Manage intellectual property and legal protection risk:Understanding product liability when exporting

What is product liability?

Product liability is the legal responsibility for injury or damage that happens when someone is using a product. This responsibility applies to any or all parties involved in a product's chain of manufacture.

For example, a manufacturer who produces a product that can be poisonous if taken internally has a responsibility to make sure this is clearly marked on any packaging, in any market. They can be prosecuted and sued for damages if it's not.

A person who uses your product may take legal action against your business as a result of:

• bad design during manufacturing
• poor standards of parts/materials used
• unclear instructions on use and maintenance

Make sure the products you export are as safe as possible for your customers. Maintain clear documentation on quality control and make regular manufacturing audits to ensure high standards of production. This will also support you against any potential lawsuits.

Ways to reduce your exposure to liability

Understanding product liability laws in your market - and taking precautionary measures - are the first steps towards preventing product liability.

If you're selling into a new market, make sure you've looked at local regulations and the certifications needed. To limit your liability, get advice from a local lawyer on the terms and conditions of your sales contract in that market.

You'll need to make sure that:

• your product conforms to the safety standards and regulations of the market
• you keep up to date on any new or revised standards
• your product is tested for use in the market
• you include instructions that are clear enough for the average user to understand how to safely use and look after the product (and in the relevant languages spoken in the market)
• your product is well-packaged, to protect it against damage
• any potential hazards from product and packaging misuse are clearly marked
• any marketing material accurately shows what the product does and what it's intended for

Product liability insurance

You might want to think about buying product liability insurance to cover any legal costs for liability cases.

However, be aware that you're not legally required to hold it, and it also won't cover any reputational damage to your business that may occur.