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Explain and contrast the three theories of producer responsibility – contract theory, due care theory and strict liability Essay Example

Theories of Producer Responsibility

Theories of producer responsibility make manufacturers to exercise care while producing consumable goods and services. Information asymmetry, according to contract theory, deals with analyzing of financial decisions in transactions where one individual has more information than other parties in the transaction. In this case, the tobacco industry knows more about the effects of its products. Moreover, the tobacco industry also has information monopoly regarding the cancerous implications of smoking cigarettes. Information leads to misinforming and is crucial in every communication process. Therefore, according to contract theory, manufacturers in the tobacco industry should intensify campaigns that disseminate information about the harmful and cancerous effects of smoking tobacco.

Unlike contract theory, due care theory stipulates that producers such as tobacco producers should take sufficient steps in shielding the interests of a buyer. Therefore, it is the mandate of tobacco producers to eliminate and foresee all inherent risks contained in tobacco products. In addition, due care theory also stipulate those producers of tobacco should continue to exercise conscientious duty because they have access to greater knowledge about tobacco products. Therefore, according to due care theory, tobacco producers should exercise adequate care and measures right from the first stage of producing tobacco so that harmful materials are not used.

Liability theory empowers the consumers of tobacco products to take immediate causes of action in case they harmed by tobacco products. Liability theory stipulates that a manufacturer can be sued for negligence if he or she did not exercise reasonable care while producing goods and services. Unlike the other two producers’ theories, liability theory confers to the consumers of tobacco the right to sue tobacco producers for the breach of warranty in case they fail to fulfill the representations made regarding the quality of tobacco products.