As a business owner, you must learn to navigate sometimes murky waters, especially if treading those waters involves the risk of legal liability. Generally, liability depends on the degree of fault. Strict liability, however, is a particular type of action that doesn't require proof of fault. Its implications for businesses often occur in product manufacture or sale.

Strict Liability

Assume the XYZ Corporation manufactures lawnmowers. Somehow, during the manufacturing process, one of XYZ’s lawnmowers became defective. If a consumer purchases the defective lawnmower and then is injured by it, that consumer may sue XYZ for negligence. XYZ could defend a traditional negligence cause by arguing that it used reasonable care to produce the lawnmower and had no knowledge of the defect. If the consumer sues on a products liability claim (a strict liability tort), XYZ could be found liable, even if XYZ used reasonable care to produce the product -- the degree of care or fault is not necessary to prevail in strict liability cases.

Advantages – Product Quality

At first thought, holding someone responsible for an injury even though that person was not actually at fault for the injury may seem imbalanced and unfair. Policy dictates that manufacturers are in the best position to produce safe and reliable products. Strict liability therefore encourages manufacturers to ensure that their products are made in a safe and reliable fashion and to test the products before selling them.

Disadvantages – Price Point for Consumers

The disadvantages of strict liability for businesses are relatively clear: the business can take all reasonable precautions and still be potentially liable for harm caused by the product. But the issues affect consumers as well. The costs associated with research, design, testing and other precautionary measures, such as employee training or insurance, are felt in higher costs of goods for particular products.

Prevailing at Court

If fault makes no difference in a strict liability case, plaintiffs need to prove two things to prevail: causation and damages. In the defective lawnmower case, even if the lawnmower was defective, if the consumer was injured because he was not using the lawnmower correctly – meaning that the defect didn't cause the injury – XYZ Corporation may defend the lawsuit on those grounds.