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 (10 M. & W. 109 (Exch. 1842)), which held that the only people the manufacturer is liable to
are people who directly bought their products (that's what privity
Courts had occasionally
allowed for non-privity customers
to sue manufacturers, but it had to be an especially egregious case. (see Thomas
v. Winchester (6 N.Y. 397 (1852))).
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.)