IJCA - Volume I - Flipbook - Page 52
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The International Journal of Conformity Assessment
If a lawsuit is filed, it is better to resolve it through
settlement rather than a judgment in court; however,
unconditional settlements may cause serious
damage to the company. Therefore, the enterprise
must go on trial with a firm attitude, if necessary,
after careful analysis and review of the case. As a
result of the company’s review, if there appears to
be no possibility of winning the trial, it is desirable to
settle at an early stage during a lawsuit.
Even if a product liability accident occurs, product
liability will not be interrogated if the company
actively proves there is no product defect. This
is because the Product Liability Act holds the
manufacturer liable for damages based on the
defect in the product. Proving there are no defects
results in the product’s safety measures preventing
defects in the product’s finality. Therefore, the
company’s product liability prevention plan should
not only focus on solving product accidents that
have already occurred, but also strive to provide safe
products to users (consumers) in preparation of the
following topics for the future.
Improvement of the Accident Information
Collection System
To prevent product liability accidents and
achieve a fair and smooth resolution of disputes
by narrowing the gap in product awareness
and information between consumers and
manufacturers, it is necessary to establish a
comprehensive management system. This helps
with improving safety systems and responding
to product liability accidents by introducing and
implementing a system for the collection and
analysis of product liability accident-related
information.
Maintenance of the Agency that Finds the Cause
of the Defect
Even if the liability requirements are changed from
negligence to defects due to the introduction of the
Product Liability Act, the victim is still responsible
for proving the causal relationships between the
existence of defects and damages, which are the
biggest issues in product liability disputes.
Scientific and technical analyses of the causes
of the accidents are needed to respond to the
victim’s claim basis for compensation and the
prevention of recurring defects. In the use of these
cause-finding institutions, above all, support for
reducing the cost burden and easy directions for
use are required.
2022 | Volume 1, Issue 1
In particular, the maintenance of the cause
investigation agency can reduce the time and cost
of disputes by preventing the abuse of lawsuits
by unclear claims and can greatly contribute to
preventing the recurrence of accidents that reveal
the cause of accidents to manufacturers.
Improvement of the Non-Judicial Dispute
Settlement System
Taking the introduction of the Product Liability
Act, it is necessary to establish a simple and rapid
dispute settlement system managed by third
parties.
It can minimize the manufacturer’s easy damage
relief and loss costs by diversifying dispute
resolution procedures, leading to quick and easy
resolution in preparation for the increase of
damage-relief claims incidents.
Product liability disputes may also result in
significant monetary damages due to life
accidents, but minor physical injuries or small
amounts of property damages are expected to
account for the majority of the disputes; hence, the
current civil trials have many problems considering
the time and economic burdens required by the
lawsuits.
In addition, if it is difficult to resolve problems
through negotiations between consumers
and manufacturers, then going directly to trial
becomes a concern about the social and economic
costs and losses such as excessive costs and the
waste of time due to delays in litigations.
A Proactive Approach to Securing Measures of
Compensation
If the Product Liability Act is introduced and
the obligation to compensate for damages
due to an unexpected product accident is
imposed, this presents a serious business risk
to manufacturers that fail to take precautions to
perform compensation. Therefore, it is necessary
to ensure fullness by organizing systems that can
secure various compensation implementation
measures such as insurances, guarantees,
deposits, deduction systems, mutual company
establishments, self-insurances, and mark
systems.
Response to Change Trends in Safety Regulations
Until now, pre-regulations have been emphasized
to promote consumer safety. The introduction of
the Product Liability Act is expected to strengthen
post-compensation measures and future
changes may promote consumer safeties under
autonomous corporate responsibilities.
However, safety regulations are being
strengthened on an international level according
to the preventive aspects of accidents and the
internationalization of product-related standards.
To defend development risks, manufacturers
are required to respond in a timely manner to
changes in product safety-related standards and
regulations
2. Potential Business Impacts of Product Liability
Legislation
(1) Strengthening of product stability
It can be said that Product Liability Act legislation
greatly contributes to strengthening the stability of a
company’s product.
In the process of developing, designing, planning,
purchasing, manufacturing, inspecting, marking, and
post-servicing products, whether established or not,
various product liabilities such as the existence of
product defects play an important role. Therefore,
efforts to improve safety are inevitable because it
is beneficial to make safe products rather than pay
compensation for defective products.
Due to this influence, the product safety is gradually
improved, which leads to an increase in sales and
enhances the corporate image due to the purchasing
preference of consumers who recognize this.
(2) Realization of customer satisfaction
management (consumer protection)
From a consumer’s point of view, the Product
Liability Act facilitates relief from product accident
damages, leading to claims, trials, and disputes from
consumers who are not compensated for damages
due to difficulties in procedural evidence or proof
of defect. This number is expected to continue to
increase.
Accordingly, companies are expected to develop
and design in preparation for disputes or lawsuits
caused by defective products, and naturally
implement corporate management systems
based on the concept of consumer protection and
customer satisfaction.
(3) Enhancement of business competitiveness
From a company’s point of view, product safety
measures are an important concern for corporate
management, which spurs competition for the
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production and sale of safer products. Resultingly,
as consumers purchase products based on
factors such as product safety in addition to price
and quality, companies that produce products in
preparation for product liability naturally strengthen
their competitiveness.
Companies should establish and implement product
liability prevention measures and product safety
measures to actively prevent product accidents,
not simply from the perspective of product liability
defense.
(4) Dispersion of company responsibilities
Without the Product Liability Act, the company
has no choice but to rely on the negligence liability
(tort liability); however, when the Product Liability
Act is enforced, proving product defects is much
easier than proving negligence, so the company’s
responsibility becomes heavier. Nonetheless,
companies can distribute the burden of accident
costs through product liability insurance.
(5) Prevention of recurring accidents
In today’s consumer society, accidents caused by
product safety are inevitable to some extent.
In the U.S., legal systems such as class action laws
have led to surging product liability lawsuits and
rising insurance premiums—and, consequently, the
product liability crisis of corporate bankruptcy. Yet in
the case of Korea, which has a similar legal system
to Japan, lawsuits and disputes related to product
liability are expected to be similar to Japan.
Due to such lawsuits or disputes, companies can
take proactive and defensive measures on product
safety and prevent the recurrence of accidents.
3. Defensive Countermeasures for Product Liability
Accidents
(1) The Importance of Product Liability Defense
Countermeasures
From the perspective of product liability accidents
and companies’ preventative product liability
measures, it goes without saying that the pursuit of
product safety is of paramount importance.
However, in the modern high-consumption society,
even though companies pay maximum attention to
prevent accidents, it is difficult to completely prevent
product liability accidents. Therefore, it cannot be
said that companies have sufficient product liability
measures just by taking product liability defense
measures.
