Why Businesses Can Be Liable for a Defective Product They Never Manufactured

If you run a business that sells, distributes, imports, or even just places products into the market, there is a legal reality that often comes as a shock: You can be sued for a defective product even if you did not design it, manufacture it, or physically alter it in any way.

Many business owners assume product liability stops at the factory door. In reality, liability often follows the product itself. This is where the “stream of commerce” doctrine comes in, and it is one of the most misunderstood areas of business and commercial litigation.

Let’s break down how this works, why Florida businesses are exposed to this risk, and what you can do to protect yourself before a claim ever lands on your desk.

What Is the “Stream of Commerce” Doctrine?

The stream of commerce doctrine is a legal concept used in product liability cases. In simple terms, it means that any business that participates in placing a product into the marketplace can be held legally responsible if that product causes harm.

That participation can include:

• Importing a product
• Distributing a product
• Wholesaling or retailing a product
• Branding or private labeling a product
• Marketing or promoting a product as safe or fit for use

You do not need to manufacture the product to be pulled into a lawsuit. If your business helped move it from the factory to the consumer, you may be part of the stream of commerce.

Can a Seller or Distributor Really Be Sued for a Defective Product?

Yes, and it happens more often than most businesses realize.

Under Florida product liability law, injured consumers are not required to sue only the manufacturer. They can also sue sellers, distributors, and other commercial entities involved in the product’s path to market.

From a legal standpoint, this makes sense. Manufacturers may be overseas, out of business, or difficult to collect from. Florida courts allow plaintiffs to pursue businesses that are easier to identify and have a direct commercial presence in the state.

For business owners, however, this can feel deeply unfair, especially when the defect was completely outside their control.

Why the Law Allows This Type of Liability

Product liability law is designed to protect consumers, not businesses. The underlying idea is that companies profiting from the sale of products should share responsibility for product safety.

Courts often reason that:

• Businesses are better positioned than consumers to absorb or insure against losses
• Commercial sellers can influence supply chains and vendor choices
• Liability pressure encourages safer products and better quality control

Even if you never touched the manufacturing process, your business may still be viewed as part of the system that placed a dangerous product into the hands of the public.

Common Scenarios Where Businesses Get Pulled Into Product Liability Lawsuits

Florida businesses often encounter stream of commerce liability in situations like these:

Importing Products from Overseas Manufacturers

If your company imports goods from foreign manufacturers, you may be treated as the domestic face of that product. When something goes wrong, plaintiffs often look to the importer first.

Private Label or White Label Products

If your brand name appears on the product, consumers may reasonably believe your company stands behind its safety. That alone can create liability exposure.

Distributors and Wholesalers

Even businesses that never sell directly to consumers can face claims if they helped move a defective product into Florida’s market.

Retailers and Online Sellers

Brick and mortar stores and ecommerce sellers can be named in lawsuits even when they had no role in product design or manufacturing.

What Types of Defects Lead to Liability?

Product liability claims typically fall into three categories:

Manufacturing Defects

Something went wrong during production, making the product unsafe even though the design itself may be sound.

Design Defects

The product was dangerous as designed, regardless of how carefully it was manufactured.

Failure to Warn

The product lacked adequate instructions or warnings about known risks. Businesses in the stream of commerce can be exposed to all three types, depending on their role and how the product was marketed or sold.

How Florida Courts Analyze Stream of Commerce Liability

Florida courts look at several factors when determining whether a business can be held liable, including:

• Whether the business placed the product into the Florida market
• Whether the business expected the product to be used by Florida consumers
• The degree of control the business had over distribution or branding
• Whether the business benefited economically from the product’s sale

You do not need to be the “main” actor to be included. Even a supporting role in the distribution chain can be enough.

Can Businesses Shift Liability Back to the Manufacturer?

Sometimes, but not always. Many businesses assume that an indemnity clause in a supply contract will automatically protect them. In reality, indemnity provisions must be carefully drafted, enforced, and supported by insurance to be effective.

Even with strong contracts, your business may still have to defend the lawsuit first and pursue reimbursement later. That alone can be costly and disruptive.

How Businesses Can Reduce Product Liability Risk Before a Lawsuit Happens

The best protection happens before a claim arises. Practical steps include:

• Carefully vetting manufacturers and suppliers
• Requiring clear indemnity provisions in supply contracts
• Confirming that vendors carry adequate product liability insurance
• Reviewing branding and labeling practices
• Avoiding overstatements in marketing about safety or performance

For businesses involved in importing, distribution, or private labeling, legal review of contracts and risk exposure is not a luxury. It is risk management.

When Product Liability Becomes a Business Litigation Issue

Once a claim is filed, product liability cases often evolve into complex commercial litigation involving:

• Contract disputes between suppliers and distributors
• Indemnity and contribution claims
• Insurance coverage disputes
• Multi-party litigation across jurisdictions

At that stage, having experienced business litigation counsel becomes critical. These cases are rarely simple and often move quickly.

Final Thoughts for Business Owners

If your business is part of the stream of commerce, you are part of the risk chain. That does not mean you are powerless, but it does mean assumptions can be dangerous. Understanding your exposure is the first step toward protecting your company, your assets, and your long term operations.

If you have questions about product liability risk, supplier agreements, or a pending claim, contact an experienced attorney in Miami at 305-570-2208.

You can also contact trial attorney Eduardo A. Maura at eduardo@ayalalawpa.com.

Schedule a case evaluation online here.

[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].