France enacts the 1985 Product Liability Directive - the implications of the French Act which applies to products put into circulation after 21 May 1998

Product liability abroad - France enacts the 1985 Product Liability Directive

GŽrard Honig of Honig Buffat Mettetal considers the implications of the French Act which applies to products put into circulation after 21 May 1998

The 1985 Product Liability Directive has finally been enacted in France. The new system is in addition to French current positive law, and provides facilities for victims on the one hand, as well as new exemptions from liability for manufacturers on the other. However, the multiplication of systems does not favour simplification.

Application of the Act

Persons concerned by the Act

The Act does not define the victims, and does not make any distinction between them.

It merely stipulates that the system of liability applies whether or not the victim is bound by a contract with the manufacturer. Therefore not only the purchaser, but any person having suffered a loss as a result of a product may take action, whether or not he is the user and whether or not he is a trader or an end-user. There is also no differentiation between individuals and companies, who may both take action by virtue of the Act.

The Act places the burden of liability on the manufacturer of the defective products.

"A manufacturer, when trading professionally, is classified as being the manufacturer of a finished product, the producer of raw materials, the manufacturer of a component part".

A manufacturer also includes any person acting in a professional capacity who declares that he is a manufacturer, by marking the product with his name or other distinctive sign, or who imports a product into the European Community for the purposes of selling it or hiring it out, with or without a contract of sale, or any other form of distribution.

Builders are excluded from the category of manufacturer since the legislator did not wish to alter the special system laid down by the Civil Code. The Act does, however, apply to sub-contractors who do not come under that special system.

The supplier (seller, lessor) is responsible for any fault in the product's safety, under the same conditions as the manufacturer.

This represents a widening of liability in relation to the Directive, which provided that a supplier would only be assimilated with a manufacturer in the case where he had not given the victim the manufacturer's name. The Act, however, provides that a supplier's recourse against a manufacturer follows the same rules as for a claim made by a direct victim, but that the supplier must bring his suit within a year of being sued.

Products covered by the Act

The Act applies to any personal estate, even if it is incorporated into real estate.

Products from the earth, breeding, hunting and fishing fall within the field of application of the Act, as does electricity. Gas and water are not mentioned. Gas should normally be treated in the same way as electricity. As concerns water, it can be presumed that it comes under the category of products concerned by the Act if it is subject to industrial treatment.

With the exception of Greece, Luxembourg, Finland and Sweden, all other EC countries have excluded agricultural produce from the field of application of their law enacting the Directive, as considered by Chris Hodges on page 3.

The product must be defective.

The Act defines this concept very precisely:

'A product is considered to be defective if it does not provide the degree of safety that one has the right to expect'.

In order to judge the safety of a product, all circumstances must be taken into consideration, in particular, the presentation of the product, the use to which it may reasonably be put and the date it was put into circulation.

The concept of putting into circulation.

Curiously, this concept was not contained in the Directive, although it is a key one in the Act: a product is put into circulation when the manufacturer voluntarily parts with it, and a product may only be put into circulation once.

The Act provides that the seller of a good, recently acquired by the victim may, like any manufacturer, rely on an extinction of liability, if he can prove that it was put into circulation more than ten years earlier. The ball is therefore in the manufacturers' court to find ways of proving the exact date the product was put into circulation. Apparently the concept of a sole putting into circulation should be taken into consideration for each component in the case of a product made up of several other products. As a result, there is a risk that a complex product may be the object of suits brought at varying dates, according to the date each component was put into circulation by its manufacturer.

Repairable damage

The application of the Act is wider than the Directive: the Act adopts neither the deductible of 500 ECU, nor the distinction between goods intended for private or professional use, except with regard to clauses limiting or excluding liability.

Repairable damage is defined under the Act as a loss resulting from injury to a person or damage to a good, other than the product itself, that is to say not only mental suffering arising from bodily injury but also consequential financial loss such as loss of revenue or profits as a result of a damaged good. However, purely intangible loss not resulting from material damage remains outside the scope of the Act.

Application of the Guarantee

Coexistence of the new system of liability with existing ones

The Act does not affect victims' rights under contractual or extra-contractual law, or under a special system of liability. Victims may thus choose between a system of liability arising from the Directive or traditional system of liability. The Act provides that the manufacturer is liable for its faults and for those committed by persons for whom it is responsible. Manufacturers now bear a dual liability: one for liability without fault as discussed below, in addition to traditional liability for fault.

The system of legal liability

The Act lays down the principle of manufacturers' liability without fault whereby liability arises from the sole fact that a defect in the manufacturers' product caused damage to a victim. This is called the system of objective liability. The victim has the duty to evidence the damage, the defect, and the causal link between the defect and the damage, and a manufacturer may only be exempt from this very heavy responsibility by supplying proof that:

• the manufacturer had not put the product into circulation: he did not part with it voluntarily in order to sell it;
• the defect did not exist at the time the product was put into circulation;
• the product was not intended for sale, or any other form of distribution;
• the state of scientific and technical knowledge at the time the product was put into circulation did not enable discovery of the defect (except when damage is caused by a factor of the human body or by-products of the human body). However, a manufacturer may not rely on this ground for exemption or the next one if, "in the presence of a defect which is discovered within 10 years of the product being put into circulation, it has not taken the appropriate measures to prevent damaging consequences". This instigates an obligation to follow up a product after it has been put into circulation.
• The defect is due to the conformity of the product with legislative or regulatory norms. The Act provides that manufacturers may be responsible for the defect even if the product has been made in conformity with industrial standards or existing norms, and this stipulation merely confirms traditional case law on the subject. The Act does, however, also provide that the manufacturer of a component may be exempt if it can prove that the defect is attributable to the design of the product in which the component was incorporated, or to the instructions given by the manufacturer of such component.
• The traditional fault of the victim must be added to these special reasons for exemption (thereby lightening or removing the manufacturers' liability.)

Scope of liability and periods of limitation

The principle of full liability

The Act does not provide for a financial cap to liability for a manufacturer in the case of bodily injury, on the basis that compensation is not very often limited in French judicial tradition. Only Portugal, Germany and Spain have introduced a financial limit to liability in their laws enacting the Directive.

Limitation of liability clauses

The Act prohibits clauses whose purpose are to exclude or limit liability arising from defective products. It does, however, allow for such clauses in relationships between professionals, and only for damage caused to goods which are not used privately.

Term of liability and statutory time limits

In conformity with the Directive, the Act instigates a dual time limitation: a period of time after which liability expires, simultaneously with a statutory time limitation for bringing action.

• Manufacturers' liability expires 10 years after the product is put into circulation. This time limitation may only be interrupted by a suit, which rules out the other causes for suspension or interruption mentioned in the Civil Code. The wording stipulates, however, that the time limitation does not count if the defect is due to the manufacturer, which implies that after a period of 10 years, the manufacturer may be found liable on the basis of a fault proved against it.

In practice, there will be a delay between the putting into circulation of the product and the end-user taking possession of it, with the result that the length of time available to a consumer for suing the seller or the manufacturer is shortened. It may also prove difficult for the victim, who is not necessarily the purchaser of the product, to find out when it was put into circulation. In addition, there will most likely be problems in application for the incorporation of a product within another.

• The Act also superimposes a statutory time limit of 3 years on the time limit for extinction of liability, which starts to run from the date on which the plaintiff became aware, or should have become aware, of the defect and the name of the manufacturer. Although these time limits may seem short, the coexistence of the common law of liability with this special system preserves ten and thirty year time limitations, which start to run from when the damage occurs or is discovered and not from the date the product was put into circulation.

Conclusions

There exists today a multitude of systems of liability which give rise to two types of suit:

• One type of action is based on existing systems of liability (contract and tort law) which are characterised by longer time limits and the absence of exemption from liability of a manufacturer on the ground of risk of development.
• The other type is based on the new system arising out of the Directive which, as well as providing certain facilities for victims of a defective product (system of objective liability without fault, removal of the distinction between contractual and criminal liability), makes important innovations in that a manufacturer may be exempt from liability because of the risk of development, which was formerly not admitted in French domestic law, and in addition there is a time limitation placed on liability.

The French legislator wanted to preserve the rights of the victims: however, the multiplication of systems in place does not favour simplification or clarification of the matter.

GŽrard Honig is a partner in the firm Honig Buffat Mettetal, 21 Rue Clement Marot, 75008, Paris, France, Tel (04331) 44 43 88 88, Fax (00331) 44 43 88 77

The full text of GŽrard Honig's article is available on request.