Country:

Portugal

Court:

Coimbra Court of Appeal (Tribunal da Relação de Coimbra) of the 27th of April 2004 (Case 431/04)

Topics:

Private consumption definition

Facts:

A sold to B an equipment to be put in his freezing truck. In addition, B signed an insurance contract with C, labelled as "cargo transportation", in which, according to the terms of the contract, all risks are guaranteed by C. The equipment never worked, due to a manufacturing problem. Therefore, while B was transporting ice creams in his freezing truck, the ice creams melted and C had to compensate B. For this reason C decides to sue A.

Court Decision:

Firstly, the court stated that «product liability is a way of strict liability/liability without fault. One is responsible, regardless of the fault committed, for the damages caused by the provided goods placed in the market. The moment that is taken into account to considerer the existence of the product's deficiencies is when they are placed in the market for trade. » The court concluded that the product had deficiencies that were the cause of its malfunction. However, it stated that « compensation can only extend to damages that arise from death or personal injury and to damages caused to other goods aimed at particular consumption, rather than the original product». In this case, the court found that the ice cream was not aimed at personal consumption; therefore, damages do not qualified, in terms of liability without fault, to compensation.

Ratio of the decision:

The court considered that, in this case, the Law that ought to be applied is the Decree-law nº 383/89, which deals with product liability regardless of fault. According to its article 4º, a product is considered to be dysfunctional when it does not offer safety standards regarding all of its forms, such as the products presentation or use that a person can make of the product since the moment that it is placed on the market. However, the producer will not be held liable when he proves that the deficiency did not exist at the moment the product was put into circulation. In this particular case, the defendant did not prove these circumstances. However, according to article 8.º nº 1 of the decree-law, compensation can only extend to damages that arise from death or personal injury and to damages caused to other goods aimed at private consumption, rather than the original product. So, while analyzing the courts decision, we must face the problem of determining the meaning of "private consumption". Regarding this issue, the Court followed Calvão da Silva's appreciation on this subject (expressed in the authors book about this subject: Compra e venda de coisas defeituosas - conformidade e segurança, 2001, p. 208). Therefore, the court alleged that "when it comes to the damage of goods the Decree-law nº 383/89 only offers a strict understanding of consumer protection. This means that it only extends to situations of personal use and to those that are non-professional related. Consequently, a refrigerator that is used in a domestic environment is considered to be of private consumption but it will not be considered as such if it is used in an office. A car is considered to be a private consumption good when it is used with a private or family intention, but not if it is aimed at an occupation". The Court concluded that such damages cannot be compensated under the terms of the Decree-law nº 383/89. However, the plaintiff could sue the defendant under the general principles of Tort. Nevertheless, this aspect was not dealt with by the judges.

Comments:

Portuguese courts have been judging unanimously this type of cases in the same way. In our legal system, strict liability is narrowed by the limitation of the damages that can be compensated. Concerning product liability, the limitation is established in article 8º of the Decree-law. However, doubts arise when we are dealing with the understanding of the expression "private consumption". There are other court decisions which understand that such expression implies a distinction between private and public law. If that was correct, as the product was not used by a public entity, the damages would be compensated. The court decision, in this case, reflects the opinion of the majority of scholars. The Law that regulates product liability is incorporated and understood as being part of consumer protection. Therefore, it is based on it that the "private consumption" expression can only apply for a non-professional use of a product.