The Contractual Theory

The three main theories which aim at protecting consumers are the Contractual Theory, Due Care theory and Strict Liability Theory. The common intention of these theories is to guarantee the product’s safety, quality and conformity (Bansuch, 2008, 2267). In the contractual theory, the obligations of the producer or the seller to the consumer are implicitly or explicitly expressed in the sales contract. This contract provides the basis for the product warranties. One of the reasons for having warranties is to balance the power between the buyer and the seller in commercial transactions.

Through the Contractual Theory, there is stability, regularity, and reliability in business or commercial transactions. However, under the Contractual Theory, some warranties especially those pertaining to safety can be waived by the producer or the seller (Bansuch, 2008, 2267). The Due Care Theory does not provide a formal agreement or contract, but it encourages the seller or producer to avoid negligence and to act as reasonably as possible in protecting the consumer in such aspects as product design, material, production control packaging and information.

Hence, the Due Care Theory is also an assurance of product safety and compliance. However, because it is largely informal and undocumented most of the time, the Due Care Theory is deemed as inaccurate since it is not at all measurable (Bansuch, 2008, 2267). The Strict Liability Theory holds manufacturers accountable and responsible for almost any injury which may result from defects in their products, even if the manufacturer observed reasonable care in all aspects of the production and distribution process.

This type of theory emerged because of the imperfections of the Contractual Theory which may tolerate unequal bargaining and evaluative power between buyers and sellers (Bansuch, 2008, 2268). If I were a consumer, I would not prefer one theory above the two others. I believe that it is best to apply all the three theories together because each has an element that is distinctive from the other two. Despite the fact that all three theories are designed to protect the consumer in terms of product quality, safety and conformity, the theories have different approaches and focal points.

For example, the Contractual Theory is an essential tool between the seller and the consumer. It provides the sort of formal agreement between the two parties in every commercial or business transaction. However, due to the fact that most agreements made under the Contractual Theory can be leaning more towards the producer rather than the consumer, these may not be adequate to protect the latter. On the other hand, the Due Care Theory provides the sort of conscience in every business or commercial transaction.

If a manufacturer or producer would comply with this theory, the consumer can be assured of the product’s safety, quality and conformity in ways beyond the provisions in the Contractual Theory. Meanwhile, the Strict Liability Theory provides the check and balance in business transactions in ways and means beyond the scope of both the Contractual Theory and the Due Care Theory. It provides the highest level of protection for the consumer because it holds the manufacturer or the producer for any incident relating to the safety and quality of the product.

But this assurance is good not only for the consumer but for the manufacturer as well. If the latter always complies with such theory, then his products will always be in good standing and reputation with the consumers. Reference Bansuch, M. (2008). Warranties. In R. W. Kolb (Ed. ), Encyclopedia of Business Ethics and Society (pp. 2205-2209). United States of America: Sage Publications, Inc.

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