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Law Commission proposes major overhaul of product liability law for the digital age

Published:
image of products

The Law Commission has launched a consultation on major reform to product liability law to ensure that it remains effective in a world increasingly shaped by digital technologies. A summary of the full paper is attached.

The law governing defective products was introduced almost 40 years ago, before smartphones, apps, social media and artificial intelligence. It has not kept pace with how these technologies have transformed everyday life. New proposals would bring software, AI systems, and online platforms within scope, while providing greater clarity on when people harmed by defective products are entitled to compensation.

Key proposals include:

  • Expanding the definition of a “product” to include software, AI systems, the design components and features of social media and other online platforms, regardless of how they are supplied.
  • Extending liability to online marketplaces, reflecting the way people increasingly buy products today.
  • Clarifying when compensation may be available for psychiatric illness caused by defective products.
  • Making the law on what counts as a defective product clearer and easier to apply.
  • Introducing a new mechanism to balance risks fairly where claimants face exceptional difficulty obtaining evidence to prove that a product was defective.
  • Retaining key defences for businesses to maintain the balance of interests between business and consumers, while adapting them to the digital age.

The review focuses on Part 1 of the Consumer Protection Act 1987, which was designed to make it easier for people injured by defective products to claim compensation. The law was developed for a world largely dominated by physical goods. Since then, products have become more complex, increasingly digital and often interconnected. Questions have also arisen about whether the current law provides sufficient access to redress, particularly where claimants face difficulties obtaining the technical evidence to prove that a product is defective.

One of the Commission’s central proposals is to broaden the definition of a “product” so that it is no longer limited to physical items. Software and AI systems would be treated as products in their own right, whether supplied on or embedded in a device, downloaded from the internet or accessed remotely. The proposals would also bring within scope the design components and features of social media platforms, including recommendation systems such as algorithms.

The Law Commission also proposes clearer rules on when compensation may be available for psychiatric harm caused by defective products. This is increasingly important as emerging technologies create new risks of psychiatric injury. The proposals address claims by people directly harmed by defective products, as well as those who develop psychiatric illness after witnessing harm to, or the death of, a loved one.

To make the law on defect clearer and easier to apply, the Law Commission proposes a set of principles to guide the courts when assessing whether a product is defective. It also proposes an updated list of relevant circumstances that the courts should take into account when determining defectiveness. These changes are intended to promote greater consistency in decision-making and help reduce the costs of litigation.

The Law Commission also proposes measures to address evidential challenges in technically complex claims, where claimants face exceptional difficulty obtaining evidence to prove that a product was defective. In these limited circumstances, a new presumption of defectiveness would apply. Defendants could seek to rebut the presumption or accept it, in which case the court would award partial compensation under a new risk-sharing mechanism.

The reforms are designed to strike a fair balance between the interests of consumers and businesses. To preserve this balance, the Law Commission proposes to retain and update defences that allow producers to avoid liability where it would be unfair to impose it. These include the “development risks” defence, under which a producer would not be liable for a defect that could not have been discovered when the product was supplied or when it later became defective.

Professor Solène Rowan, Commissioner for Commercial and Common Law, said:

“The law governing defective products was introduced long before smartphones, social media and artificial intelligence became part of everyday life.

“As technology evolves, the law must evolve with it. Our proposals are designed to ensure that people harmed by defective products can obtain compensation, while providing greater clarity and certainty for businesses developing the products and technologies of the future.

“We want to hear from consumers, businesses, legal professionals and anyone with an interest in these issues to help us shape our final recommendations.”

Next steps

The Law Commission welcomes responses from as many stakeholders as possible, including consumers and consumer groups, businesses involved in making or selling products, and legal professionals with relevant expertise. Following the consultation, the Law Commission will consider all responses before publishing its final recommendations for reform, expected in late 2027.

The consultation closes on Thursday 14 January 2027. People can respond using the online form at https://lawcom.gov.uk/project/product-liability/ or by emailing productliability@lawcommission.gov.uk