Clues emerge as to how UK product liability law might be reformed

The Law Commission of England and Wales began reviewing the law relating to liability for defective products last September, promising at the time to consider how the current framework could be updated to ensure it is fit for purpose in the age of AI and other emerging technology. It published an initial scoping questionnaire to gather views on what the review should focus on, and followed that last month by publishing the terms of reference for the review (3-page / 369KB PDF). It plans a formal public consultation on proposals for reform in the second half of this year.

Currently, the product liability regime in Great Britain is underpinned by the Consumer Protection Act 1987. It applies to physical products supplied to consumers. According to the terms of reference for its review, the Law Commission will explore whether the regime should be updated to apply to intangibles like downloadable software, including where that software is modified.

The current framework provides consumers with a right to compensation in the event they suffer damage because of a defective product. The Law Commission has said it will consider whether the concept of ‘damage’ should be expanded to encompass data destruction or corruption in future.

The Law Commission is also exploring whether liability for product defects needs to be extended beyond the product ‘producers’ – manufacturers and processors – in-scope of the existing framework. It will also look into potential changes that could make it easier for consumers to show that products are defective, particularly in the context of AI where the Law Commission highlighted there can be opaqueness and a degree of autonomy over how systems operate.

Other reforms that will be considered in the review include alterations to the so-called ‘state of the art’ defence, which enables product producers to defend claims that their product is defective with reference to the state of knowledge and the market at the time the product was supplied. The Law Commission is to look at whether that defence needs to be updated to account for iterative updates being made to products.

The review will also explore whether the period of time during which product liability claims can be raised after products have been supplied could also be extended beyond the current 10-year limit, to account for potential “latent harms”, the Law Commission said.

While the Law Commission is an influential advisory body to government, it would ultimately be for the UK government to decide on whether to implement its recommendations for reform. It has undertaken to consult with stakeholders in devolved nations “to record any relevant differences”.

Jacqueline Harris of Pinsent Masons said: “In essence, the review’s purpose is to ensure that product liability laws in England and Wales are fit for purpose in the modern world. The hope is that any changes will help to ensure they are future proofed, able to adapt to new technology and emerging risks. The review is undoubtedly also prompted by recent changes in the EU. There, the new Product Liability Directive came into force on 8 December 2024 and heralded the most significant amendment of Europe’s product liability regime in nearly 40 years. The new rules will apply to products placed on the market after 9 December 2026.”

Changes introduced into the regime in the EU include broadening the definition of ‘product’ to include software, irrespective of its mode of supply or use, and digital manufacturing files governing automated production processes.

The revised EU rules also clarify that damages for personal injury arising from a defective product can include "medically recognised damage to psychological health" as well as damages for destruction or corruption of data.

Businesses that substantially modify products outside the manufacturer's control and then place them on the market are also among the bodies now subject to potential liability under the EU regime, as are distributors, importers and online marketplaces.

Among other things, the updated EU Product Liability Directive also imposes new disclosure obligations on businesses subject to claims, introduces a presumption of defectiveness and/or of causal link between the defectiveness and damage in certain circumstances, and extends the limitation period for liability for latent defects from 10 to 25 years.

Katie Hancock of Pinsent Masons said: “The UK government has made it clear that it will facilitate regulatory alignment with the EU where that is of benefit to the UK. Alignment may well feel as if it should be the easier option for businesses trading in both jurisdictions and avoids concerns of substandard product dumping in one or the other. However, it may not promote economic growth in the UK, a key policy objective of the government. Careful consideration will be required both by the Law Commission and government before change is proposed and the various competing interests will have to be balanced, which will not be an easy task.”

The Law Commission said: “A clear and efficient legal regime is necessary for [product liability], particularly with respect to emerging technologies, to balance business confidence and innovation against consumer and third-party protection. A [product liability] regime that is fit for purpose also enables insurers adequately to price risk of emerging technologies to instil further market and user confidence.”