1. Introduction of the Product Liability System

Through the rapid development of science and technology and aggressive innovation in economic activities, Japan has attained a society of mass production and mass consumption. On the other hand, because consumers use and consume high-tech and complicated products daily, their safety primarily depends on product manufacturers.

Therefore, in order to change the principle of liability for damages in product-related accidents from "negligence" to "defect", and relieve the injured persons in a swift and appropriate manner, the Product Liability Law shall come into force from July 1, 1995. With the introduction of the Product Liability system, it is expected that the way of thinking and the approach concerning product safety of both the industry business segment and the consumer segment will change and improve.

2. What is Product Liability?

(1) Definition of Product Liability

Product Liability shall be defined as liability for damages in such case as follows:
In the case where due to a defect in the delivered product, a life, a body or property of another person (including a third party not using or consuming the product directly, and a legal person as well as a natural person) is injured, the person who manufactured, processed, imported or put his name, etc. on the product as business is liable for damages of the injured person.

(2) Significance of Introduction of the Product Liability Law

Previously in Japan, claims for damages have usually been made based on the Civil Code Article No.709 in case the injury is caused by a defect in the product. The Civil Code Article No.709 employs the "fault-based liability (negligence) principle", and requires the "intention or fault" of the manufacturer, etc. as a condition for liability.

The Product Liability Law takes the "defect in the product" as a condition for liability instead of the "intention or fault" of the manufacturer, etc. Therefore, after introduction of the Product Liability Law, the injured has only to verify the "defect in the product" for claiming damages.

 

Civil Code Article No.709	Product Liability Law
The damage The intention or fault of the accused The causal relationship between the damage and the intention or fault	The damage The defect in the product (at the time distribution commences) The causal relationship between the damage and the defect

The Product Liability Law can be said to employ the "liability without fault principle", that is, the manufacturer, etc. is liable for damages if the injury is caused by a defect in the product regardless of whether it was his intention or fault. However, the manufacturer, etc. is not liable when there is no defect in the product. As the Product Liability Law is a means for claiming damages, the plaintiff side bears the burden of proof for the above-mentioned 1) - 3). The enactment of the Product Liability Law means a change in the liability rule from fault-based liability principle -To- defect-based liability principle

3. Points of the Product Liability Law

(1) Scope of the product

By definition, "product" means movable property manufactured or processed. Therefore, incorporeal property such as services, information, software, electricity, etc., and immovables are not the object of the Law. Moreover, agricultural, forestal, marine and mineral products which are not processed artificially are not the object of the Law.

(2) Parties subject to liability

Parties subject to liability are as follows:
Manufacturer
Importer
Any person who puts his name, etc. on the product with such titles as "manufacturer" or "importer", or any person who puts his name, etc. on the product in a manner mistakable for its manufacturer or importer (For instance, any person selling OEM products using his company brand name) Any person who, by putting his name, etc. on the product, may be recognized as its manufacturer-in-fact, in the light of a manner concerning manufacturing, processing, importation or sales, and other circumstances (For instance, any person, even though he puts his name, etc. on the product with such titles as "seller" or "sales agency", who is socially recognaized as its manufacturer-in-fact or is a sole distributor of the product)

(3) Concept of the term "defect"

A "defect" does not mean mere lack of quality of the product, but means lack of safety in the product which may cause the injury to life, body, or property. In the law, the term "defect" is defined as "lack of safety that the product ordinarily should provide," taking into account "the nature of the product", "the ordinarily foreseeable manner of use of the product", "the time when the manufacturer, etc. delivered the product", and other circumstances concerning the product. These three above-mentioned circumstances include such respective factors, as are presented below. In the actual trial, while the weight of each factor is different depending on individual cases, these factors are comprehensively taken into account in judging whether the product is defective or not. Meaning of "the nature of the product" This means the circumstances of the product itself, including factors such as the following: representation of the product (instructions, warnings, etc. to prevent accidents) effectiveness and usefulness of the product (compared to its danger) cost vs. effect (the safety standard of products in the same price range) probability of occurrence of accident and its extent ordinary use period and durable period of the product Meaning of "the ordinarily foreseeable manner of use of the product" This means the circumstances concerning use of the product, including factors such as the following reasonably foreseeable use of the product possibility of preventing damage from occurring by the product user Meaning of "the time when the manufacturer, etc. delivered the product" This means the circumstances when the manufacturer, etc. delivered the product, including factors such as the following: situation at the time the product was delivered (the safety level required in society at the time the product was delivered) technological capabilities(the prior state of safety regulations and possibility of alternative design)

(4) Exemptions

Development Risk Defense, The Product Liability Law admits "Development Risk Defense" as an exemption. This means the manufacturer, etc. shall not be liable for damages, if the manufacturer, etc. proves that the state of "scientific or technical knowledge" at the time when the manufacturer, etc. delivered the product was not such as to enable the existence of the defect in the product to be discovered. "Scientific or technical knowledge" means all the established knowledge that could influence the decision on the existence of the defect, and not the knowledge held by a peculiar person but the total knowledge that objectively exists in society. Component or Raw Material Manufacturer's Defense Insofar as components or raw materials are "products" movable property manufactured or processed, their manufacturers are also subject to liability in the Law. However, if the manufacturer, etc. of a component or raw material proves that the defect is substantially attributable to compliance with the instructions concerning the specifications given by the assembling manufacturer who incorporates the component or raw material into another product, and that the manufacturer, etc. is not negligent on occurrence of the defect, the manufacturer of the component or raw material shall not be liable for damages.

(5) Time Limitations

The right for damages provided in the Law shall be extinguished by prescription if the injured person or his legal representative does not exercise their rights within the following period: A period of three years from the time when the injured person or his legal representative becomes aware of the damage and the liable party for the damage (short-term nagative prescription) A period of ten years from the time when the manufacturer, etc. delivered the product (long-term liable period)

Article 1:Purpose

The purpose of this Law is to relieve the injured person by setting forth liability of the manufacturer, etc. for damages when the injury on a life, a body, or property is caused by a defect in the product, and thereby to contribute to the stabilization and improvement of the people's life and to the sound development of the national economy.

Article 2: Definitions

(1) As used in this Law, the term "product" means movable property manufactured or processed.

(2) As used in this Law, the term "defect" means lack of safety that the product ordinarily should provide, taking into account the nature of the product, the ordinarily foreseeable manner of use of the product, the time when the manufacturer, etc. delivered the product, and other circumstances concerning the product.

(3) As used in this Law, the term "manufacturer, etc." means any one of the following:

any person who manufactured, processed, or imported the product as business (hereinafter called just "manufacturer"); any person who, by putting his name, trade name, trade mark or other feature (hereinafter called "representation of name, etc.") on the product presents himself as its manufacturer, or any person who puts the representation of name, etc. on the product in a manner mistakable for the manufacturer; apart from any person mentioned in the preceeding subsections, any person who, by putting the representation of name, etc. on the product, may be recognized as its manufacturer-in-fact, in the light of a manner concerning manufacturing, processing, importation or sales, and other circumstances.

Article 3:Product Liability

The manufacturer, etc. shall be liable for damages caused by the injury, when he injured someone's life, body or property by the defect in his delivered product which he manufactured, processed, imported or put the representation of name, etc. as described in subsection 2 or 3 of section 3 of Article 2 on. However, the manufacturer, etc. is not liable when only the defective product itself is damaged.

Article 4:Exemptions

In cases where Article 3 applies, the manufacturer, etc. shall not be liable as a result of Article 3 if he proves; that the state of scientific or technical knowledge at the time when the manufacturer, etc. delivered the product was not such as to enable the existance of the defect in the product to be discovered; or in the case where the product is used as a component or raw material of another product, that the defect is substantially attributable to compliance with the instruction concerning the specifications given by the manufacturer of the said another product, and that the manufacturer, etc. is not negligent on occurrence of the defect.

Article 5:Time Limitations

(1) The right for damages provided in Article 3 shall be extinguished by prescription if the injured person or his legal representative does not exercise such right within 3 years from the time when he becomes aware of the damage and the liable party for the damage. The same shall also apply upon the expiry of a period of 10 years from the time when the manufacturer, etc. delivered the product.

(2)The period in the latter sentence of section 1 of this Article shall be calculated from the time when the damage arises, where such damage is caused by the substances which are harmful to human health when they remain or accumulate in the body, or where the symptoms for such damage appear after a certain latent period.

Article 6:Application of Civil Code

In so far as this law does not provide otherwise, the liability of the manufacturer, etc. for damages caused by a defect in the product shall be subject to the provisions of the Civil Code (Law No.89, 1896).

Supplementary Provisions

This Law shall come into force the day after one year from the date of promulgation, and shall apply to the products delivered by the manufacturer, etc. after this Law comes into force. Partial Amendment of the Law on Compensation for Nuclear Damage The Law on Compensation for Nuclear Damage (Law No.147, 1961) shall be partially amended as follows:

In section 3 of Article 4 of that Law, "and the Law relating to the Limitation of the Liability of shipowners (Law No.94, 1975)" shall be amended as ", the Law relating to the Limitation of the Liability of shipowners (Law No.94, 1975) and the Product Liability Law (Law No.85, 1994)".

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