Products Liability
Comments on the Current Legal
Position & Recent Changes.
Adrian Foster LLB(Hons)
• Kosmar Villa Holidays plc v Trustees of
Syndicate 1243 [2008] EWCA Civ 147.
• Breach of a Claims Condition, such as a delay in
notification where the right should be reserved on
notification and prior to any investigation.
• Breach of Claims condition where the breach becomes
apparent during investigation and/or handling.
• Where a limitation or exclusion may apply in respect of
policy cover.
• “election which requires a choice between mutually
inconsistent rights”
• It is important to recognise the distinction
between,
• Physical damage,
• Economic loss (directly) flowing from that
physical damage, and,
• Pure economic loss.
• Spartan Steel and Alloys Ltd v. Martin &
Co. Ltd [1973] 1 QB 27
• Contractors damaged an electrical cable to a
smelting plant. The damage to the plant was
physical and the loss of profit from the smelt in it
at the time, economic loss resulting from that
physical damage. The loss of profit from future
smelts (which had not been damaged or even
made) was however pure economic loss.
Physical
Damage
Economic
flowing directly
from the
physical
damage.
Contract
Yes
Yes
Tort
Yes
Yes (?)
Pure Economic
Loss
Yes (Financial
Loss Ext)
No (Financial
Loss Ext)
• Barclays Bank v Fairclough Building Ltd
[1995] 1 ALL ER 289 – Contributory
Negligence does not apply to claims in
Contract alone.
• Contribution & Tort.
• Damages in Contract = The Contract was
performed with losses within the reasonable
contemplation of the parties (see Victoria
laundry (Windsor) Ltd v Newman Industries Ltd
Ltd [1949] 2 KB 528).
• Damages in Tort = The claimant must show that
that “but for” the defendants tortious act he
would not, on the balance of probabilities, have
suffered the injury or loss. Public Policy.
• Contract Terms.
• Have these been adequately
communicated ?
• Are they appropriate to the circumstances
of the supply ?
• Are the terms and conditions, and any
exclusions contained therein, clear ?
• “The Underwriters will indemnify the
Insured against legal liability for damages
in respect of accidental
1) Bodily Injury to any person
2) Damage to Property
occurring during the Period of Insurance
anywhere in the world and caused by or
arising from any Product Supplied.”
• Damage.
• Promet Engineering (Singapore) Pte Ltd v
Sturge [1997] CLC 966 – “changed
physical state”.
• “Damage – shall mean loss of or physical
damage” or “material damage”. The
damage cannot therefore be economic
loss.
• Pilkington v UK Ltd v CGU [2004]
EWCA.
• Barcardi Martini Beverages Ltd v
Thomas Hardy Packaging Ltd [2002] 2
Lloyds Rep 379.
• James Budgett Sugars v NU [2003]
Lloyds Rep 110.
• Tioxide v CGU [2004] EWHC 2116.
• General Product Safety Regulations
(GPS) 2005.
• Product Recall Cover & Exclusions.
• The Need for Risk Assessment.
• Is the Insured required by the terms of the policy
to mitigate whilst considering the available policy
cover or without reference to it?
• Rexodan International (7/11/97) v CU
• Design Exclusions.
• E.g. DE4: Defective part exclusion
'This Policy excludes the costs necessary to
replace, repair or rectify any component part or
individual item of the Property insured which is
defective in design, plan, specification, materials
or workmanship, but this Exclusion shall not
apply to other parts or items of the Property
insured unintentionally damaged as a
consequence of such defect.'
• Jurisdiction.
Effects both,
• The evidence available to determine how
a product was made and thus whether its
quality is satisfactory.
• The jurisdictional issue in pursuing a
recovery.
• Disclosure of Insurance details maybe
required in claims for personal injury via
the CPR, see Harcourt v FEF Griffin
(2007).
• With property cases however there is no
such requirement – see West London
Pipeline and Storage Ltd v Total UK Ltd &
TAV Engineering Ltd (9th June 2008).
• Firsteel Cold Rolled Products v Anaco
Precision Pressings, Times, 21/11/94.
• Aerospace Publishing Ltd v Thames Water
Utilities [2007] EWHC 2987.
• Quantum & What's Reasonable
• John F Hunt Demolition Ltd v Asme
Engineering Ltd [2007] EWHC 1507 (TCC)
• Draft reports & CCFA’s
• Tesco Stores Ltd v Constable & Others
[2008] EWCA Civ 362.
• “physical damage” and also made reference to “all
sums which the Insured shall be liable in law . . .
obstruction, loss of amenities, trespass, nuisance or
any like cause” – these were tortious liability.
• Does the policy require that the particular claimant has suffered
physical damage to his property for the economic loss to be
recovery or does it only require that physical damage has occurred.
• “damages in respect of “
• Summary.
• Elephants, and,
• Luck.
 Describing what you are doing is almost impossible but
you can see a solution. There is so much to take in and
on top of that you need to deal with the personalities of
the Insured, the claimants, and your Principals.