Chapter 11: Liability for product distribution

Question 1

Which Legal rule apply:

• When selling goods in Switzerland?
• When selling goods to another country?

Answer 1

When selling goods in Switzerland, the CO applies.

When selling goods to another country, the United Nations Conventions on Contracts for the International Sale of Goods (CISG) may be applied (instead of the CO)

Question 2

What is the aim of the CIGS?

Answer 2

To harmonise the right applicable to international purchases.

Question 3

When is the CISG applicable?

Answer 3

Material scope of application:
Sale of goods or supply of goods to be manufactured or produced.

Territorial scope of application:

(a) Branch offices of sellers and buyers are located in different contracting states, or
(b) the law of a contracting state shall apply.

Question 4

Does the CISG have to be designated as applicable by the parties or does it automatically apply if the conditions are met?

Answer 4

It applies automatically as it forms part of Swiss Law.

The contracting parties may exclude the application.

Question 5

Fintech AG with residence in Switzerland enters a contract on delivery of spare parts for machines with Electro AG with residence in Germany. Which law is applicable to the contract?

Answer 5

The CIGS is applicable. It is a sale contract (material scope of application) between two parties whose places of business are in different states (territorial scope of application).

Question 6

The contract contains a clause “the contract is governed by Swiss Law”. Is the CIGS applicable to the contract?

Answer 6

Yes, the parties must explicitly exclude the application of the CIGS. the CIGS is applicable as part of the Swiss Law.

Question 7

What is the main difference between the CO and CIGS?

Answer 7

The CIGS recognise a uniform system of contractual infringement.

There is no distinction between delay and improper performance.

Question 8

What are the CIGS claims for a major breach of contract?

Answer 8

• Avoidance of the contract/rehibition (art. 49 p. 1 lit. a CISG)
• Remedial action (art. 46 p. 3 CISG)
• Delivery of a substitute good (art. 46 p. 2 CISG)
• Reduction of price (art. 50 CISG)
• As well as compensation claims pursuant to articles 74-77 CISG

Question 9

What are the CISG’s claims for an insignificant simple infringement?

Answer 9

• Remedial action (art. 46 p. 3 CISG)
• Reduction of price (art. 50 CISG)
• As well as compensation claims pursuant to articles 74-77 CISG

Question 10

What two legal grounds of liability are to be distinguished if a product cause damage to the purchaser?

Answer 10

Contractual liability and non-contractual liability.

Question 11

Norman drives with his bicycle into Maria who suffers an injury. Does Maria have a contractual or a tort claim?

Answer 11

Maria has a tort claim. There is no contract between Norman and Maria.

Question 12

What kind of liability is available if a product does not harm the purchaser, but other persons?

Answer 12

Insofar as the injured persons do not have a contract with the manufacturer/distributor, only the external liability is available.

Question 13

In the following cases, determines whether it is a contractual, a non-contractual or a mixture of the two claims:

a) A teapot breaks because of the hot water and hurts the customer
b) A craftsman drives into the customer’s garden fence
c) A craftsman drives into his client’s neighbor’s garden fence
d) An ordered package has still not arrived

Answer 13

a) Contractual and non-contractual claim
b) Contractual and non-contractual claim
c) Non-contractual claim
d) Contractual claim

Question 14

With deficiencies in the product itself, can non-contractual claims for liability be claimed?

Answer 14

No. For defects of the product itself, only the contractual claims (warranty claims) are available.

Question 15

What are the four general requirements for the non-contractual liability?

Answer 15

1. Illegality (violation of a recognised due diligence/ duty of care.
2. Legal infringement (injury to a person or damage to property; only in exceptional cases pure pecuniary losses)
3. Adequate causality
4. Fault (no independent meaning)

Question 16

What kind of non-contractual liability types of product distribution do you know?

Answer 16

• General fault-based liability (general clause in art. 41 CO and liability of the producers pursuant to art. 55 CO)
• Liability according to the Swiss Product Liability Act (PrLA)

Question 17

Which are the differences between the liability of employers according to article 55 CO and the liability for auxiliaries according to article 101 CO?

Answer 17

The liability for auxiliaries (article 101 CO): contractual liability; it is only an attribution of liability to the debtor for damaging acts of an auxiliary.
Liability of employers (articles 55 CO): Liability for torts; the employer breaches his duty of care, he has therefore the possibility to prove that he complied with his duty.

Question 18

Which aspects can be distinguished in the liability of employers (article 55 CO) with regards to the duty of care.

Answer 18

Diligent selection, instruction and supervision of the auxiliary; employment of suitable material, adequate organisation of the firm as well as final inspection of the produced goods and their ongoing monitoring on the market.

Question 19

After finishing a paint job, the employee returns to his firm Colour AG. He places the tins with the colour on the back of the pick-up-truck without closing the trunk. When entering a curve, the tin falls off and hits the front window of the following car. Which claims exist?

Answer 19

The injured driver has a claim based on article 55 CO against Colour AG. The employee was on his way back from a paint job and acted therefore within his business duties. In addition, the employee is liable according to article 41 CO.

Question 20

In terms of product liability, when is a manufacturer in violation of its duties of care?

Answer 20

1. Design fault
2. Manufacturing fault
3. Instruction fault
4. Error of observation

Question 21

What is a breach of the monitoring duty in the producer liability pursuant to article 55 CO?

Answer 21

The producer has to monitor the product also after the sale and recognise new product dangers or risks.

Question 22

What is a construction defect and what is a manufacturing defect?

Answer 22

A construction defect concerns the design and development of a product.
A manufacturing defect concerns a fault in the production.

Question 23

The firm Slimm AG introduces a new body oil fighting cellulite. 5 years later it is discovered that an ingredient can cause cancer. Is Slimm AG liable according to the producer liability?

Answer 23

If the danger wasn’t known by the state-of-the-art of science and technology at the time the product was put into circulation, the firm is not liable.

Question 24

Which are the requirements for a liability according to the Product Liability Act “PrLA”?

Answer 24

The requirements are:

• defective product
• adequate causality
• personal injury or property damage

Question 25

Which company strategies can be used to minimise a liability risk when selling products?

Answer 25

- Careful internal organisation - Contractual risk hedging (i.e. against the manufacturer) - Comprehensive documentation (to improve evidence situation)

Question 26

For which types of damage exists a liability according to the Product Liability Act "PrLA"?

Answer 26

The liability exists only in cases of personal injuries or property damage; in the case of property damage liability is only given if the product is intended for private use or consumption. There is no liability however for the damage to the defective product in itself.

Question 27

What is the difference with regards to so-called "outliers" between the producer liability (55 CO) and the PrLA?

Answer 27

The liability for outliers exists only under the PrLA not however under the producer liability (55CO).

Question 28

On which provision are producer liability and product liability based?

Answer 28

The producer liability is based on the liability of employers (55 CO) as developed by case law. The product liability is based on the PrLA which has been adopted from the European regulation.

Question 29

What is the difference between the producer liability (55 CO) and the PrLA?

Answer 29

``` Producer liability (55 CO): liability also for property damages which are not intended for private use in consumption; in addition, there is a product monitoring duty. Product Liability Act: liability also for outliers; damage to property up to an amount of 900 CHF must be borne by the injured person; liable is also importer of the product. ```

Question 30

Max, a bicycle manufacturer, produces 5000 bikes daily. Tony buys one of the bicycles. On his first trip, the frame gets bent. All of the other bicycles produced by Max seem to be without this defect. Which claim has Tony?

Answer 30

Tony has no claim under the PrLA because the damage of the product itself is not covered by the act. The same is valid for the producer liability (55 CO). In addition, it is a case of an outlier which is not covered by the producer liability (55 CO). Tony has a contractual warranty claim according to article 197 et seq. CO.

Question 31

Tony buys a bicycle from the manufacturer Max. On his first ride, the brakes fail and he drives into Marlene. He ends up in a tree. All of the bicycles of this model show the same defect. Which claim has Tony?

Answer 31

Tony can base his claims on the producer liability (55 CO). Alternatively, he has also contractual warranty claims. These are concurring claims. For the damage of the bicycle, there is only a contractual warranty claim.