What is the “risk-utility test”?

The "risk-utility test" is a measure of the balance between the potential risks and the potential benefits of a product in South Dakota products liability law. It is a standard used to determine whether a manufacturer has acted in a reasonable manner in producing and marketing a product. The risk-utility test involves a comparison of the risks of serious harm that a product might cause with its usefulness or value to consumers. It is a cost-benefit analysis that focuses on the potential injury from a product as opposed to the cost of producing it. The factors that are typically examined as part of the risk-utility test include the gravity of the potential harm, the likelihood of the harm occurring, the costs of eliminating the risk, the usefulness of the product, and the availability of a substitute product. When a product is found to pose an unreasonable risk, South Dakota courts may hold the manufacturer liable for any damages caused by the product. The courts will typically evaluate the product under the risk-utility test as part of the process of determining whether the manufacturer acted reasonably in producing and marketing the product. If the risk-utility test reveals that the product is unreasonably dangerous, the manufacturer may be held liable for damages regardless of the cause of the injury.

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What is the “risk-utility test”?

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