CORPORATE RESPONSIBILITY IN ADVERTISING, PRODUCT SAFETY

AND LIABILITY

Presented By:

Akrit Mehta, Ankita Ghosh, Donald White, Farhana Choudhury, Harish Dalwaipattan,

Niyati Gauba

Agenda

What is Corporate Responsibility ?

Corporate Responsibility Advertising Product Safety Product Liability

What is Corporate Responsibility ?

Corporate Responsibility is an expression used to describe what some see as a company's obligation to be sensitive to the needs of all of its stakeholders or even to society as a whole in its business operation

Corporate Responsibility in Advertising

Advertising

Can be defined as a form of communication between buyer and seller

Provides consumers with information about the goods & services

Its goal is to persuade

Deceptive Techniques in Advertising

Ambiguity

Concealed facts

Exaggeration

Psychological Appeals

Deception- example

Ads for diet products and services sold each year often include misleading and exaggerated claims that promise rapid, effortless weight loss and unachievable goals

At least 40 percent of the 300 ads reviewed in the two- year study made at least one false representation, such as 'can eat as much as you want and still lose weight‘

Other ads made unproven claims about safety and effectiveness, when there was little to support that claim.

Ads directed at Children

Significant consumer group

Low resistance to deception/manipulation

Problem – gullible / naïve

Example : The Centre for Science in the Public Interest announced legal action to try to stop the Kellogg Co from aggressively marketing high-sugar, low-nutrient foods to kids

Corporate Responsibility in Advertising

Advertising needs to ensure

Are the public welfare and good taken into consideration for the effects as well as the intention of advertisements?

Has anyone been harmed?

Whose rights are being protected or violated intentionally and inadvertently?

Are consumers being justly and fairly treated?

Corporate Responsibility and Government Enforcement

Government , at times bans or restricts commercial speech to obtaining a public policy goal

Example : The basic argument for restrictions on tobacco

advertising stems from the belief that tobacco advertising leads to an increase in overall consumption and also that this advertising contributes to minors smoking

Corporate Responsibility in Product Safety

Product Safety

Refers to measures undertaken by manufacturers against unreasonable risks of injuries associated with consumer products.

The responsibility of manufacturers to consumers concerning:

Product quality Prices Labeling Packaging

Need for Product Safety

Increased dependence of consumers on manufactured goods

Informed consumers

Prevention of consumer exploitation

Potential hazards associated with consumer products

Product Safety Issues

Injuries from product use

Safety manuals

Statutory warnings

Costs from deceptive selling practices

Emotional costs

Loss of goodwill

Product Safety Issues

Costs from defective goods

Physical damage

Collateral damage

Adherence to societal and consumer norms

Disclosure of confidential information

Doctor/Lawyer client relation

Corporate Responsibility in Product Liability

What is Product Liability ?

This is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause.

Encompasses a number of legal claims that allow an injured party to recover financial compensation from the manufacturer or seller of a product

Product Liability

Claims are associated with :

Negligence, Strict liability Breach of warranty Various consumer protection claims

Types of Product Liability

There are three major types of product liability claims:

Manufacturing defect Design defect A failure to warn

Legal Liability of Manufacturers

Provide customers with a product that lives up to the claims the firm makes about the product

Due-care theory of the manufacturer’s duties to consumers

Caveat emptor Strict Liability

Due Care Theory

Due care is the idea that consumers and sellers do not meet as equals and that the consumer's interests are particularly vulnerable to being harmed by the manufacturer, who has knowledge and expertise the consumer does not have.

According to the due care view, the manufacturers have an obligation above and beyond any contract, to exercise due care to prevent the consumer from being injured by defective products.

Caveat Emptor

“Let the buyer beware”

The law now requires that goods must be of “merchantable quality”

CE also applies to the return policy

There is no legal requirement for the vendor to provide a refund or exchange

Caveat Emptor

According to the doctrine of caveat emptor, consumers were held to the ideal of being knowledgeable, shrewd and skeptical in their purchases.

It meant that the consumer was entirely responsible if harmed by a purchased product.

Product Liability Law in India

The Consumer Protection Act, 1986

The Sales of Goods Act, 1930

The Monopolies and Restrictive Trade Practices Act, 1969 (“MRTP Act”)

Cases

Stella Liebeck vs. Mc.Donald's Corporation

Smt. Uma Deepak v. Maryti Udyog Ltd. & Ors

Wheels World Vs. Pradeep Kumar Khurana

THANK YOU…!