Product Liability Law, To what extent is a manufacturer's responsibility for defective products?

Law firm Veat received a request from e-commerce retail company A (hereinafter referred to as "the client") to review the scope of the manufacturer’s responsibility for defective products.

As e-commerce has become more active, various products are being directly sold to consumers through online platforms. Particularly, when purchasing products online, consumers make purchase decisions without being able to directly check the goods, which often results in consumer damage due to defective products. Therefore, it is a very important legal issue to determine what responsibilities a manufacturer bears when damages occur due to defective products.

Law firm Veat reviewed the client’s specific circumstances, focusing on statutory product liability under the Civil Code, liability for breach of contract, and damages liability under the Product Liability Act, and advised the client on appropriate legal response measures by reviewing the manufacturer's liability under the Civil Code and Product Liability Act.

Product Liability Act

Manufacturers are liable to compensate for damages to those who have suffered harm to life, body, or property due to defects in their products. This is stipulated in Article 3, Paragraph 1 of the Product Liability Act, and this provision defines the legal responsibility that manufacturers must bear for damages arising from product defects.

That is, the Product Liability Act does not apply when the damage caused by a product defect is limited to the decrease in value of the product itself, but if personal or property damage occurs, the manufacturer is liable for damages. For example, if an electronic device ignites and causes a fire, if the surrounding property or building is damaged, the manufacturer may be liable under the Product Liability Act for strict liability.

This provision has been established with the intention of more robustly protecting consumers and is an important legal device for quickly and substantially compensating for damages caused by defective products.

Statutory Product Liability and Liability for Breach of Contract

When a manufacturer directly sells products, the manufacturer may be liable not only under the Product Liability Act, but also under statutory product liability and liability for breach of contract under the Civil Code.

1. Statutory Product Liability (Civil Code Articles 1618, 1619, and 1623)

Under the Civil Code, a seller is obligated to supply a product that is capable of normal use in accordance with a sales contract, and must bear certain responsibilities if there are defects in the product. The seller cannot be excused from responsibility when the purpose is not achieved due to defects that existed at the time of the contract, and may be subject to damages or contract rescission. Therefore, if a manufacturer directly sells products to consumers, consumers can sue for statutory product liability based on the Civil Code.

2. Liability for Breach of Contract (Civil Code Article 390)

When a manufacturer supplies a defective product, they may be deemed to have failed to properly perform the obligation to perform the sales contract, and may be liable for breach of contract.

If a manufacturer simply supplies parts or products, Article 3, Paragraph 1 of the Product Liability Act on strict liability is central, and the scope of damages is limited to third-party property damage or bodily injury beyond the product itself. On the other hand, if the manufacturer directly sells the product, they may be liable for both statutory product liability and liability for breach of contract under the Civil Code, which may expose them to a wider range of damages and legal risks.

In particular, a comprehensive consideration of the nature of the defect, the scope of the damage, the consumer's usage method, and the existence of warranty clauses in the contract should be given to precisely assess the degree of legal responsibility that the manufacturer actually bears and the scope of damages.

Law firm Veat analyzed the client’s specific business type and product distribution method, and consumer damage cases comprehensively to review the scope of the manufacturer’s responsibility and provided advice to minimize the legal responsibility the client had to bear.

Based on its extensive experience and expertise in the e-commerce sector, Law firm Veat provides proactive and strategic legal services for various legal issues arising in the rapidly changing digital market. In particular, it comprehensively analyzes relevant laws and regulations, such as the Civil Code and Product Liability Act, for key issues related to e-commerce, such as product defects, consumer protection, contract disputes, and product liability, and provides practical and customized legal advice tailored to the client’s business characteristics. Understanding the complexity of online distribution structures and accurately coordinating legal liability allocation structures among manufacturers, platforms, and sellers prevents disputes as well as provides high credibility in post-response.

Law firm Veat provides regular legal counsel services and membership service programs for clients who require regular legal advice in addition to one-time legal advice, so that clients can efficiently receive prompt and professional legal review whenever they need it.

If you need legal advice related to e-commerce, product liability, or statutory product liability, please feel free to contact Law firm Veat.

This case study can also be found on the Law firm Veat blog.

- What is the scope of a manufacturer's responsibility for defective products?

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