product liability
Definition
Product liability is the legal responsibility a business has when a product it makes, sells, or distributes causes someone harm. If a customer gets hurt because your product was defective, had a design flaw, or lacked proper safety warnings, you can be held financially responsible for their injuries and damages.
Example
A small bakery sells a packaged cookie mix that turns out to be contaminated, making several customers sick, and those customers can sue the bakery to cover their medical bills and other losses.
Watch Out
Even if you did not manufacture the product yourself, you can still face a product liability lawsuit simply for selling or distributing it.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.