CHINA Law and Practice Contributed by: Yue Dai, Zhenghao Li and Xiaokun Yuan, King & Wood
of this guide, unless otherwise specified, “product lia - bility” should be construed as encompassing a wider range of legal consequences related to product qual - ity, covering civil, administrative and criminal liabilities or penalties. For administrative and criminal penalties, please see 1.5 Penalties for Breach of Product Safety Obliga- tions . This section examines in greater detail the civil liabilities arising from defective products, as well as procedural issues in civil litigation. Contractual claims over product non-conformity Firstly, a buyer can bring a claim against the seller in respect of the non-conformity of products – ie, that the product does not conform to the applicable qual - ity standards or specifications presented. Specifically, the buyer (or consumer) may request repair, replace - ment or refund of the product, and compensation for any further losses caused, if a product falls within one of the following categories: • the product does not have the properties required for use and the buyer (or consumer) has not been informed of the flaws in advance; • the product quality does not conform to the stand - ards specified on the product or its packaging; or • the product does not meet the quality stated in the instructions for use or demonstrated via samples provided. The non-conformity of products may pertain to not only defects that threaten the safety of personal life or property, but also flaws to a lesser degree. A claim based on such non-conformity is, by nature, a con - tractual claim since the seller breaches the contract by selling products that fail to meet the quality standards or specifications agreed upon by the parties. In the case of product non-conformity, the consumer may further claim punitive damages if the merchant inten - tionally engages in fraud (see 1.5 Penalties for Breach
party may also claim compensation for mental dis - tress if the defective product causes “severe mental damage”. Under Chinese law, in cases of product defects, prod - uct liability borne by the manufacturer is a form of strict liability, which means that the manufacturer is liable for damage regardless of whether there is any fault on their part. The seller, on the other hand, is lia - ble for damage only if it is at fault for the injury or loss. However, the injured party may bring claims directly against the manufacturer or the seller, without estab - lishing their fault. If the fault ultimately lies with the manufacturer, the seller may ask the manufacturer to reimburse its losses after it compensates the plaintiff. If the product defect is caused by the fault of a third party – such as a transporter – the manufacturer or seller, after compensating the injured party, may seek reimbursement from that third party for the losses incurred. Accordingly, to bring a tort claim for product defects, the injured party is required to establish not the fault of the product seller or manufacturer, but the following three elements: • the defect of the product; • the damage or loss suffered; and • the causal relationship between the defective prod - uct and the damage. Among these elements, the most important condition is whether a product is defective. Product defects typ - ically fall into three types: design defects, manufactur - ing defects, and inadequate warnings or instructions. As noted in the Civil Code, even if the safety defect has not yet resulted in actual damage, the infringed party has the right to request the elimination of the hazard, which may take the form of suspension of manufacturing/sales, product repair, or product recall. According to Article 46 of the Product Quality Law, two tests serve to determine the existence of a prod - uct defect: • a statutory standard, which considers a product to be defective if it fails to meet one of the applicable
of Product Safety Obligations ). Tort claims over product defects
Secondly, any injured party harmed by a defective product may bring a tort claim against the product manufacturer and/or seller. In addition to property damage and personal injury/physical harm, the injured
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