Article

Design defects

Design defects are one type of product defect. They occur when a product is inadequately planned in such a way as to pose unreasonable hazards to product users. The basis underlying this theory of defect is that the product manufacturer should have adopted a design that would have reduced the risk of accidental injury.

Unlike production defects, which only apply to products that deviate from established manufacturing requirements, design defects will apply to an entire product line that is built in conformance with the flawed design. This can expose many people to a hazard.

This report provides an overview of the basic types of design defects, legal theories under which product liability lawsuits alleging defective design are brought, tests used by courts to determine defectiveness, and recommendations for reducing liability for defective design.

Types of defects

In general, two broad types of design defects can be distinguished: inadvertent design errors or conscious design choices.

Inadvertent design errors are those that result because the designer failed to adequately appreciate the implications of the various design elements or to employ commonly understood and accepted engineering techniques of safe product design. These types of design errors are like manufacturing errors because they may be measured against an objective standard. Common types of inadvertent design errors include specifying a material or component that was inadequate for the product or failing to identify a concealed hazard in the product.

Design errors involving conscious design choices result from a product designer’s decision to accept the risks associated with the intended design in exchange for increased product utility, reduced costs or other business objective that the designer believes justify conscious acceptance of the risks. These cases are more difficult to assess because the defect cannot be judged against an objective measure of defectiveness. Instead, it must be judged based upon the surrounding circumstances at the time the product was manufactured and whether a reasonably prudent manufacturer would have acted the same way. One common type of claim resulting from conscious design choices is the failure to provide a needed safety device.

Theories of liability

Design defect cases may be brought under each of the main theories of liability: negligence, strict liability or breach of warranty. In general, under negligence theory, the court will evaluate whether the manufacturer exercised reasonable care in the adoption of a safe plan or design for a product. Under contract theories, the court will evaluate whether the manufacturer breached an express or implied warranty regarding the fitness or suitability of the product to the product user. Under strict liability theory, the court will evaluate whether the product itself was in an “unreasonably dangerous condition,” irrespective of the conduct of the manufacturer.

Tests for defectiveness

The determination of defectiveness is very complex, and there is no single rule that applies to all cases. Jurisdictions vary widely in the specific tests used, and within a jurisdiction, these tests may vary depending upon the legal theory under which the case is brought, or the type of product involved.

In general, courts will judge the adequacy of a product’s design using one of two basic standards or some combination of these standards. They are:

  • Risk-utility analysis
  • Consumer expectation

Risk utility

In a risk-utility analysis, the court will balance the likelihood of harm against the benefits of taking precautions against the harm. If the likelihood of harm outweighs the benefit, the manufacturer will be found liable. This test is followed by most jurisdictions and was adopted by the Restatement (Third) Torts: Products Liability.

Factors that courts have considered include:

  • The usefulness and desirability of the product to the user and the public
  • The likelihood that the product will cause injury and the probable seriousness of the injury
  • The manufacturer’s ability to eliminate the unsafe character of the product without impairing its usefulness or making it too expensive to maintain its utility
  • The user’s ability to avoid the danger by the exercise of care in the use of the product
  • The user’s anticipated awareness of the danger inherent in the product and the avoidability of such danger, because of public knowledge of the obvious condition of the product or of the existence of suitable warnings and instructions
  • The state of the art at the time that the product was manufactured
  • The feasibility of the manufacturer spreading the loss by setting the price of the product or carrying liability insurance

These are sometimes called the “Wade factors,” named after an early influential product liability commentator. The specific tests followed will vary depending upon the court. Some courts may focus on one or more particular factor(s), while other courts may look at the totality of the factors.

The risk-utility test described in Section 2(b) of the Third Restatement requires that a plaintiff prove that “the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design.” While this “reasonable alternative design” requirement has not been uniformly followed by all courts, it can be essential in courts that have adopted the requirement.

Consumer expectation

Under a consumer expectation analysis, a product will be found defective if it does not meet the reasonable expectations of an ordinary consumer as to its safety. The test has its roots in the warranty remedies of contract law and is analogous to the Uniform Commercial Code’s warranty of fitness and merchantability.

A commonly referred to statement of the test comes from Restatement (Second) of Torts, §402(A), comment (l). This states that a product is in defective condition when: “The article sold must be dangerous to an extent beyond that which would be contemplated by the ordinary consumer that purchases it, with the ordinary knowledge common to the community as to its characteristics.”

The test is objective. A court will look to the expectations of the ordinary person who uses the product, rather than the individual plaintiff or the public in general.

Under the traditional statement of the test, there is no recovery for generally known danger. Some courts have broadened the scope of liability by being very reluctant to find that a risk is generally known or obvious. This is done by evaluating whether the specific accident scenario was obvious to the consumer, rather than whether the general risk of the product was obvious.

A small number of courts use this test as the primary test for design defect. Others restrict this test for simple product designs or accident mechanisms. Some jurisdictions use consumer expectation as an element of, or in combination with, a risk-utility analysis.

Risk control recommendations

The primary risk control recommendations for preventing product defects are to take steps to ensure that product safety is evaluated in the design of the product and that specific steps undertaken to evaluate and address potential product safety hazards are well documented.

Product safety in design

Organizations designing products should:

  • Ensure that technical specifications consider product safety
  • Ensure that products comply with all applicable safety standards and regulations
  • Perform hazard analyses on potential product designs using accepted hazard assessment techniques (e.g., failure modes and effects analysis or fault tree analysis)
  • Incorporate customer feedback into design planning to determine if complaints are an indication of design flaws
  • Conduct formal, systematic, and critical design reviews at prescribed intervals throughout the product development process to reevaluate product designs
  • Address any safety concerns identified by hazard analyses or design reviews
  • Control design changes that occur

Documentation

Product safety activities during product design should be well documented. The documentation should be able to demonstrate the formal activities performed by the organization to address product safety. In addition to identifying the specific activities that occurred, the documentation should also substantiate why actions occurred, for example, why one design solution was chosen over another. Documentation should be maintained in accordance with company document retention policies.


See Product design reviews on Hanover’s Risk Solutions website for more specific loss control recommendations regarding product design.

References

  1. 63A Am. Jur. 2d, Products Liability: Design Defects §§ 904-1107, Westlaw (database updated August 2018).
  2. American Institute for Chartered Property Casualty Underwriters/Insurance Institute of America. Property and Liability Risk Control, 2nd edition. Malvern, PA: AICPCU/IIA, 2008.
  3. American Law Institute (ALI). Restatement, Third, Torts: Product Liability. Philadelphia, PA: ALI, 1998.
  4. Bass, Lew. Managing for Products Liability Avoidance, 3rd edition. Chicago, IL: Stacey Caywood, 2004.
  5. Eades, R. Mastering Products Liability. Durham, NC: Carolina Academic Press, 2008.
  6. Owens, David. “Design Defects.” 73 Mo. L. Rev. 291 (2008).
  7. Wilkov, S. and Elisa Arko. "No Alternative Design: An Often-Overlooked Defense to Product Liability Claims.” For the Defense 47-52 (April 2017).

Copyright © 2018, ISO Services, Inc.

This material is provided for informational purposes only and does not provide any coverage or guarantee loss prevention. The examples in this material are provided as hypothetical and for illustration purposes only. The Hanover Insurance Company and its affiliates and subsidiaries (“The Hanover”) specifically disclaim any warranty or representation that acceptance of any recommendations contained herein will make any premises, or operation safe or in compliance with any law or regulation. By providing this information to you, The Hanover does not assume (and specifically disclaims) any duty, undertaking or responsibility to you. The decision to accept or implement any recommendation(s) or advice contained in this material must be made by you.

LC NOV 2018-337
171-9128 (6/19)