When a business sells, distributes, or uses a product, the last thing it wants is to be caught in a costly legal battle over product liability. However, when products cause harm or financial loss, liability becomes a major issue—one that can lead to lawsuits. In business-to-business (B2B) transactions, understanding the difference between strict liability and negligence is critical. The legal framework surrounding product liability dictates whether a business must compensate for damages, even if it did nothing wrong.
If your company is involved in manufacturing, distributing, or selling products, knowing when you could be held responsible—and on what grounds—can help you protect your business and reduce legal risk.
What Is Product Liability in a Business-to-Business (B2B) Context?
Businesses are often involved in complex supply chains, which means a defective product can impact multiple parties, from manufacturers to distributors to retailers. Product liability laws determine who is responsible when a product causes harm.
In B2B transactions, product liability can arise from:
- Manufacturing Defects: Errors in production that make a product unsafe.
- Design Defects: Flaws in a product's design that create risks, even if it is properly manufactured.
- Failure to Warn: Lack of adequate warnings or instructions for safe product use.
When a product issue leads to damages, the affected business may sue the responsible party. Whether the lawsuit is based on strict liability or negligence depends on the circumstances.
What Is Strict Liability in Product Liability Cases?
Strict liability means that a business can be held responsible for a defective product, even if it did nothing wrong. The injured party does not need to prove negligence—only that the product was defective and caused harm.
When Does Strict Liability Apply?
- The product was defective when it left the seller's possession.
- The defect made the product unreasonably dangerous.
- The defect directly caused injury or financial loss.
Example: A business purchases industrial equipment from a manufacturer. A flaw in the machine's design causes an accident, resulting in property damage. Under strict liability, the manufacturer can be held responsible—even if it took reasonable steps to ensure safety.
Key Takeaway: Strict liability makes it easier for injured parties to win claims because they don't have to prove the seller or manufacturer was careless—only that the product was defective.
What Is Negligence in Product Liability Cases?
Negligence in product liability cases means the injured party must prove that the manufacturer or seller failed to take reasonable care in designing, producing, or distributing the product.
How Do You Prove Negligence in a Product Liability Case?
A business claiming negligence must prove:
- The defendant owed a duty of care to ensure the product was safe.
- The defendant breached this duty through careless actions or oversight.
- The breach directly caused damage or injury.
Example: A company sells medical devices but skips proper safety testing. A hospital purchases the devices, and they malfunction, causing financial loss. The hospital could sue for negligence, arguing that the seller failed to ensure product safety.
Key Takeaway: Negligence claims require proof of fault, making them harder to win than strict liability cases. However, they allow businesses to hold specific parties accountable for unsafe practices.
Strict Liability vs. Negligence: Which Applies to Your Case?
When determining whether strict liability or negligence applies, businesses should consider the type of defect, industry standards, and available evidence. Here's how they differ:
- Proof of Fault: Strict liability does not require proof that the manufacturer or seller was careless—only that the product was defective. Negligence claims, on the other hand, require proof that the responsible party failed to take reasonable care.
- Who Can Be Held Liable: Under strict liability, manufacturers, distributors, and sellers can all be held responsible. Negligence cases typically focus on the party that acted carelessly, such as a manufacturer that skipped safety testing.
- Defenses: In strict liability cases, businesses may argue that the product was misused or that the customer assumed the risk. In negligence cases, a defendant may argue that they had no duty of care or that their actions did not directly cause the damage.
- Who Benefits: Strict liability benefits the injured party, as it makes it easier to win a case. Negligence claims benefit the defendant, since proving fault is more difficult.
In strict liability cases, businesses must be cautious when selling products, as they can be held liable even if they followed safety protocols. In negligence cases, businesses have more room to defend themselves but face tougher claims if they ignored safety risks.
How Businesses Can Protect Themselves from Product Liability Lawsuits
If your business manufactures, sells, or distributes products, you must take steps to reduce legal risk.
- Use Clear Contracts: Business agreements should define liability responsibilities in case of product defects.
- Maintain Quality Control: Strict manufacturing and testing procedures can prevent defects.
- Ensure Proper Labeling and Instructions: Warnings should clearly explain potential risks.
- Carry Product Liability Insurance: This can cover legal costs if your business faces a lawsuit.
- Work with an Experienced Business Litigation Attorney: A lawyer can help draft agreements, handle claims, and defend your business.
Facing a Product Liability Issue? We Can Help.
At Ayala Law, we specialize in business litigation and product liability defense, helping companies navigate these complex cases.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
