Legal Boundaries of Product Liability: The Product Self-harm

Josephine Malver

Student thesis: Master thesis

Abstract

This thesis discusses how a company that produces sub-products can be subject to product liability or deficiency liability or absolves him of a liability, when their sub-product causes damage to the final product. The focus is on a company that sells a part product to a finished product manufacturer, which integrates the part product into its own product that is resold to the end user. This part product then causes damage to the total product. The legal analysis has primarily been to analyze the differences between the product liability and the defect liability, which arise from either the components or the ingredients. The rules differ in essential areas. A prerequisite for establishing product liability is that the product is defective and has caused damage to something other than itself. Conversely, there is a deficiency liability when the product is subject to defects and deficiencies that do not cause harm to anything but themselves, the so-called self-harm. Based on this, the need for contract management and insurance coverage seems to be relevant to companies that produce part products. Liability regulation in sales and delivery terms will have an impact on coverage. The economic analysis has analyzed that product liability rules not only have a preventive effect, since the general market forces specifically encourage companies to improve product safety. A principal-agent relationship arises between the sub-producer and the finished product manufacturer when they contract. It is found that the sub-producer has an incentive to commit moral hazard, since the risk in the sales and delivery conditions is allocated to the finished goods manufacturer. The principal and agent theory is extended to also analyze the risk allocation between the sub-producer and the insurance company, where it is found that the disclaimers have a negative effect on the insurance coverage as the sub-producer does not obtain coverage.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2020
Number of pages73
SupervisorsHenrik Lando