Originally, the basis for product liability was not the
general duty of reasonable care but the duty implicitly undertaken in a
contract. Therefore the manufacturer could only be liable to the buyer, who
was in privity of the contract, and could not be held liable to other
people injured by the defective product. Then, in the case of MacPherson v.
Buick Motor Co. (217 N.Y. 382, 111 N.E.1050 (1916)), the wheel of an auto
fell off, injuring the owner of the car (MacPherson). Since MacPherson had
bought the car from a retailer, and not Buick directly there was no privity.
However, the New York Supreme Court changed the law to substitute foreseeability
for privity in a contract as a requirement for liability.
Prior to this case, the leading case was Winterbottom
v. Wright, which held that the only people the manufacturer is liable
to are people who directly bought their products (that's what privity
means).
Courts had occasionally allowed for non-privity
customers to sue manufacturers, but it had to be an especially egregious
case. (see Thomas v. Winchester).
If the privity rule had stood, then Buick would
only owe liability to the car dealer. That doesn't make a lot of sense.
In the old days, most people bought goods directly from the producer, but
as society became more complex, and distributors, middlemen, and retailers
proliferated, the privity rules had to be discarded in the name of
justice.
Interestingly, Buick didn't make the defective wheel, it
was made by subcontractor.
Although this case did away with the requirement for privity,
there is still a requirement to show negligence on the
manufacturer. (You can still try res ipsa loquitur though.)
