Defenses to Strict Liability

• As with negligence, there are defences available to those defendants who

would otherwise be strictly liable
• From an economic standpoint, the use of these defences can be a problem
• Their introduction may lower primary accident costs but cause tertiary
costs to increase and offset any gains
• This possible offsetting effect can be lowered if the defense is clear in
terms of its applicability
• In the case of all defenses, the important economic question is whether the
availability of the defense will increase the probability that the best cost
avoider will take preventive action
Unforeseeable Misuse
• Although there are good economic reasons for holding manufacturers
strictly liable for the sale of defective products, a problem arises
when the product is used in a manner that is not reasonably
anticipated by the manufacturer
• In terms of the Hand Formula, the P of the accident is extremely low
and B is quite high
• The party who misuses the product would find it less burdensome
and is, therefore, more likely to be the best cost avoider
• The question here is whether manufacturers could have reasonably
anticipated the misuse and designed the product in such a way that
the resulting harm could have been avoided
• For eg., crashing a car into another car can be viewed as a misuse of a
car, but it is also something manufacturers can readily anticipate and
respond to by designing and manufacturing crash-worthy cars
• It is important to keep in mind that even finding a producer liable for
“foreseeable” misuses does not mean that preventive action will be
taken
• As in all instances of SL, the liable will decide whether the burden of
making the modifications are justified by the expected liability
Unreasonable Assumption of Risk
• Timing appears to be a factor in these cases, the product may be
actually be defective, but he producer escapes liability because, at the
time of the use of the product, the plaintiff was the best cost avoider
• This approach makes economic sense when the product is not
generally defective and the plaintiff chooses to use if in a manner
that tests its limitations
• Any defense may decrease a manufacturers incentive to redesign the
product
• This may not be of great consequence for a couple of reasons
• First, even holding the manufacturer liable may not mean that
accidents are avoided in instances in which the costs of redesign are
high
• Second, the cost of redesign, even if justified by the expected
accident costs, may not be the least expensive method of avoiding
the accident
• In other words, the manufacturer may not be the best cost avoider
Contributory and Comparative Negligence
• A possible defense to SL would be to permit the defendant to show
the plaintiff was negligent
• If this were a complete bar to the plaintiffs recovery, there is no
guarantee that primary accident costs would be minimized
• The issue is that, even though the plaintiff might be negligent, the
defendant may be the best cost avoider
• By allowing this defense, the defendant would not receive the proper
economic signal and would not have the incentive to avoid the
accident
• Another possibility is to apportion the damages between the parties with
the plaintiff’s recovery reduced by the extent to which he contributed to
the accident
• This approach has a merit since, if the plaintiff’s action contributed to the
harm, it may be incorrect to regard the full amount of the harm as an
externality of the manufacturers activity
• On the other hand, as in the case of comparative negligene, dividing the
losses between the parties may lead to over or under investment in
prevention
• Thus, if the objective is to minimize primary accident costs, it makes sense
to treat the party who is the best cost avoider as liable for the full amount
of the loss even if the other party could have also avoided or decreased the
harm