Legal Definitions - risk-benefit test

The risk-benefit test is a method used to determine product liability on a manufacturer. It is also known as the risk-utility test. This test is used when evidence shows that a reasonable person would conclude that the benefits of a product's particular design versus the feasibility of an alternative safer design did not outweigh the dangers inherent in the original design.

For example, if a car manufacturer designs a car with a faulty brake system that causes accidents, the risk-benefit test would be used to determine if the benefits of the design outweighed the dangers. If it is found that the benefits did not outweigh the dangers, the manufacturer would be held liable for any damages caused by the faulty brake system.

Another example would be a pharmaceutical company that produces a drug with harmful side effects. The risk-benefit test would be used to determine if the benefits of the drug outweighed the risks. If it is found that the risks outweighed the benefits, the company would be held liable for any damages caused by the drug.