Description of How Product Liability Law Affects the Organization

Negligence

• Negligence is unintentional tort and one of the most common elements of product liability cases. Companies have a duty to foresee and protect against any damaging consequences of their products. If the company overlooks a potentially damaging consequence of product use, and a person is injured from using the product, then the company is liable for damages. Because of negligence doctrines, companies should always consider all potential consequences of using the product and guard against consumer injury. Companies may not be held liable if the damaging situation was not foreseeable.
  
  

Injury and Damages

• Companies found liable for product-related injuries must pay damages to any injured parties. The amount of money awarded is usually contingent on the extent of the injury, the injured party’s life situation and perceived level of the company’s wrongdoing. In some cases of extreme negligence or wrongfulness, the company may have to pay damages to the injured party and face criminal charges. Under tort law, the product or the company must be shown to be the actual cause of the injury. The company isn’t legally responsible unless the product is the actual cause of the injury.
  
  

Malpractice

• In some organizations, the “product” is actually a service. Professional service providers, such as lawyers, doctors and accountants, have to uphold professional standards. Professional service product liability is called professional malpractice. Professionals are held legally liable for any wrongdoing or negligence that leads to injury as a result of a customer using their services. Professional service providers found liable for injury pay malpractice damages.
  
  

Assumption of Risk

• Sometimes, the injured consumer knowingly engaged in risky behavior that caused her injury. Consumer foreknowledge of risk is known as assumption of risk. A customer voluntarily assuming risk often negates product liability. Organizations that make the consumer aware of risks may not be held liable for damages from injury; so many organizations issue warning statements or label their products with warnings. For example, a cigarette company might place health risk labels on cigarette packs it an attempt to keep itself from being held liable should the smoker become ill as a result of using the cigarettes.