Legal Alerts/14 Mar 2013

Legal Alert – Borenius Assisted the Finnish Ministry of Agriculture and Forestry in Assessing the Need for Amendments to the Liability System in the Animal Feed Legislation

Attorneys at law Borenius has drafted an assessment report to the Finnish Ministry of Agriculture and Forestry regarding necessary amendments to the liability system in the animal feed legislation. The assessment was conducted as part of the forthcoming reform of the Animal Feed Act (86/2008) which will be proposed to the Parliament during 2013. Liability under the Animal Feed Act is regulated through Section 48 of the Act and is based on strict liability: the manufacturer, commissioner or importer of feed is liable, regardless of negligence, for any damage occurring to the buyer as the result of defective feed.

Although the stipulation has remained almost unchanged ever since its introduction in the Animal Feed Act of 1986, its ambiguous formulation has raised uncertainty amongst actors in the animal feed sector regarding the interpretation and application of strict liability. Furthermore, the feed sector has undergone some structural changes since the introduction of the original Animal Feed Act in 1986. An increasing amount of feed trade takes place directly between farmers, and consequently, also small entrepreneurs may act as feed sellers. On the other hand, the size of cattle farms has grown, and a growing amount of large cattle farms have extended their activity to feed production. Moreover, internet has enabled end users to purchase feed directly from sellers operating in other countries.

The purpose of the assessment was to analyse the application of strict liability in the relation between different actors in the animal feed sector, assess the extent of liability and examine the application of other tort legislation to damage caused by defective feed. The main observations in the assessment were that:

1) the current stipulation regarding strict liability is rather inflexible from the perspective of the manufacturer;
2) the general stipulations of the Sale of Goods Act (355/1987) and the Tort Liability Act  (412/1974) do not protect the end user of animal feed as extensively as the current strict liability under the Animal Feed Act. The Product Liability Act (694/1990) only applies to business to consumer relations;
3) the wording of the stipulation regarding strict liability is ambiguous and may be interpreted in several ways; and
4) the current Animal Feed Act may not provide adequate protection in relation to sellers that operate in other countries.

The conclusion of the assessment report is that the stipulation regarding strict liability must either be clarified or abolished, depending on the objectives of the Animal Feed Act’s reform. In the latter event, the report suggests that a centralised, standard term feed sale agreement should be negotiated between feed manufacturers and end users and that a specific form of insurance should be created for feed trade.

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Additional information

Casper Herler

Managing Partner