Academic journal article Defense Counsel Journal

Product Liability in Latin America

Academic journal article Defense Counsel Journal

Product Liability in Latin America

Article excerpt

THE current political shift to a "more market-friendly approach" is encouraging an increasing number of companies to invest in Latin America. Inflation and fiscal deficits are falling and currencies' depreciation -which used to erode profits in dollar terms and generated an incentive for multinational firms to move to other markets in the past- is now stabilizing. This shift leaves the region fertile for business development in a reduced players' market.

For those businesses involved in the manufacturing and supply of consumer products, a proper understanding of product liability issues has a direct impact on profit. More often than not, product defects present complex cross-border situations that require a product liability risk management team with knowledge of the relevant laws across the jurisdictions at play. Failing this, the rising number of product liability cases -including class actions and punitive damages regulations in the region- may reduce profits, not only because of litigation expense, but also due to the company's potential tarnished reputation. All in all, product liability risk management should be embraced as an achievable way of increasing firm value.

While the countries in the region seem to be following each other's lead in the political shift, product liability issues still vary greatly, despite the fact that their approaches are often meant to be coordinated, as intended by the Organization of American States. These divergences reinforce both in-house and external counsel's need to understand cross-border issues where their clients' products or components are marketed.

In this article, we set out a general overview of the product liability regimes across five countries in the region. We also encourage developing close connections with Latin-American firms who have the ability and expertise to provide advice and manage the practical application of product liability issues.

We are particularly grateful to every Latin-American IADC colleague who invested their time and effort in drafting the responses to the proposed questions. Without their assistance, this article would not have been possible.

I. Argentina

A. Current rules related to product liability

Product liability is regulated by the general regime for damages in Argentina, which has its legal origin in the Civil & Commercial Code, Law No. 26,994 ("CCC") and the Consumer Protection Law No. 24,240 ("CPL"), as amended. Criminal liability may also arise in specific cases where products intentionally, or by means of serious negligence, do not comply with applicable regulations or if the sale or marketing of the product involves fraud. Consumers are further protected by fair trade laws, which establish rules for labelling and advertisement of products.

B. Definition of a "product defect"?

Neither Argentine law nor the Consumer Protection Agency provides a definition of product "defect". Frequently, the terminology found in Article 1757 of the CCC will be used, which addresses: the damages caused by virtue of the risk or defect inherent in their goods. Under this rule, the traditional three types of defect apply: manufacturing defect; design defect; and warning defect. The applicable standard is that products must provide safety against risks that are reasonably foreseeable.

Argentine scholars' opinions also refer to the European Council Directive 85/374/EEC of July 25, 1985 which states that

A product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account, including: (i) the presentation of the product; (ii) the use to which it could reasonably be expected that the product would be put; (iii) the time when the product was put into circulation' and that 'A product shall not be considered defective for the sole reason that a better product is subsequently put into circulation.

In fact, the European Directive arguably does not contain a "defect" definition, but points to when a product may be defective. …

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