In the following case, two persons purchased a defective smartphone Samsung S4 and experienced the same overheating problem.
Ashley Adams left his smartphone plugged into electric socket. When he returned, he found out that the phone had overheated and exploded, burning the bed sheet. An independent expert stated that overheating occurred because of the defect in the phone. However, Samsung, after a technical investigation found signs of internal corrosion on the circuit board and charger port, which was caused by liquid contamination. Samsung stated that liquid contamination could in rare instances cause the overheating of charger port.
Clare`s phone was not plugged in electric socket but was in her pocket when it started to overheat. When Clare opened the phone, it started to emit chemical smells. When Clare`s friend, Anna, tried to help her, the phone exploded and plastic fragments hurt Anna`s face.
The following case raises the question of Samsung`s liability for selling defective products: whether Mr Adams and Ms Clare are entitled to remedy resulting from purchase of low-quality product. However, this case concerns not only the problem of defective goods, but the problem of safety which is one of the central aspects of quality of goods. It is only by lucky chance that the users of smartphone in this case did not suffer any serious damage to their health or property. Moreover, it is clear that such defect in the smartphones has a negative effect on its safety and, therefore, the safety of those people who use it.
Sales of Goods Act in section 14 sets the standard of quality for the goods sold under the sales contracts. The section specifies that each contract, by virtue of this statute, contains an implied term about quality and safety of the goods purchased.
Thus, the issue in this case is whether Samsung breached implied terms about safety of the product set forth in section 14 of Sales of Goods Act?
Rule of law
Section 14 of Sales of Goods Act 1979, “Implied terms about quality and fitness” provides that there is no implied term about the quality or fitness for any goods transferred under a contract of sale. At the same time, if the seller sells goods in the course of business, there is an implied term under a contract requiring that the goods must be of “satisfactory quality”. Satisfactory quality is the standard of quality that meets the expectations of a reasonable person regarding price, description and condition of the goods. In appropriate cases, the quality of goods may be determined based on the factor of safety. (Sales of Goods Act 1979)
In SW Tubes Ltd v. Owen Stuart Ltd, the Court of Appeal found that the circular saw was not of satisfactory quality because the lack of the guard made it unsafe. The claimant was granted a judgment even though he failed to mitigate the risk after the defendant offered a new saw in replacement of the old. The Court noted that “as safety is an aspect of quality under 1979 act.the saw was not of satisfactory quality and its supply breached the term implied under s14 of 1979 act.” (SW Tubes Ltd v. Owen Stuart Ltd)
In Clegg v Olle Andersson, the Court of Appeal ruled that the buyers were entitled to reject a new yacht because it failed to meet the standard of satisfactory quality set forth in section 14. The buyers claimed the return of the purchase price and damages for breach of contract because the seller has failed to remedy the problem of overweight keel that threatened the safety of the vessel and the people on board. The Court found that a reasonable person would not consider the yacht to be of “satisfactory quality” because the overweight keel had an obvious negative effect on the safety of the yacht. On this basis, the court held that the seller had violated an implied term about product`s safety found in section 14, ruling that the claimants are entitled to the return of the price and other costs they incurred. (Clegg v Olle Andersson)
The case of Medivance Instruments v. Gaslane Pipework Services also raised the question of application of section 14. The case concerned a fire in Medivance factory that resulted from the ignition of cardboard boxes placed near a heater sold to Medivance by Gaslane Services. Medivance argued that the heater was not a safe product because it lacked a thermostat device that would prevent overheating and thus, would lower the risk of fire. The defendant argued that the heater was sold with the instruction expressly stating that the front of the heater should not be obstructed, particularly with inflammable objects like cardboard boxes. The warning was communicated to the claimant, but he failed to take necessary precautions. The court ruled in favor of defendant, noting that in such cases “the existence of a clear and unambiguous warning of a particular defect or risk when the product is sold, will, on its own, be enough to defeat a claim based on section 14 when, in the absence of such a warning, the claim would have succeeded”. (Medivance Instruments v. Gaslane Pipework Services)
The rule of section 14 establishes a standard of satisfactory quality, which, among other things, requires that the goods sold must be safe to use. From the facts of the case, it seems that Samsung has violated this requirement. Mr. Adams and Ms. Ashley both reported that their Samsung S4 smartphones, without obvious reason, overheated and caught fire: Ms. Ashley`s smartphone has even exploded. Based on statutory provision of s14 Sales of Goods Act and relevant caselaw, Mr. Adams and Ms. Ashley have a viable claim against Samsung. The Court of Appeal in Clegg and SW Tubes discussed the aspect of safety as one of the elements that indicate whether the goods sold under the contract of sales are of “satisfactory quality”. In both cases, the Court recognized that sellers are required to sell goods that meet the statutory standards of quality and safety. If the seller violates the implied term about quality, the buyer can be afforded the best remedy available even if he did not suffer any physical damage from unsafe product. Furthermore, in Clegg the court find that in the event of seller`s breach of implied term about quality of the goods, the buyer has the right to rescind contract and claim full purchase price. However, in SW Tubes the court found that the offer of new, safe product instead of the unsafe is also acceptable remedy. Thus, based on Samsung`s breach of implied term about quality, Ms. Ashley is entitled to claim either full purchase price of the smartphone or accept new and safe device as a compensation for the exploded one.
As to the Mr. Adams` case, it has fewer chances for success. In Medivance, the Court held that a seller is not liable for breach of implied term set forth in s14, if a seller at the moment of sale clearly and unambiguously communicated to a buyer the warning “of a particular risk” and, despite the warning, the buyer took the risk. Samsung alleges that Mr. Adams has subjected his smartphone to “liquid contamination” which might have led to the malfunction and subsequent incident. Samsung s4 warranty clearly provides that Samsung company is not liable for any defects caused by “exposure to liquid, moisture and dampness”. (Phone Warranty Information) Moreover, in our age of technological progress, it has become a common knowledge that mobile phones, especially smartphones, are easily broken if exposed to water even for short moments. Thus, unless Mr. Adams can prove that exposure to water was not the reason of overheating accident and that the smartphone had a technological defect, the Samsung will not be held liable under section 14 of Sales of Goods Act.
Based on the facts of the case, Samsung has breached an implied term about quality in Ms. Ashley case, which gives her the right to claim contract damages. At the same time, Samsung has a good chance to avoid liability in Mr. Adams case if it can prove that the accident resulted from the failure to comply with the warning not to expose smartphone to liquids.
Samsung`s liability to Anna under the tort of negligence
Whether Samsung is liable in the tort of negligence in relation to injuries suffered by Anna
Rule of law
In a landmark case of Donoghue v. Stevenson, House of Lords discussed whether there is liability in negligence for injury caused by defective product in the absence of a contract. Specifically, the court ruled that manufacturers owe a duty of care to eventual consumers if it was impossible to identify the defects before the goods had been received. The Court also established a neighbor principle, which states that a manufacturer does not owe a duty of care to the world at large, but to the neighbors. In the view of the court, neighbors are persons who are reasonably foreseeable to be affected by manufacturer`s actions or omissions. (Donoghue v. Stevenson)
Consumer Protection Act 1987 introduced the concept of strict liability for defective products. Under this concept, the manufacturer is liable for any harm caused by defective product whether he was at fault or not. Thus, under Section 2(1) of the Act, the manufacturer is liable for any damage to any person who suffered such damage from defective product regardless of whether this person is consumer or not. Section 3(1) provides that a defect exists where “the safety of the product is not such as persons generally are entitled to expect” and where such defect violates safety standards, bearing “risks of death or personal injury” . Therefore, the claimant can recover damages under the Act for personal injury, which, as defined in section 45(1) includes “any disease and any other impairment of a person`s physical or mental condition”. (Consumer Protection Act 1987)
Under the tort of negligence established in Donoghue and based on relevant provisions of Consumer Protection Act, Samsung is liable to Anna for personal injuries suffered as a result of explosion incident. According to the rule of Donoghue, Samsung breached a duty of care owed to Anna based on the neighbor principle, and the breach was the cause of Anna`s personal injury.
At the same time, Consumer Protection Act provides better protection of Anna`s interests than common law of negligence. Thus, under the provisions of Consumer Protection Act, Samsung bears a strict liability for damage arising from its defective products. According to this standard, Anna is not required to prove fault or negligence on behalf of Samsung; there is no need to establish traditional elements of negligence such as duty of care, breach of duty and causation. Samsung violated the standard of safety as provided in Section 3(1) of the Act which caused impairment of Anna`s physical and mental condition.
Samsung is liable to Anna both under common law tort of negligence and consumer protection legislation. The incident led to impairment of Anna`s physical and mental condition and Samsung must recover damage suffered because of its defective product. Under Consumer Protection Act, Samsung bears strict liability for Anna`s injury and emotional distress caused by explosion of its defective product. Therefore, Anna is not required to demonstrate negligence on behalf of Samsung.
Sales of Goods Act 1979 c.54
S.W. Tubes Ltd v. Owen Stuart Ltd (t/aO.S.L. Technical Services)  E.W.C.A. 854
Medivance Instruments v Gaslane Pipework Services  EWCA Civ 500
Clegg v Olle Andersson (t/a Nordic Marine)  EWCA Civ 320
Donoghue v Stevenson  UKHL 100
Consumer Protection Act 1987 (1987 c. 43)
Phone Warranty Information, Samsung S4, Retrieved from http://www.samsung.com/us/support/service/warranty/SGH-I537ZBAATT
S Deakin, A Johnston and B Markesinis, Tort Law (2003) 5th Ed. Oxford University Press