Consider whether U.S. retailers that utilize products or raw ingredients that are imported from China and that are poorly regulated should be liable in tort for injuries to consumers who are harmed...

Consider whether U.S. retailers that utilize products or raw ingredients that are imported from China and that are poorly regulated should be liable in tort for injuries to consumers who are harmed by those products. If the U.S. companies should be liable, then those companies would not be legally exempt from tort liability. Discuss the consequences of such a policy to U.S. businesses. 

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kipling2448 | (Level 3) Educator Emeritus

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In general, U.S. companies can be held legally liable for their failure to adequately monitor the quality of components or ingredients used in U.S.-manufactured products. While it does differ from state to state, American businesses leave themselves vulnerable to civil suits filed in response to accidents attributed to foreign-made components. As one U.S. law firm specializing in such maters wrote on this topic:

"U.S. products liability law varies considerably from state to state but, as a general rule, anyone in the chain of commercial distribution of a consumer product, including manufacturers, importers or other intermediate distributors, and retail sellers, may be liable if the product is defective and injures someone." ["U.S. Liability for Foreign-Made Products," http://www.larsonking.com/files/Foreign_Products_Liability.pdf]

In short, then, U.S. retailers and manufacturers that import foreign-made components or, in the case of the food industry, ingredients, can be sued in state courts for negligence. Now, all of this assumes that there has been some "injury" resulting from negligence on the part of the company in question. Otherwise, there is no basis for a civil suit. Assuming an injury, then, the American business can certainly be held liable even though it didn't manufacture or process the defective or tainted element. As the reach of state courts may not extend, in a practical sense, to a foreign company, then the onus on the American company becomes even greater. 

The consequences of this situation for U.S. companies are clear. It is incumbent upon those companies to monitor the quality and specifications of the foreign-made components being incorporated into the final "U.S.-made" product. That requires occasional trips by officials or representatives of the U.S. company to the foreign site in question for the purpose of monitoring quality control measures, which may be markedly different, in a negative sense, from those utilized in the United States. American businessmen/women who fail to apply such due diligence risk receiving shipments of defective items that will have serious ramifications for their ability to meet delivery dates. Hopefully, flawed components not identified at their source -- in effect, at the foreign-based factory or processing plant -- will be detected before their incorporation into the final product. Such discoveries, as stated, will entail considerable disruptions to the American business's manufacturing and shipping processes. 

Holding foreign suppliers, especially in countries with corrupt legal systems or in countries with viable but deficient legal systems (by U.S. standards) liable for defective products can be exceedingly difficult and protracted, resulting in unacceptable or untenable losses on the part of the American company. That is why it is incumbent upon the American business to exercise due diligence in any arrangements negotiated with foreign suppliers. 

The laws in the jurisdiction in which the faulty items are manufactured may not be adequate to protect the American company, and the absence or presence of a binding legal commitment in the form of a treaty between the two countries at issue may not be sufficient to protect the American company from serious damages resulting from a civil suit. Most trade agreements, including those that fall under the rubric of the World Trade Organization, include provisions addressing these issues, but their dispute resolution mechanisms can be very slow and ponderous, leaving the wounded American company fatally liable for damages.

At the end of the day, the U.S. company must remain vigilant regarding the quality control measures of the foreign partner. That U.S. company can be held liable for its failure to detect or identify defective foreign-made components, and it is ultimately responsible for monitoring the quality of those components before injuries to consumers occur.

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