Product liability is a special area of private law that regulates liability for damage caused by defective products. The aim is to strengthen the position of injured parties; this is achieved, among other things, by granting compensation regardless of fault and by facilitating legal enforcement against the manufacturer of the product.
Product liability is limited to certain cases and only applies to damage caused by defective products. It therefore does not apply to all types of damage, but only when a product injures a person or damages property due to a defect. The legal framework for product liability is based on EU directives, which are intended to ensure uniform consumer protection in all member states of the European Union.
Product liability exists in parallel to general tort law and supplements it. Injured parties thus have the option of choosing whether to assert their claims under the rules of product liability or under general tort law. This gives them two legal avenues for claiming compensation. While general tort law regularly requires proof of fault, product liability often offers easier access to compensation, as it is largely based on strict liability and thus strengthens consumer protection.
Requirements for product liability claims
In the context of product liability, a product is defined as a movable, physical object. This includes both independent objects and components of another movable or immovable object. In addition, product liability extends to energy, which means that damage caused by faulty energy supply (e.g., electricity) may also be covered.
A physical therapist treats a patient to relieve neck and shoulder pain. However, during manual therapy, he applies too much pressure to the cervical spine and performs a backward mobilization without first adequately checking the mobility and stability of the joint. This causes the patient to suffer a muscle strain and irritation of the nerve root, resulting in severe pain and restricted movement. In this case, the treatment was performed incorrectly, i.e., it was a case of malpractice, but not a product liability case, as no defective product within the meaning of the Product Liability Act was used. Liability in this case would be governed by the rules of general tort law.
Due to a fault in a step-up transformer in the distribution network, an uncontrolled overvoltage occurs in the house connection line of a residential building. The overvoltage causes the insulation of the cables in the house's fuse box to melt, resulting in a short circuit that triggers a cable fire. As the fire goes unnoticed, part of the building burns down. Energy is considered a product in terms of product liability, and the network operator may also be liable for the damage caused by the overvoltage under the rules of product liability law. (Of course, there is also liability under general tort law.)
A product is considered defective if it does not offer the safety that can reasonably be expected. This expectation is based not only on technical functionality, but above all on whether the product poses unforeseeable or avoidable dangers. The decisive factor here is whether the manufacturer has taken all reasonable measures to avoid risks – for example, through appropriate design, manufacturing controls, warning notices, and instructions for use.
A doctor A prescribes a medication for his patient P that is not suitable for treating his illness. Due to P's situation, side effects are to be expected, as indicated in the product information for the medication, causing P to suffer painful swelling. A product liability claim exists only if the medication itself was defective (for which there is no evidence). If the damage to health (swelling) is solely due to improper treatment by the doctor, there is no product liability case. In this case, A's liability would have to be examined under general tort law.
A craftsman's business carries out flame work on a residential building to seal the roof. Due to carelessness when handling the gas burner, the roof insulation ignites and the fire spreads to the entire house – the building burns down partially. In this case, it is not a product liability case; although the gas burner used in this case meets the definition of a product,
Types of Defects
A design defect exists if the product is already defective in its planning or design. This means that all products in a series have the same safety defect, as the defect is inherent in the design itself. The manufacturer has therefore designed the product in such a way that it poses a risk even when produced and used properly.
In an electronic control system, a resistor is systematically undersized so that it cannot adequately dissipate the heat generated during operation. As a result, the circuit regularly overheats and, in the worst case, can cause a fire. Since all devices in this series are constructed in the same way, all products are defective—a typical design defect.
A production defect, on the other hand, affects individual units of an otherwise faultless product. The design is correct, but during manufacture, a deviation error occurs by chance, for example due to material defects, faulty machine control, or inadequate final inspection.
In a production series of electronic devices, the circuit is correctly designed. However, due to a software error in the production control system, a defective resistor is installed in a single device, which burns out during initial operation, causing a short circuit and smoke. Only this single device is defective – a classic production defect.
An instruction error occurs when the manufacturer provides insufficient or misleading instructions for use or warnings. The product itself is technically sound, but the user is misled into dangerous handling due to missing, unclear, or incorrect information. This is particularly relevant for products that the customer has to install or assemble themselves.
A manufacturer supplies an electric fan heater as a kit. The instructions describe the wiring of the connection cables unclearly, so that the customer mixes up the wires. When switched on, a short circuit occurs and the device catches fire. The cause is not a technical defect, but misleading instructions – a typical instruction error.
A product must be designed in such a way that it can be used safely when used in a foreseeable and intended manner. The manufacturer must also take into account obvious misuse that is reasonably foreseeable. However, if a product is used in a completely inappropriate manner that the manufacturer could not have foreseen, there is generally no defect.
A manufacturer launches a new lawn mower tractor on the market with two levers located directly next to each other: one is used to raise the mower deck, the other to engage reverse gear. Both levers are the same size, the same color, and inadequately labeled. A user confuses the levers, accidentally engages reverse gear, and drives into a wall, damaging the tractor and slightly injuring the driver. In this case, the product is defective because the manufacturer should have recognized and avoided an obvious risk of confusion. The product was therefore not sufficiently safe for its foreseeable use.
The way in which a product is presented and described has a decisive influence on the consumer's safety expectations. Advertising, packaging, instructions for use, and warnings must be clear, complete, and understandable. If, for example, advertising gives the impression that a product is particularly safe or easy to use, but the manufacturer does not point out possible risks, this may constitute a presentation error and lead to liability.
A manufacturer advertises its lawn mower tractor with packaging graphics that clearly show the driver mowing a steep slope while the machine appears safe and stable. However, the instructions for use do not indicate that mowing on slopes with an incline of more than 6° is dangerous because the tractor can tip over due to its unfavorable center of gravity. A customer relies on the image on the packaging, mows on a slope, the machine tips over, and the driver is injured. In this case, there is a presentation error: the presentation of the product conveys a false sense of security and gives the impression that a dangerous application is safe. The manufacturer should have clearly pointed out the risks in order not to deceive the consumer's legitimate safety expectations.
Whether a product is defective is always assessed according to the state of the art and safety at the time of placing it on the market. This means that a product that met the safety requirements at the time of its market launch does not automatically become defective simply because technology has advanced since then. Technical obsolescence alone does not therefore constitute a defect – the decisive factor is whether the product was considered safe based on the knowledge available at the time.
A DIY enthusiast uses an electric circular saw manufactured in 2002. At that time, the use of an automatic saw blade brake, which stops the saw blade immediately after switching off, was not yet mandatory and was only common in expensive professional models. The saw complies with all safety standards applicable at the time. In 2025, the DIY enthusiast slips while working and injures himself because the saw blade continues to run for a few seconds. Although modern saws are now generally equipped with an automatic saw blade brake, there is no product defect in this case. The saw was safe according to the state of the art at the time it was placed on the market. The mere absence of a safety device developed later does not make the product defective retrospectively.
The existence of a product defect alone is not sufficient for product liability; there must also be a causal link between the defect and the damage incurred. The damage must therefore have been caused by the product defect. If damage occurs independently of the defect, for example due to external circumstances or a completely different event, there is no causal link – in which case there is no product liability claim.
An electric drill has a manufacturing defect that could theoretically lead to overheating. However, before the defect has any effect, the drill is struck by lightning during a thunderstorm, causing the device to explode and start a fire. Although the drill was defective, there is no causality between the product defect and the damage that occurred.
Furthermore, product liability only covers certain types of damage. These include personal injury, i.e., product liability covers damage to absolutely protected legal interests such as life, health, and physical integrity. Under certain conditions, property damage caused by the defective product is also covered, but damage to the defective product itself is not covered. However, such damage can be compensated for under general tort law and, if applicable, under warranty law.
A-GmbH sells a mobile phone manufactured by B-AG to private customer C. While in use, the phone's battery explodes, causing C to suffer severe burns to his face and blindness in one eye. C is entitled to compensation for personal injury. The severe burns to the face and blindness in one eye are significant health impairments that clearly fall under product liability. This includes medical expenses and compensation for pain and suffering.
Product liability only compensates for damage caused by a defective product to other legal interests – i.e., to persons or other property. Damage to the defective product itself is not covered by the PHG. In such cases, other legal bases may be considered. If the product was already defective at the time of delivery and does not meet the agreed quality standards, warranty claims may be considered. If the manufacturer can be proven to be at fault for the defect, the claim for compensation can also be based on general damages.
A customer buys a mobile phone whose battery overheats after a short time due to a manufacturing defect, rendering the device unusable. The damage affects only the phone itself – other objects or persons are not affected. Since the damage occurred to the product itself, there is no claim under the Product Liability Act. However, if misconduct or lack of care on the part of the manufacturer can be proven, a general claim for damages may be considered. If the customer simply wants a functional device instead, they can assert warranty rights – i.e., demand replacement or repair. If they consider these measures to be unreasonable, they are entitled to rescission (withdrawal from the purchase contract and refund of the purchase price) as a last resort.
In contrast to product liability, where the concept of defect relates to the general safety of the product, the warranty deals with the contractually guaranteed quality. A deviation from the agreed quality makes a product defective in terms of warranty law, but not necessarily defective in terms of product liability.
A buyer purchases a defective circular saw from a dealer to use it as a source of spare parts for other devices. The purchase contract expressly states that the saw is not functional and is only being sold for craft purposes. Although the saw may be defective in terms of product liability (e.g., due to a safety defect), there is no material defect in terms of warranty, as it corresponds exactly to the agreed quality—namely, a defective saw. The warranty therefore does not apply because the condition was contractually accepted.
The obligated party in a product liability claim is primarily the manufacturer of the defective product. The manufacturer is not only the actual producer, but also the party who markets the product under their name or trademark. If the manufacturer is based outside the European Union, the importer or distributor in the EU is liable as the responsible party – in other words, they assume the role of the liable producer. In practice, this liable party is usually more financially capable than an ordinary seller, as manufacturers and importers have appropriate insurance or reserves.
A significant advantage of product liability is that it is independent of the fault of the liable party. This means that the injured party does not have to prove that and to what extent the manufacturer acted negligently or intentionally. It is sufficient to prove that a product was defective and that the damage was caused by this defect. This significantly reduces the burden of proof for the injured party, making it easier to obtain compensation. This not only promotes consumer protection, but also provides incentives for manufacturers to maintain high quality and safety standards.
Product liability applies to the manufacturer (B-AG) because they put the defective product on the market. A-GmbH, which sold the mobile phone, is only liable if, as a distributor, it did not provide sufficient information about the manufacturer (Section 3 of the Product Liability Act). The claim is therefore primarily directed against the manufacturer.
Limitations of product liability
Product liability offers protection to injured parties in the event of damage caused by defective products. However, it is subject to a number of limitations that affect both the liability itself and the enforceability of claims. These regulations are intended to limit the manufacturer's liability to certain circumstances and to strike a balance between consumer protection and manufacturer risk.
A deductible of 500 euros applies to property damage. This means that the injured party must bear the first 500 euros of property damage themselves. This regulation is intended to prevent minor damage that is economically insignificant from leading to extensive liability cases. However, it is important to note that this limitation applies exclusively to property damage. Personal injury is not affected and can be claimed without restriction.
A faulty cell phone explodes while charging in the living room and causes a fire that destroys the entire house. The property damage amounts to EUR 600,000. Under product liability, the manufacturer is liable for the damage caused, but a deductible of EUR 500 applies to property damage. This means that the injured party must bear the first EUR 500 themselves, while the manufacturer is liable for the remaining damage of EUR 599,500. The deductible therefore has only a minor effect in this case.
A faulty cell phone explodes on the terrace and scorches an old plastic garden table that is now only worth EUR 10. Since the deductible for property damage is EUR 500, the owner is fully liable for the damage – there is no claim under the Product Liability Act because the damage is below the deductible. At best, the injured party could try to assert a general claim for damages if the manufacturer's fault can be proven.
Damage to property that is used exclusively for commercial purposes is not subject to product liability. This restriction aims to focus product liability on consumer protection and to exclude commercial users, who can usually take their own safety measures.
In a carpentry workshop, a computer is used in the workshop to record working hours. During operation, the saw blade of a faulty circular saw comes loose, flies through the workshop and completely destroys the control computer. The property damage amounts to several thousand euros. In this case, there is no claim under product liability, as the computer is used exclusively for commercial purposes. Compensation would only be possible under the general civil law rules on damages, not under the PHG.
Under the Product Liability Act, the manufacturer of the defective product, i.e., the party whose contribution actually caused the damage, is generally liable. However, if a product is composed of several sub-products or components, it must be examined where the defect originated and who could have prevented it. A supplier or manufacturer of a raw material or sub-product is not liable if the defect is not in the sub-product they supplied, i.e., if it only arose as a result of the design, combination, or instructions of the end manufacturer. This is to prevent uninvolved suppliers from having to take responsibility for defects that are beyond their control. Only those who created or failed to prevent the defective condition are liable.
Manufacturer A supplies a complete industrial plant for the automated production of metal parts. The control software comes from B, the robot arm from C, and an integrated vacuum cleaner for cleaning the workpieces from D. During operation, a control error occurs due to a programming error in the software from B: The robot arm performs an unforeseen movement and seriously injures an employee. The cause of the accident is therefore the defective software and the inadequate safety design of the entire system.
While A and B are liable for the personal injury caused because the error lies within their area of responsibility, manufacturers C and D are not liable because their products were proper and free of defects and did not contribute causally to the damage. Liability therefore only applies to those whose products were actually defective or enabled the damage to occur.
Claims arising from product liability expire at the latest ten years after the product was placed on the market, regardless of when the damage occurred or the defect was discovered. This period limits the manufacturer's liability in terms of time and protects them from unlimited liability.
Product liability is mandatory law and serves to protect the general public. Therefore, it cannot be contractually excluded or restricted. Agreements in which the manufacturer or seller attempts to exclude liability for damage caused by defective products are legally invalid. This prevents consumers from waiving their protective rights through clauses or signatures.
A customer buys an electric drill and signs a clause upon purchase stating that the seller and manufacturer are not liable for damage caused by the product. After a few weeks, the drill overheats due to a design flaw and catches fire, injuring the customer. Despite the signed disclaimer, the manufacturer remains liable because the exclusion of product liability is legally invalid.
Summary
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