Is Your Business Strictly Liable for Injuries to Customers?
If you sell products in person or online, you should know about strict liability. Strict liability, in the context of products liability injury law, makes those who distribute, manufacture, or sell a product liable for injuries caused when and if that product malfunctions and hurts someone.
Your business may not know anything about the product. You didn’t put it together, manufacture it or make any warranties or promises to your customers. Your business simply put a given product on its shelf or on its website or other online platform and sold it—and yet you, simply having sold that product, can be liable to the end user if that product malfunctions and causes injury. And if the end user is seriously injured, you can be sued, and end up owing a lot of money.
Amazon Fights Against Strict Liability
Amazon recently challenged this long helped concept, when it was sued after a computer battery exploded, injuring a customer. The product was sold by Amazon under a program called “fulfilled by Amazon.” Under the program, Amazon keeps a product in its warehouse, and ships from its warehouse when the product is ordered. Amazon does not directly manufacture or sell the product (although it does get a part of the sale proceeds).
Because Amazon did not sell or manufacture the product, it argued it could not be held liable under a strict liability theory. Amazon’s position is that it was more like a flea market, or a clearinghouse, creating a platform where third parties sell their goods.
However, a California court disagreed. The court pointed out that Amazon received fees from the sale, controlled how it was shipped, and created the conditions that made it possible for the item to be purchased.
The original manufacturer of the battery that exploded had no control of the sale, and in fact, likely didn’t even know the sale ever occurred until it received any payment for the sale, according to the court.
Changes Could be Coming
Amazon is now appealing the decision. If it is unsuccessful, its business model could change forever. Amazon likely does not want to be liable for every single product that it sells, or just ships.
Amazon may opt to refuse to ship items from unreliable or unknown manufacturers. It may opt to require that manufacturers live up to certain safety standards, or carry insurance that protects Amazon.
These additional measures cost money, and it’s likely that cost will be passed on to the consumer. But the real lesson here is that if you are a seller—no matter how little your involvement is in the manufacture of the product, and whether in person or online—you need to take measures to protect yourself from product liability claims.