2. Business Model Legality/ Regulatory Approval Investigation

Q2 (Product Liability for Resellers)

We are conducting an e-commerce business. Is it correct that the liability for manufactured goods is only with the manufacturer, and we have no liability?

Under the Product Liability Act, not only the manufacturer and the processer, but also the following parties have liability for manufactured goods: (i) a person that imports the products in the course of trade (Article 2, Section 3(1)); (ii) a person that provides its name, trade name, trademark or other indication on the product as the manufacturer of such product (Article 2, Section 3(2)); (iii) a person that provides a representation of its name or another indication on the product which misleads others into believing that it is the manufacturer (Article 2, Section 3(2)); and (iv) a person that provides a representation of its name or another indication on the product which, [in light of the manner of manufacturing, processing, importation or sales of the product and other circumstances, could be deemed as holding itself out as the manufacturer] (Article 2, Section 3(3)). Accordingly, if you are importing the products as part of your business, you could have liability under item (i) above. And even if you are not importing the products, you need to be careful to not display your name or another mark so that one of items (ii) to (iv) above may apply to you.

(Posted: January 27, 2012)