Product liability law generally falls within the purview of theUnited States. However, third-parties who sell their productsthrough Amazon may be based in other countries. (Photo:Shutterstock)
Amazon is the quintessential example of a modern-day"disrupter." From books to electronics to groceries and media, thetrillion-dollar behemoth has significantly impacted almost everysector of the economy. Perhaps less noteworthy to the generalpublic, but significant to insurance professionals, is the impact Amazon has had on product liability law.The innovations that propelled Amazon past Walmart as the largestretailer in the world have called into question traditionalunderstanding of what it means to be a "seller," and specificallywhether Amazon should be subject to seller liability for theproducts that third-party sellers list on Amazon.com.
Product liability law is generally within the purview of theUnited States. Most have adopted the principles set forth in theRestatement of Torts, the leading treatise on tort law in the U.S.The Restatement provides that "one who sells any productin a defective condition unreasonably dangerous to the user orconsumer or to his property is subject to liability for physicalharm." The Restatement does not distinguish retailers frommanufacturers; it applies to all sellers within the supply chain.For example, Walmart could be found liable for selling a defectivelaptop battery even if the battery was designed and assembled by aChinese corporation. Walmart could seek contribution from theChinese corporation but the burden would be on Walmart, not theinjured consumer.
Determining liability
Imposing liability on the entire supply chainserves chiefly to promote product safety and to ensure customersare compensated for injuries caused by defects. From a safetyperspective, product liability encourages retailers to vet theirsuppliers and to ensure the quality of their products. Productliability also enables individual customers to sue retailersdirectly, which is crucial in today's economy where manufacturersand suppliers are not always known, solvent or otherwise amenableto the jurisdiction of the U.S.
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