Product Liability for Contractors and Developers – The Defective Products Liability Law and the Torts Ordinance
Jan 10, 2020
חבות הקבלן/היזם על פי חוק האחריות למוצרים פגומים
חוק האחריות למוצרים פגומים תש"ם -1980 (להלן: "חוק מוצרים פגומים" או "החוק") קובע אחריות חמורה של היצרן (ובענייננו: הקבלן/היזם) לנזקי גוף שנגרמו כתוצאה מפגם או ליקוי במבנה. שימו לב שסעיף 1 לחוק מגדיר כמוצר: "מוצר המחובר למקרקעין, ובניין".
נראה רחוק? מסוג הצרות שאפשר להתמודד איתן כשהן צצות? ממש לא.
החוק מעניק כלים לא מבוטלים לנפגע. ראשית, סעיף 2 לחוק מוצרים פגומים קובע כי האחריות לא מותנית ברשלנות, במעשה או מחדל. שנאמר, "יצרן חייב לפצות את מי שנגרם לו נזק גוף כתוצאה מפגם במוצר שייצר ואין נפקא מינה אם היה או לא היה אשם מצד היצרן". בנוסף, החוק קובע חזקה לאחריות הקבלן/היזם "אם נסיבות המקרה מתיישבות יותר עם המסקנה שהיה פגום מאשר עם המסקנה שהיה תקין".
זאת ועוד, מאחר שהבניין הוא "מוצר" ניתן לראות באלמנטים השונים המרכיבים אותו או מותקנים בו – כרכיבים של המוצר. כך גם תכנון הבניין והעבודה שבוצעה להקמתו הם "רכיבים". אי לכך, בשרשרת האחריות ע"פ החוק יעמדו לצד הקבלן גם יצרן הרכיב ומתכנן המבנה, בהתאם לעניין, ותיבחן שאלתם אחריותם לנזקי הגוף שייגרמו כתוצאה מאחד הרכיבים כמצוין.
כך לדוגמה, נפילת אריח שיש על ילד ששיחק לתומו במדשאה בחצר הבניין בחלוף שנתיים ממועד מסירת המבנה לדיירים, כאשר נמצא שוועד הבית או הדיירים לא ביצעו כל שינוי בחיפוי המבנה, מעיד על פגם בחיפוי החיצוני.
The contractor/developer's liability under the Product Liability Law
The Defective Products Liability Law of 1980 (hereinafter: "Defective Products Law" or "the Law") establishes strict liability of the manufacturer (and in our case: the contractor/developer) for bodily harm caused as a result of a defect or deficiency in a structure. Note that Section 1 of the Law defines a product as: "a product attached to real estate, and a building."
Seem far away? The kind of trouble you can deal with when it arises? Not at all.
The law provides significant tools for the injured party. First, Section 2 of the Defective Products Law states that liability is not conditional on negligence, an act or omission. As stated, "A manufacturer must compensate anyone who suffers bodily harm as a result of a defect in a product it manufactured, and it does not matter whether or not the manufacturer was at fault." In addition, the law establishes a presumption of liability for the contractor/developer "if the circumstances of the case are more consistent with the conclusion that it was defective than with the conclusion that it was in good condition."
Moreover, since the building is a "product," the various elements that make up it or are installed in it can be seen as components of the product. Likewise, the design of the building and the work performed to construct it are also "components." Therefore, in the chain of responsibility according to the law, the manufacturer of the component and the designer of the structure will also stand alongside the contractor, depending on the matter, and the question of their liability for bodily harm caused as a result of one of the components will be examined as indicated.
For example, a marble tile falling on a child who was playing alone on the lawn in the building's yard two years after the building was handed over to the tenants, when it is found that the building committee or the tenants did not make any changes to the building's cladding, indicates a defect in the exterior cladding.
Liability of the contractor/developer based on the Torts Ordinance
Alongside the Defective Products Liability Law, under which the injured party does not need to prove negligence on the part of the contractor/developer, the injured party has the option of filing a claim under the Torts Ordinance (New Version), 1968, by virtue of the tort of negligence under sections 35-36 of the Ordinance. In the event of such a claim, the injured party must prove the defendant's negligence.
If, in the case of personal injury, the cause of action can be based on both laws, in all matters concerning property damage or financial damage caused as a result of a defect or defect in construction - the liability of the contractor or developer will apply according to the Torts Ordinance.
Product liability insurance provides a solution to both of these paths: both bodily injury claims under the Defective Products Liability Law and claims based on the Torts Ordinance for bodily injury or property damage.
לצד חוק האחריות למוצרים פגומים במסגרתו הניזוק לא צריך להוכיח רשלנות של הקבלן/היזם, עומדת לניזוק האפשרות לתביעה במסגרת פקודת הנזיקין (נוסח חדש), תשכ"ח-1968 מכוח עוולת הרשלנות לפי סעיפים 35-36 בפקודה. במקרה של תביעה כזו, על הניזוק להוכיח את רשלנותו של הנתבע.
אם לעניין נזקי גוף עילת התביעה יכולה להסתמך על שני החוקים גם יחד, בכל הנוגע לנזקי רכוש או נזקים פיננסיים, שנגרמו כתוצאה מליקוי או פגם בבניה - חבות הקבלן או היזם תחול ע"פ פקודת הנזיקין.
ביטוח חבות מוצר מספק מענה לשני הנתיבים הללו. הן תביעות נזקי גוף מכוח חוק האחריות למוצרים פגומים והן תביעות המבוססות על פקודת הנזיקין לנזקי גוף או רכוש.
While contractor's work insurance or professional liability insurance is usually intended for the period of time that the project is in progress, product liability insurance provides long-term protection after the project is completed.
The exposure period for a claim under the Defective Products Liability Law is 10 years, while the exposure period under the Torts Ordinance is much longer and is also related to the Sales Law (Apartments). As is known, according to the Sales Law, the warranty period lasts up to 10 years depending on the component in question according to a warranty table specified in the law, but in certain cases - such as a warranty for construction - it lasts even 20 years.
A claim under the Torts Ordinance is based on the above warranty periods, although they do not constitute rivets.
We have already encountered a claim for bodily and property damage resulting from an electrical short circuit that caused a fire in the building 9 years after it was delivered for use.
The fire quickly spread from the main panel on the ground floor to all floors of the building. The fire investigator appointed by the insurance company that insured the building for the House Committee found that the fire separations were carried out negligently and hence the path to filing a claim under the Torts Ordinance was short. Although the warranty period had expired, the insurance company that compensated the tenants filed a subrogation claim against the developer, relying on the tort of negligence under sections 35-36 of the Torts Ordinance.
תקופת החשיפה של הקבלן/היזם לתביעות
The Defective Products Law lists a number of defenses that the contractor/developer can avail themselves of on the day of the order and depending on the circumstances. Below are some of the most important of them:
- The defect in the structure was created after the structure left the contractor/developer's control: If the contractor proves that the structure passed all safety and standard tests before it left his control, it is presumed that the damage was caused by a defect that occurred subsequently. For example: A short circuit in a residential apartment that was split after it was built by the buyer caused a fire. It was determined that the buyer split the electrical panel amateurishly, resulting in the short circuit and fire. The developer was found to be exempt from liability.
- Technological development - The contractor/developer could not have known that the design would not meet the reasonable level of safety according to the level of scientific and technological development that existed when the product was out of his control. For example, the building was built exactly according to the earthquake standard but collapsed during an earthquake and people were injured.
- The structure went out of the contractor's/developer's control involuntarily - The structure went out of the developer's/contractor's control involuntarily and he took all reasonable measures to prevent it from going out of his control, including warning the public concerned about the risk involved in the structure.
- The victim's awareness of the risk - the victim knew about the defect in the product and the risk involved and voluntarily exposed himself to this risk.
The protections that the law provides to the manufacturer - the developer/contractor
Israeli tort law states that the injured party can be held "contributory fault" if his behavior influenced the damage caused to him. According to the Defective Products Law, the injured party can be held "contributory fault" in cases of gross negligence on his part.
A special emphasis and importance in the law regarding children - if the injured party was under the age of 12, the defense regarding the injured party's knowledge of the product defect will not apply and the court will not reduce compensation by virtue of "contributory fault."
It should also be noted that product liability insurance does not cover claims originating in the relationship between the contractor/developer and the purchaser, regarding property damage and/or financial damages related to the quality of the construction. The contractor is exposed to claims under the Torts Ordinance and the Contracts Law regarding damages related to the quality of the construction, and issues related to the relationship between the parties in light of the Sales Law (Apartments), 5733-1973, the regulations thereunder and Amendment 3, 5791990.
Summary of information on liability for defects according to the Apartment Sales Law .
Is the donor at fault?
One of the important issues regarding product liability insurance for contractors is retroactive coverage at any given time. Product liability insurance for contracting companies is a "Claims Made" policy, meaning that the insurance will only provide a solution if two cumulative conditions are met: the policy was valid both at the time of the damage or accident and at the time the claim was filed. Given that both cumulative conditions were met, the policy that will cover the claim is the policy in effect at the time the claim was filed.
Product liability insurance for contractors must be renewed every year and care must be taken to ensure continuity and retroactive coverage when switching between policies and/or from one insurance company to another. It is important to remember that claims that can be covered by product liability insurance for contractor companies may arise even many years after delivery.
It is recommended to read the article on the implications of not renewing professional liability and product liability policies .
Yes, we know. You've probably already said to yourself: "This is going to cost me a lot of money, especially since product liability insurance is ongoing insurance." Yes, but... this is exactly where we come into the picture.
Retroactive coverage when purchasing product liability insurance
Many contractors believe that they have protection even after delivery (full or partial) by virtue of the coverage for damage during maintenance work that is part of the contractor's insurance. Well, this is a mistake. Maintenance work coverage, as the name suggests. This is an insurance solution that provides coverage only for damage caused during maintenance work and not due to product defects.
It is important to know that the maintenance period is not an extension of the contractor's insurance policy. The coverage is also limited in time and is usually purchased for a period of 12 months or 24 months.
Product liability insurance, unlike the definition of the maintenance period in the contractor's policy, is aimed at damages caused after delivery (partial or full) and for years to come. Long after the last worker leaves the construction site permanently.
What is the difference between product liability and maintenance coverage under contractor insurance?
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