EU situation should be looked at by everyone [LWN.net]

EU situation should be looked at by everyone

Posted Dec 13, 2023 11:15 UTC (Wed) by farnz (subscriber, #17727)
In reply to: EU situation should be looked at by everyone by khim
Parent article: Bottomley: Solving the Looming Developer Liability Problem

Legislatively, the liability stops with the car dealer. If the manufacturer says "nope, not going to fix it, your problem", that's the car dealer's problem to deal with.

In practice, as a result, car dealers refuse to sign contracts with manufacturers that permit manufacturers to say that - they instead require manufacturers to sign up to contracts that allow the dealer to pass liability backwards down the chain to the manufacturer.

But, for example, if the car dealer you bought your car from goes bankrupt, you have no legal claim against the manufacturer, only against the car dealer's remains. Manufacturers will usually intervene in this case, for the benefit of the brand, but they are under no legal obligation to do so.

The CRA, while not perfect, is an attempt to try and fit similar rules to software - it's just that because of the nature of software, it's a lot easier for vendors to sell you just one piece of the final product (a simple piece like a start-up script), and require you to assemble the rest of the software from other places, and the CRA wants to block off that sort of shenanigans. But this is new rules for software.

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EU situation should be looked at by everyone

Posted Dec 13, 2023 11:38 UTC (Wed) by khim (subscriber, #9252) [Link] (1 responses)

> Legislatively, the liability stops with the car dealer. If the manufacturer says "nope, not going to fix it, your problem", that's the car dealer's problem to deal with.

You are talking about defect fixing. I'm talking about liability. And, of course, in case of accident your car maker may be found liable and that doesn't depend just on what contract between dealer and car maker says.

Manufacturer can disclaim some liability, sure, but not everything.

> But, for example, if the car dealer you bought your car from goes bankrupt, you have no legal claim against the manufacturer, only against the car dealer's remains. Manufacturers will usually intervene in this case, for the benefit of the brand, but they are under no legal obligation to do so.

Lol. That loophole was closed years ago. I still remember times when law worked like that in Russia. Big companies just never sold anything, they created tiny dealers which sold good and then went disappeared after 3 or 6 months. And then your warranty was pretty much pointless and you companies could save money. That's a no-brainer scheme, really.

Of course these loopholes were patched up and today law doesn't work like that. Whether manufacturer would be help liable or not is determined by a large body of law, but if car design defect leads to deaths it's almost always judged to be manufacturer's fault.

Why defect in MySQL or Apache Web Server shouldn't be treated in the same way?

EU situation should be looked at by everyone

Posted Dec 13, 2023 12:07 UTC (Wed) by farnz (subscriber, #17727) [Link]

In the UK, it still works like that - the manufacturer can disclaim all liability and pass it onto the dealer. The dealer is the entity that cannot disclaim liability. A US lawyer talking about liability in the US is kinda irrelevant here - we're not (yet?) a state of the USA.

We closed the loophole differently; the liability for manufacturing defects is created at the time the sale happens, and is thus part of the company that you have to handle while you close the company down; if you've not done so, then the directors of the company that was closed down have committed a criminal offence, and can both be forced to pay out the liabilities personally (possibly making them bankrupt), and banned from ever running a UK company again. This makes the trick you describe effectively impossible - you need to find genuine directors for your new company (otherwise it's just a trading name of the manufacturer), and you will not be able to do so if you're burning through them every 3 months or so, and discarding them with huge liabilities that they agreed to.

Further, to close a company down requires you to transfer all of its assets and liabilities out - if you transfer assets out without transferring out liabilities, then the company becomes insolvent, and the asset transfers can be undone to make the company solvent again (since it's illegal to engage in any transfer that makes the company insolvent). The only way to leave liabilities behind is to go bankrupt, but in UK law, that requires you to prove that the company could not continue trading - and also opens up opportunities for the bankruptcy court to "pierce the corporate veil" and say that the company is merely a front for another entity, who thus is liable for everything the company did as-if they did it themselves. In the case of the scheme you describe, the company would be deemed (in bankruptcy) to be a front for the manufacturer, and thus the manufacturer becomes liable because they created the company purely to avoid liability.

And if you remember when it worked like this in Russia, then Russia had this problem a long time after the mechanisms I loosely describe above came into being in England & Wales; these mechanisms built up in the 18th and 19th centuries, and were fully in place by the beginning of the 20th century.