A huge issue that many business leaders face is product liability and the laws that govern this environment. Owens (2008) suggests that a typical product liability case consists of a claim for damages against the product of an organization that causes harm or injury when it is used. The plaintiff is the individual focused on proving the damage was caused by a defect in the manufacturing process or that the product was misrepresented and falsely described in their advertising. Furthermore, the plaintiff must proceed to demonstrate the product was used properly (Owen, 2008). Normally damage claims include medical expenses, disability, pain and suffering, lost wages, and perhaps emotional harm. The defendant on the other hand, attempts to prove the product was not deficient and presents evidence to suggest that perhaps there is another reason the product did not function properly.
In this week’s case study we were asked to examine a situation exposed by a PBS news report, that revealed certain US retailers were importing products from China with unknown ingredients. What makes this case study interesting is that products imported from China are not scrutinized because of the inefficient regulations in place to monitor quality control on their exports. If any of the products are discovered to be tainted or contaminated the question posed is who is liable in tort for injuries sustained to consumers that have been harmed by the products? According to the PBS Newshour (2007) report that disclosed the information, journalist Margaret Warner stated that this situation presented an enormous challenge because none of the players involved really comprehended how serious it was. In the news segment, spokesman, Donald Straussheim revealed that China has no history of providing label ingredients to their own citizens, let alone on their exports. The Chinese government does not have regulatory systems to inspect, monitor, or enforce the law on products they manufacture and export (Newshour, 2007). In other words, no information is provided with respect to the ingredients or from where the products originate. This means that companies are purchasing products and selling them to consumers with little information on the contents. To put this simply another way, a company that wants to cuts costs can easily substitute chalk for powdered milk in the manufacturing process of a product that requires powdered milk. Without regulatory systems in place to monitor quality control, it allows for unethical behavior like this exists because there are no penalties.
The question then is if a US company is making purchases in large volumes that affects a vast portion of the population are they responsible or exempt from tort liability. Seaquist (2012) suggests that business leaders have a responsibility to operate a company with reasonable care and avoid hurting others in the process. If a company manufactures and sells a product that causes death or harm to consumers, the consequences will most likely end up in litigation (Seaquist, 2012). Duty of care is the term used to identify reasonable standards of behavior that businesses are expected to engage in. Because situations continue to change, the standard of care naturally does as well, as the world and marketplace continue to evolve. The facts are, that certain companies in the US purchase products from China that contain ingredients of unknown origin. In addition, there are no regulatory measures in place to insure these products are not contaminated. This is not uncommon practice. Huge corporations that are focused on cutting costs to raise their profits are inclined to purchase in volume from the most inexpensive wholesalers. However, this is one corner a company should never risk making cuts in, because consequences can result in severe illness and death due to tainted food products. Although the company is operating within the legal framework of the law, the ethics of their business strategies are questionable. By not including this information on their packaging, the company would and should be liable for negligence. If however, they include a label that provides information that the ingredients and origins are unknown, then it is up to the consumer to take responsibility to make the best decision based on the information available. This strategy provides transparency and empowers the consumer to make the choice and take responsibility for their actions. The challenge for the company in conducting business in this manner, is that they may lose sales because of the labeling. In that case, they can monitor the sales records and assess if in the long run this product is profitable. Then they can determine whether to continue to include it in their product line. If they see no change in sales figures and consumers still purchase the product that is clearly labeled, then they can continue to risk selling the product, until a problem does arise, which they will be forced to address then. In conclusion, it never makes sense for a business leader to purchase or sell inferior products.
Newshour, P. (Producer). (2007). Chinese imports & food safety [Motion Picture]. USA: PBS. Retrieved August 4, 2013, from http://www.youtube.com/watch?feature=player_embedded&v=BKe70AAU_lc
Owen, D. (2008). Products liability. St. Paul, MN: Thompson/West.
Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.