7/19/2011

New product liability law in Thailand

New product liability law in Thailand

by

Stephen Frost, Bangkok International Associates

Introduction

“The rule that you are to love your neighbour, becomes in law, you must not injure your neighbour; and the lawyer’s question, who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be - persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.” Lord Atkin in Donoghue v Stevenson (1932) AC 562.

Thailand’s Unsafe Product Liability Act was passed on 13 February 2008 and will come into operation on 23 February 2009. It will impose liability for unsafe products on manufacturers, sellers, importers, and others in the distribution chain. In this article, we examine the basic principles of liability under the Act.

What products are subject to the Act’s requirements? The Act defines products as all kinds of products manufactured or imported for sale, including agricultural products and electricity, but excluding products exempted under regulations. Agricultural products means products from agriculture, including rice farming, fruit and vegetable farming, livestock farming, silk farm, lac (resin) farming, and mushroom farming, but excluding natural products.

What does ‘produce’ mean? Production means manufacturing, mixing, preparing, assembling, inventing, transforming, re-shaping, modifying, selecting, packaging, freezing, and radiating, and includes any other action that gives a similar affect.

Who can make a claim under the Act? A person who suffers damage or loss from an unsafe product, may bring a claim.

What does loss or damage mean? Loss or damage means loss or damage caused by using an unsafe product, whether to life, body, health, mind, or property, but excluding loss or damage to the unsafe product itself. Mental loss means pain, suffering, fear, anxiety, depression, humiliation, or any other mental loss with the same affect.

What is an unsafe product? An unsafe product is one that causes or may cause injury, whether from a manufacturing defect, the design, lack of instructions, storage, warnings, or information concerning the product, or inadequate or unclear information, all in relation to the state of the product, including usage and storage under normal conditions of that product in normal circumstances.

What activities are covered? Under the Act, ‘sale’ includes sale, distribution, or exchange for the benefit of trade, hiring, hire purchase, supplying, and persuading to buy, or exhibiting for the purpose of the foregoing. Importing means importing or ordering products to sell in Thailand.

Who is liable? A business operator who is liable under the Act, means:

(1) A manufacturer or a contractor

(2) An importer

(3) A seller of the product who is unable to identify the manufacturer, the contractor or importer.

(4) A person who uses a trade name, trademark, mark, articles or any means to make others believe that he is a manufacturer, contractor or importer.

All business operators are liable: All business operators are liable for loss or damage caused from an unsafe product, where the product has already been sold to consumers, regardless of whether the loss or damage was caused intentionally or negligently.

The injured person must prove loss: For a business operator to be liable, an injured person or his representative must prove that the injured person suffered loss or damage from the product, and had followed the correct instructions for use or storage in normal circumstances, but does not need to prove which business operator caused the loss or damage.

Exclusion from liability: A business operator is not liable for loss or damage caused by an unsafe product, if he can prove that:

(1) the product is not a unsafe product

(2) the injured person already knew that it was an unsafe product

(3) the loss or damage was caused by incorrect usage, or storage, or failure to follow any warning, or ignoring information concerning the product which a business operator had indicated clearly and correctly.

Manufacturers and contractors: A person who manufactures under the orders of a contractor is not liable for loss or damage, if he can prove that the unsafe nature of the product was caused by the design of the contractor, or by following instructions from the contractor, since a manufacturer should not have to expect or foresee the unsafe nature of that product.

The manufacturers of a product’s parts are not liable, if they can prove that the unsafe nature of the product was caused by the design, assembly or instructions for use of the product, storage, or warning or information regarding the product.

Exclusion or exemption from liability: An agreement between a consumer and a business operator made in advance before the loss or damage has occurred, or a notice of the business operator exempting or limiting liability for loss or damage caused by an unsafe product, cannot be used to exclude or limit liability. “Consumer” here means a person who buys or obtains services from a business operator or a person who has been offered or invited by a business operator to purchase goods or obtain services, and includes a person who uses goods or obtains services from a business operator, even though he or she does not pays remuneration for it/them.

Liability under other laws: Where there are other laws that contain provisions relating to unsafe products which give greater protection than this Act, then that law or Act shall be used for enforcement instead.

Consumer Protection Committee has power to make claims: The Consumer Protection Committee, or an association or foundation certified by it, has power to make claims on behalf of an injured person. In such cases, no court fees will be charged except for court fees at the highest level. Note that an injured person still has a right to bring a claim by himself.

Assessing damages: As well as assessing damages in accordance with the Civil and Commercial Code, the court may assess compensation taking into account the following matters:

(1) Regarding damages for mental loss caused by loss or damage to the body, health or hygiene of the injured person, where the injured person has died, his/her husband, wife, parents or heirs are entitled to receive the damages.

(2) If it appears that the business operator manufactured, imported, or sold the product, knowing that it was unsafe, or without knowledge due to his negligence, or knew that the product was unsafe after manufacture, import or sale but failed to act appropriately to prevent loss or damage occurring, the court may order the business operator to pay compensation up to twice the actual amount, taking into account matters such as: the degree of loss and damage suffered, knowledge of the unsafe product by the business operator, the length of time during which the business operator has concealed the unsafe aspects of the product, the reaction of the business operator when he knew of the unsafe aspects of the product, the benefits the business operator has received, the financial status of the business operator, how the business operator has minimized the loss or damage, and whether the injured person did anything to cause the loss or damage to occur.

Limitation period for claims: The right to claim compensation expires after three years from the date that the injured person learned of the unsafe nature of the product and knew the identity of the business operator liable for loss or damage, or ten years after the date of sale of the product.

Where there is loss or damage to body or health caused by matter accumulated in the body of an injured person, or where there is a need to wait to see the symptoms, the injured person or his representative must claim within three years from the date of acknowledgement of the loss or damage, and knowledge of the business operator liable for the loss or damage, but not more than ten years from the date of acknowledgement of the loss or damage.

Effect of negotiations: If there are negotiations concerning damages between a business operator and an injured person, the period of limitation applicable is suspended during negotiations, until either party terminates them.

Rights under other legislation: The provisions of the Act do not limit the rights of an injured person to seek compensation under any other law.

Comment: This Act imposes liability on manufacturers, importers and others in the chain of distribution regarding unsafe products. The nature of the duties imposed and the exclusions from liability, should be studied carefully by all business operators who face potential liability. It is expected that the Act will lead to manufacturers examining the health and safety aspects of their manufacturing process, storage procedures, instructions for use, warnings and labeling. They will inevitably have to consider arranging suitable insurance coverage. Whilst this may increase costs and lead to increased prices to the end user, perhaps this is a small price to pay for higher standards of consumer protection. Manufacturers and other business operators have until February 2009 to examine their manufacturing or other processes to ensure compliance with the new duties imposed.

© Stephen Frost, Bangkok International Associates 2008

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Bangkok International Associates is a general corporate and commercial law firm. For further information, please contact Stephen Frost by email at sfrost@bia.co.th or telephone (66) 2 231 6201/6455.

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