The Ukrainian Parliament has recently adopted a new law on the Liability for Damages Caused by Defects in Goods (the “Law”) which will enter into force on September 17, 2011.

The Law separates procedures for claiming damages caused by movable and immovable goods, and services (works), and respectively amends provisions of the Civil Code of Ukraine and the Law on Consumer Rights Protection. Any liability that does not fall under definition of the Law will remain subject to provisions of the Civil Code. In particular, liability for damages caused by defects in immovable property or services (works) will be governed by the Civil Code, as amended by the Law, whileliability for damages caused by movable goods will be governed by the Law.

The Law in particular applies to liability for damages cased to individuals and legal entities by defects in goods that are movable property (finished products, raw materials, component parts), including those that form part of other movable or immovable property, and specifically includes electricity. The term “damages” under the Law is limited to injuries, damage to health, death, and damage to or destructionof property (other than the defective goods).

The most significant amendment introduced by the Law is that the liability for damages caused by defective goods will now be placed on the manufacturer (while under the applicable law, an injured party can claim damages from either themanufacturer or seller at its sole discretion).

An importer of defective movable goods (any person that has imported goods to Ukraine for sale, lease, leasing or any other distribution) bears liability as a manufacturer. However, each seller of defective movable goods bears liability as a manufacturer only in cases where the manufacturer can not be determined and unless it communicates to the injured party within thirty days the name and location of themanufacturer or a person that supplied such goods to him.

Nonetheless, the manufacturer of movable goods will be exempted from liability if itproves one of the following circumstances:

• it did not introduce the goods into distribution;
• the defect which caused damages originated after the goods were introduced into
  distribution by the manufacturer, unless such defect originated due to the design or
  content of the goods;
• the goods were not produced or distributed by the manufacturer in the course of its
  commercial activity; or
• the defect originated due to manufacturer’s compliance with mandatory
  requirements of the law or instructions of state authorities.

In addition to the abovementioned circumstances, the manufacturer of the defective component part of the product is relieved of the liability if it proves that the defects relate to the design of the finished product or to the technical documentation issuedby the finished product’s manufacturer.

The Law establishes a 3-years statute of limitations for claims for damages caused bydefective movable goods, including in case of injuries, damage to health or death.

Compensation for such damages may be awarded if they were suffered within ten years from the date the movable goods were introduced into distribution and the injured party filed a claim against the manufacturer before the expiration of thismentioned term.

At the same time, damages caused by defects in movable goods or services (works) shall be compensated if they are suffered within the established validity term, or within ten years from manufacturing/provision of services (completion of works) ifsuch term is not established.

Law: Law of Ukraine “On Liability for Damages Caused by Defects in Goods”
dated 19 May 2011 N3390-VI.