Introduction to

Private Law
Lecture 7
December 5, 2024
Dr. Roman Schister
From insight to impact.
Lecture content
1. Overview of liability for products

2. Producer liability (Art. 55 CO)

3. Product Liability Act (PrLA)

4. Contractual penalty and

limitation/exclusion of liability

5. Cases
Part I
Overview of liability for products
Overview
Defective products can cause harm not only to the contractual party
but also to third parties.
These third parties may have claims based on—
− producer liability (Art. 55 CO); and/or
− the Product Liability Act (PrLA).
There are various other provisions giving rise to non-contractual
liability, but this course focuses on liability for products only.

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Overview
Liability for defective products

Contractual liability Non-contractual liability

Art. 197 et seqq.CO Producer liability (Art. 55 CO)

Art. 367 et seqq. CO Product Liability Act (PrLA)

Art. 97, 101 CO

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Overview
There only is a contractual claim if— There only is a non-contractual claim if—

− an outstanding debt is not paid. − a car is damaged in an accident.

− a purchased vehicle is not fit for its purpose. − a painter on a scaffold drops a bucket of paint
− a painter paints the wall in the wrong shade. and hits a passer-by.
− a doctor does not inform a patient about the − a dog bites a hiker.
coverage of treatment by health insurance. − a rotten tree branch falls onto a parked
− a logistics company delivers an object to the vehicle.
wrong location.
− a lawyer misses a deadline.

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Overview
Both, a contractual and a non-contractual claim, exist if—

− the brakes of a purchased car fail, and the buyer is injured.

− a painter on a scaffold drops a bucket of paint and hits their customer.
− an animal injures someone in the audience during a circus show.
− a rotten tree branch on a landlord’s property falls onto their tenant’s parked vehicle.
− cargo (belonging to the sender) is damaged during transportation.
− an employee embezzles money.

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Part II
Producer liability (Art. 55 CO)
Producer liability: overview
Producers can be held liable for the damage caused by their
products.
This liability is based on Art. 55 CO and the corresponding case
law.
The conditions for liability are:
− Unlawfulness/breach of duty of care
− Infringement of a legally protected interest/damage
− Legal causation

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Breach of duty of care
The producer must ensure that their products do not cause
harm to third parties—
− either through a (final) quality inspection of the goods or—if
this is not possible—
− through a safer design.
This does not apply to unavoidable product defects (so-called
outliers).

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Manhole frame case
A construction worker was injured because a suspension loop
set in concrete in a manhole frame came loose, and the frame fell
on his foot. In the opinion of the Federal Supreme Court, the
producer of the frame did not fulfill their organizational duties: A
producer who has goods manufactured by its employees has to
ensure an appropriate organization of the work and, if necessary,
a final inspection of the manufactured goods to guarantee that
they are safe, If such quality checks are not possible, the producer
must “opt for a safer construction” (DTF 110 II 456 n. 3c).

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Types of defects
Infringement of duty of care
The producer must ensure that their products cause no harm to third parties.

Design defect
The producer infringes their duty of care when designing and developing a product.

Manufacturing defect (excl. outliers)

The product’s concept is flawless, but it is still faulty due to insufficient final inspection.

Instruction defect
The producer must prevent improper use by means of warnings/notifications of danger (product information).

Monitoring defect
The producer must monitor risks even after the product is launched.

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Damage
Damage caused by defective goods—
− includes personal injuries,
− damage to or destruction of property.

There are no non-contractual claims for the damage caused to

the defective product itself; in this regard, only contractual claims
are available.
If neither a person is injured nor property damaged, non-
contractual liability exists only in rare circumstances (not part of
this course).

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Legal causation
Causation means that the breach of the duty of care was the
cause of the damage “according to the normal course of events
and general life experience.”
It is up to the court to decide what the “normal course of events
and general life experience” are.

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Part III
Product Liability Act (PrLA)
Overview
The Product Liability Act (PrLA) has its roots in the EU’s Product
Liability Directive.
The objective of the EU’s directive was to create a regime of
strict liability for manufacturers of defective products across the
entire European Economic Area.

As—under Swiss law—non-contractual liability for defective

products already exists under Art. 55 CO (producer liability), the
PrLA hardly ever is applied by the courts.

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Conditions for liability
Product (Art. 3 PrLA)
Movable objects, even if they form part of another movable or immovable object (and electricity).

Defect of the product (breach of duty of care; Art. 4 et seqq. PrLA) → incl. outliers!
Product does not provide the safety that its users are entitled to expect, taking into account all the circumstances.

Infringement of a legally protected interest/damage (Art. 1/6 PrLA)

Personal injury or damage/destruction of property provided that said property was intended for private use.

Legal causation
Infringement of the legally protected interest must be attributable to the defect of the product.

Liability does not depend on the producer’s fault!

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Liable persons
Actual producer
− Manufactured the end product, a component part, or raw material.

Quasi-producer
− Affixes their name, trademark, etc. to the product.

Importer
− Imports the product into Switzerland.

Fallback solution: supplier

− Producer cannot be identified because the supplier refuses to name them.

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Scope of liability
Liability only for

No liability for damage to the

Personal injury Damage to property
product itself

Only objects intended for private Excess of CHF900

use or consumption Idea: exclusion of petty damages

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Details
Liability under the Product Liability Act (PrLA) cannot be
excluded or limited.
Forfeiture period: claims are forfeited 10 years after the product
is placed on the market (Art. 10 PrLA).
Relative prescription period: claims get time-barred 3 years after
becoming aware of the damage, the defect, and the producer’s
identity (Art. 9 PrLA).
Producer liability is also available (concurring claims).

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Pros and cons of the PrLA
In many cases, both—the PrLA and producer liability—are applicable and lead to
similar results.
In some cases, the two differ.

Pros of the PrLA Cons of the PrLA

(perspective of injured person) (perspective of injured person)
− Liability for outliers − No liability for damaged/destroyed property if
the property was intended for commercial use
− Liability of the (Swiss) importer
− Excess for damaged/destroyed property
(CHF900)

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Part IV
Contractual penalty and limitation/exclusion of liability
Contractual penalty
In the case of non- or bad performance of a contract, a penalty
clause can be agreed upon (Art. 160–163 CO).

The penalty can take the form of an obligation to make some kind of
performance or the form of a loss of rights.

In principle, the parties are free to set the amount of the penalty.
− However, excessively high penalties may be reduced by the court at its discretion.

Advantages of penalty clauses:

− Reinforcement of the obligor’s commitment to perform the contract correctly.
− Compensation in case of a breach of contract even if there is no damage.

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Limitation/exclusion of liability
The law generally allows for the limitation or complete exclusion of
contractual and non-contractual liability by means of agreement
(cf. lecture 6).

However, there are limitations to this. The most important ones when it
comes to non-contractual liability are:
− No exclusion of liability for personal injuries.
− No exclusion of liability for intent and gross negligence.
− No exclusion of liability under the PrLA (Art. 8 PrLA).

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Part V
Cases
How to solve a case?

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Third Third Third
party party party

Producer

Seller

Contract: purchase of a defective

product

Buyer/injured person
 Non-contractual claims
No contract
(producer liability/PrLA)

Contractual claims (sales contract)

Non-contractual claims
(producer liability/PrLA)
Example: unfortunate vaccination
During a flu outbreak, the nursing home “Retire Dream” buys 1,000 doses of the “Lucrum” vaccine from
Pharma Distribution Ltd. in Zurich. Pharma Distribution Ltd. imports the vaccine directly from the
manufacturer, Viro Research Ltd., headquartered in Mumbai. To store the vaccine on-site, the nursing
home rents a special freezer from Pharma Distribution Ltd., incurring costs of CHF5,000.

The first employee to get vaccinated is nurse Nina. She falls ill a few days after the vaccination and is away
from work for four months. Other employees of the nursing home also become ill after getting the
vaccine, resulting in a shortage of staff. This forces the management to transfer some patients to another
facility, leading to a loss of CHF80,000.

It turns out that small amounts of dirt on the bottle caps of the vials contaminated the vaccine, which is
why the vaccinated people fell ill. Despite all precautionary measures, such contamination can never be
entirely prevented. Fortunately, this is the only known incident involving the vaccine in question.

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Example: unfortunate vaccination
1. Can the nursing home assert contractual claims against the
manufacturer Viro Research Ltd.?
2. Can the nursing home assert contractual claims against
Pharma Distribution Ltd.?
3. Which contractual claim would you recommend?
4. To what extent can claims for damages be asserted?

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Example: unfortunate vaccination
5. Can the nursing home assert claims based on producer
liability against Viro Research Ltd.?
6. Can nurse Nina assert claims based on producer liability
against Pharma Distribution Ltd.?
7. Can nurse Nina assert claims based on the Product Liability
Act against Pharma Distribution Ltd.?

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Example: burning battery
Anna, a self-employed consultant, buys a new smartphone “Sung
Universe Note,” manufactured by the South Korean company
Sungsung Ltd. Sungsung Switzerland Ltd., based in Zug, is the
general importer of the phones. While driving to a meeting with
her company car, the phone in Anna’s pocket starts burning. The
incident causes the following damages:
− Medical costs: CHF2,000
− Destroyed designer pants: CHF300
− Burnt hole in the car seat: CHF1,500
− Lost fee for the meeting with the client: CHF3,000

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Example: burning battery
It turns out that a small number of the millions of batteries
installed in the phones are defective. Neither Sungsung Ltd. nor
Sungsung Switzerland Ltd. was aware of this issue. The flaw
could not be detected.

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Example: burning battery
1. Can Anna assert claims based on the Product Liability Act
against Sungsung Switzerland Ltd.?
2. Can Anna assert claims based on producer liability against
Sungsung Switzerland Ltd.?
3. Does your answer to question 2 change if Sungsung
Switzerland Ltd. had manufactured the device under a
license agreement with Sungsung Ltd.?
4. Assuming all conditions for liability are met, what damages
will Anna successfully be compensated for?

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Example: danger in the kitchen
Tim participates in a lottery organized by a large retail company. He wins a
toaster and a bread slicer, both manufactured by Electric Ltd. based in Olten.

When attempting to slice bread for the first time, he cuts his finger because the
bread slicer lacks a safety guard to protect fingers from the blade. Most other
manufacturers of similar machines typically install a safety guard.

A week later, having bought pre-sliced bread, Tim tries to insert a slice of bread
into the toaster and suffers an electric shock. The shock is so strong that Tim
needs to be examined by a cardiologist. The cause of the electric shock was an
incorrectly soldered cable in the toaster, attributable to the negligence of an
employee of Electric Ltd.

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Example: danger in the kitchen
1. What type of defect does the bread slicer have?
2. What type of defect does the toaster have?
3. Regarding the bread slicer: Can Tim assert claims against
Electric Ltd.—
− based on a contract?
− based on producer liability?
− based on the Product Liability Act?

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Thank you!

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