If a product causes damages to a third party, complex questions may arise with respect to liability and the chain of causation. Is the damage caused by software incorporated in the product or by the product itself? Is the damage caused by wrong configuration? Or is the damage a result of user fault or operation error?
Taking the perspective of a software supplier, it is paramount that the contract with the customer limits the supplier’s liability for third party damages. Otherwise the supplier may suffer substantial and incalculable losses if damages can somehow be linked to the software developed or owned by the supplier. It is not sufficient that the contract limits liability towards the customer under the contract. The contract must regulate liability for third party claims e.g. in the form of an indemnification clause.
It is also paramount to regulate in detail what are to be delivered by the supplier and the elements for which the supplier will not take responsibility, e.g. which party shall be responsible for configuration, the status of operation manuals etc.
EU has announced that it during 2019 will publish an opinion with regard to the interpretation of product liability law in the context of software and artificial intelligence. Hopefully, this may contribute to clarify some aspects with respect to the market actors responsibilities for automated and intelligent products put on the market.