In law, liability refers to legal responsibility. Businesses are liable to pay money -- called damages -- to individuals the company has wronged. Individuals who have been wronged by a company can sue the business and a court decides whether the company is liable and how much in damages liable companies must pay. Sometimes, a product causes a legal wrong, which is called product liability. Legal wrongs are called torts. Strict liability is a legal term used in tort cases where a defective or inadequate product has caused harm to a consumer.
Disadvantages for Companies
Strict liability is a type of product liability that holds the selling company liable for defective or inadequate products. Strict liability is liability without fault, meaning that the seller of the product is responsible for damages even if the tort wasn’t the company’s fault. Strict liability only applies to businesses officially engaged in selling or leasing products; private sales are not applicable. Strict liability is only enforced in some states and each state that has strict liability might have variations on the law.
Advantages for Companies
All parties in the product’s chain of distribution can be held liable for the product’s tort. This includes retailers, manufacturers, distributors and wholesalers. This means that in some cases the liable company might share or transfer the burden of damages by suing other members of the chain of distribution. However, the liable party must prove the negligent party among the members of the chain of distribution. Companies under government contract are usually exempt from strict liability tort damages.
Advantages for Consumers
Under strict liability, injured users can sue for property and personal damages. Strict liability covers the purchaser and all users of the product. Users include anyone who actively or passively enjoys the benefits of the product. Users might include the purchaser’s family, friends, neighbors or colleagues. In some cases, even bystanders can recover damages as users.
Disadvantages for Consumers
In several situations, the purchaser and users cannot sue for strict liability tort. A known “general danger” is one such situation. Sometimes, the inherent danger of a product -- such as a knife or a gun -- is general knowledge. Companies are not responsible for failing to warn consumers of generally known dangers. Companies are also not liable in situations where the consumer has misused or modified the product in such a way as to cause an injury.