules so as to ease the path to compensation, it was widely felt during 1970s across Europe to get an adequate legal answer to save society from harmful consumer products........Full Article
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