Legal Article - Business Law

Product Liability Safety Laws in the Motor Retail Industry

Much publicity has been given to the product liability safety laws currently in force in the United States. Similar laws have now been adopted by the EEC and embodied within the UK in the form of the Consumer Safety Act 1987.

Whilst the provisions are on the Statute Book they have not yet been fully taken up. They are, in essence, a disaster waiting to happen and it will only be a matter of time before a dealership finds themselves at the centre of a high profile court case.

There are also proposals laid down for the extension of these provisions, which currently only apply to goods, into the realm of services.

Regulations on Unsafe Vehicles and a Motor Traders Liability

Regulations on Unsafe Vehicles and a Motor Traders Liability

Where any damage is caused by a defect with a product then liability for the unsafe vehicle falls on one of the following:

• Producer / Manufacturer

• Person putting their name on a product and therefore holds themselves out as a producer / manufacturer

• Importer – importing from outside the EEC

• Supplier

In most instances you will be the supplier of the vehicles and provided you can identify the manufacturer (even if he has gone out of business) within a reasonable time from a request to do so by the person who has suffered the damage, then you will generally have no further liability other than a simple civil law claim under the Sale of Goods Act.

A defective product is one with which its safety is not as a person is generally entitled to expect.

In addition to these provisions there is a requirement within the General Product Safety Regulations that requires any Distributor to ensure that any safety information on product risks, and precautions to be taken to avoid the same, are passed on to consumers and, if necessary, provide adequate warnings where the risk is not immediately obvious.

It is particularly important to explain the controls and performance characteristics of a vehicle to a customer before allowing them to drive it particularly in the case of test drives or courtesy vehicles. 

It is not uncommon for enthusiastic drivers to use a test drive to check out the performance of a car that they wouldn’t be able to afford. To give legal protection we would recommend a test drive check sheet is completed and these are available from Lawgistics.

It is important to check your insurance cover both for the supply of unsafe goods and for test-drives to ensure you are complying with the insurance terms. 

We are aware of one client who allowed a customer to test drive a vehicle on his own. The driver crashed the car but the client had invalidated the insurance by letting the customer use the car on his own.

Author: David Combes

Published: 16 Mar 2011


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