Invoices, packing and product liability

1. The invoice

The invoice is the seller's bill for the goods. In an export transaction it is also a key document: it describes the goods, fixes the price on which customs duty is assessed, and is one of the documents the buyer or the bank must receive before payment under a CIF contract or a letter of credit.

• Proforma invoice: issued before the sale, as a quotation, or to enable the buyer to obtain an import licence, foreign exchange or a letter of credit. Not a demand for payment.
• Commercial invoice: the final bill, showing the names of seller and buyer, a description of the goods matching the contract, quantity, unit and total price, the trade term (for example “CIF Rotterdam”), marks and numbers, and payment terms. Under UCP 600 Article 18 the commercial invoice must appear to be issued by the beneficiary, be made out in the name of the applicant and in the currency of the credit, and describe the goods in correspondence with the credit.
• Consular invoice: on a form of the importing country, certified by its consulate in the exporting country; required by some countries to control prices and origin.
• Customs invoice: in a form prescribed by the importing country's customs, used for valuation and preferential duty.
• Certified or legalised invoice: certified by a chamber of commerce, often together with a certificate of origin, which is needed to claim preferential rates under a free-trade agreement.

In India the exporter files a shipping bill with customs under section 50 of the Customs Act, 1962, supported by the invoice and packing list; the importer files a bill of entry under section 46. A false description or value in the invoice exposes the goods to confiscation and the exporter to penalty under the Customs Act and the Foreign Trade (Development and Regulation) Act, 1992 (section 11).

2. Packing and the packing list

The packing list sets out for each package its number, contents, net and gross weight and dimensions. It is used by the carrier, customs, the insurer and the buyer to check the consignment.

Packing is also a legal obligation:

• CISG Article 35(2)(d): goods do not conform unless contained or packaged in the manner usual for such goods or, where there is no such manner, in a manner adequate to preserve and protect them.
• Sale of Goods Act, 1930: packing may be part of the description (section 15) and of merchantable quality (section 16(2)).
• Incoterms 2020, A8: unless otherwise agreed, the seller must package the goods in the manner appropriate for their transport and mark them appropriately.
• Carriage law: the carrier is not liable for loss resulting from insufficiency of packing or of marks (Hague-Visby Rules, Article IV(2)(n) and (o), in the Schedule to the Carriage of Goods by Sea Act, 2025). The bill of lading records the leading marks and the apparent order and condition of the goods; defective packing noted on the bill makes it a claused or unclean bill, which a bank may refuse.
• Marine insurance: Institute Cargo Clauses exclude loss caused by insufficiency or unsuitability of packing.
• Regulatory rules: labelling under the Legal Metrology (Packaged Commodities) Rules, 2011 for goods sold in India; dangerous goods packing under the IMDG Code; treatment of wooden packing material under the international standard ISPM 15.

3. Product liability: meaning

Product liability is the liability of a manufacturer, seller or other supplier for harm caused by a defective product. In international trade it matters because goods are made in one country and cause injury in another, raising questions of which law applies and against whom the injured person can proceed. Defects are of three kinds: manufacturing defects (the product departs from its intended design), design defects (the design itself is unsafe), and warning defects (inadequate instructions or warnings).

4. From contract to negligence to strict liability

• Privity. At first the only remedy was in contract, available only to the buyer. Winterbottom v. Wright (1842) denied an action to a third party.
• Negligence. MacPherson v. Buick Motor Co. (New York, 1916) and Donoghue v. Stevenson (House of Lords, 1932, the snail in the ginger-beer bottle) held that a manufacturer owes a duty of care to the ultimate consumer who may be injured by a product reaching him without reasonable possibility of intermediate examination.
• Strict liability. Greenman v. Yuba Power Products (California, 1963) held a manufacturer strictly liable in tort for a defective product causing injury; the rule was adopted in section 402A of the American Restatement (Second) of Torts (1965).
• Europe. Council Directive 85/374/EEC (1985) made producers liable without fault for damage caused by a defect, a product being defective when it does not provide the safety a person is entitled to expect; defences include the development-risks defence. It is replaced by Directive (EU) 2024/2853, which extends liability to software and applies to products placed on the market from 9 December 2026.
• Choice of law. The Hague Convention on the Law Applicable to Products Liability (1973) and, in the EU, Article 5 of the Rome II Regulation fix the applicable law in cross-border cases. The CISG does not apply to liability for death or personal injury caused by the goods (Article 5).

5. Indian law: Consumer Protection Act, 2019

Before 2019, product liability in India rested on the law of torts, the implied conditions of the Sale of Goods Act, and complaints of “defect” under the Consumer Protection Act, 1986. The Consumer Protection Act, 2019 introduced a separate chapter.

• Definition (section 2(34)): product liability is the responsibility of a product manufacturer or product seller to compensate for any harm caused to a consumer by a defective product manufactured or sold, or by deficiency in services relating to it.
• Product liability action (section 83): a complainant may bring an action against a product manufacturer, product service provider or product seller for harm caused by a defective product.
• Manufacturer (section 84): liable if the product contains a manufacturing defect, is defective in design, deviates from manufacturing specifications, does not conform to an express warranty, or fails to contain adequate instructions or warnings. The manufacturer is liable even if he proves he was not negligent or fraudulent in making an express warranty: the liability is strict.
• Service provider (section 85) and seller (section 86): liable in narrower circumstances, for example where the seller exercised substantial control over design, altered the product, made an independent express warranty, or where the manufacturer cannot be identified or is not subject to Indian law. This last ground matters for imported goods: the Indian importer-seller may be the defendant.
• Exceptions (section 87): misuse, alteration or modification of the product; warnings given to an employer for use by employees; products sold as components where the end-product maker was warned; obvious or commonly known dangers.
• Harm (section 2(22)) includes damage to property other than the product, personal injury, illness or death, and mental agony; complaints go to the District, State or National Commission according to value.

How this is examined

For product liability: meaning and kinds of defect, the movement from privity to negligence to strict liability with one case at each stage, the EU and Hague instruments, and the 2019 Act sections. For invoices and packing: kinds of invoice with their purpose, the packing list, and packing as an obligation of the seller (CISG Article 35(2)(d), Incoterms A8) and as a defence of the carrier and insurer.