M3: Understanding the Liabilities of the Different Actors in the Supply Chain

Consumer Transaction

Any activity involving the sale, lease, or transfer of goods or services to a consumer the grant of credit or loans for personal family household or agricultural use and any promotion or advertising related to these transactions Insurance and securities are not included

Supplier

A person or business that offers advertises promotes or provides consumer products or services even if there is no direct contract with the consumer

Manufacturer or Importer

• Manufacturer is the person or company that makes assembles or processes the product

• Importer or manufacturers representative is treated as manufacturer for imported products

Seller

A business that sells products directly to consumers and may include supplier or distributor if they control or closely work with the seller

Retailer

A person or business that sells products directly to consumers usually in small quantities

Distributor

A person or company that supplies products to sellers or retailers but is not the manufacturer or retailer

Private Labeler

The owner of the brand or trademark on a product label even if they did not manufacture the product

Creditor

A person or company that provides loans or credit including installment payments and charges finance fees or interest

Advertising Agency and Advertiser

• Advertising agency creates and runs ads for businesses

• Advertiser is the business or client who pays for and sponsors the ad

Consumer

A natural person who buys, rents, uses, or plans to buy goods, services, or credit

Service Providers and Contractors

Businesses that handle packing, delivery, transport, storage, and logistics

Third Parties

Other people or businesses that may be involved or affected by the transaction

Strict Liability

Manufacturers producers and importers are automatically responsible for damage caused by defective products even if they were not negligent

RA 7394 Liability

Liability exists for defects in design manufacturing construction assembly packaging presentation and insufficient warnings or instructions

Service Defect

Doesn’t provide the level of safety a consumer reasonably expects, considering how it is provided, possible hazards, and timing

Implementing Agency

The DTI enforces liability rules for consumer products and services

Strict Liability for Defective Products

Manufacturers producers and importers are liable if products cause damage due to defects in design, manufacture, construction, assembly, packing, presentation, or handling

A product is not defective if

A better product exists on the market, or the manufacturer proves it has no defect, or the consumer is at fault

Liability of Sellers

Sellers are liable if the manufacturer cannot be identified the product lacks manufacturer identification or perishable goods are not properly stored

Liability for Defective Services

Service suppliers are liable for damages if service is defective even without fault

Product Imperfection

Reduces quality or value, or conflict with labels or advertising, and consumer remedies include replacement, refund, or price reduction

Quantity Imperfection

If net content is less than stated consumer can demand price reduction additional quantity replacement or refund

Service Quality Imperfection

If service is inadequate or inconsistent with advertising consumer can demand reperformance refund or price reduction

Repair Service Obligation

Suppliers must use adequate, original, or equivalent parts when repairing products

Ignorance is not an excuse

Suppliers cannot avoid liability by claiming ignorance of defects

Legal Guarantee

No contract can exempt suppliers from liability multiple responsible parties are jointly liable component manufacturers and assemblers are jointly liable for defects

Penalties

Violations of non food non cosmetic non hazardous product rules can lead to fines, imprisonment, or both companies penalized through responsible officers and foreign offenders deported after serving sentence

Defective Product vs Product Imperfection

• Defect - unsafe

• Imperfection - lower quality or value

Defective Service vs Service Imperfection

• Defect - unsafe

• Imperfection - inadequate or inconsistent

Supply Chain Liability

Anyone involved in making selling or servicing a product can be responsible if something goes wrong including manufacturers sellers suppliers repair firms and service providers

Consumer Remedies

Repair, replacement, refund, or price reduction services can also have remedies like reperformance or reimbursement

Strict Liability Principle

Responsibility for harm caused by a defective product does not depend on proving negligence or fault and shifts burden of proof from consumer to business

Purpose of Strict Liability

• Protects consumers

• Ensures companies take full responsibility for safety

• Promotes high quality standards

• Accountability in the supply chain

Criminal Penalties

Selling dangerous, fake, or expired products can lead to fines or jail time