My question involves malpractice in the state of: California
This is a hypothetical, but quite reasonable, scenario that I (as a freelance electronics engineer) am often concerned about...
A client hires me as a freelance contractor to design the electronic hardware of a new product. Let's say this is a rather simple design which I do and charge a total of $1k in design fees. I supply the client with samples to test in the end application and the manufacturing data so he/she can manufacture the product in volume when ready to do so. The client later manufactures 10k pieces (through a third party) spending $100k for the manufacturing and sells the final products at a profit. A few months down the line the products start failing systematically (becoming permanently unusable after the failure but causing no injury or other damage), and after inspection it is evident that the failure is due to a previously undetected design defect in the part that I designed (not a manufacturing defect). My client is forced to compensate or replace the failed units with a resulting financial impact.
Assuming there is no relevant contract clause, what would be my liability in such a scenario? If it is clear that the issue is a result of a design mistake that, notwithstanding the extensive design stage testing, somehow slipped through, I can understand the client demanding a full or partial refund of the $1k design fees. However, the client had the samples to test with and verify their suitability in the end application and the act of getting the design to volume manufacturing is in itself (in my opinion) an approval of the design's suitability. So shouldn't the liability of my client towards his end customer stop at my client ? ...What I am trying to say is that while the design issue is clearly a direct result of my work, the magnitude of the damage is not and depends primarily on the quantities manufactured and sold by my client and my client's decision that the design was suitable for the end application in those quantities. It is easy to imaging how the magnitude of the financial loss can scale to huge sums as the production quantity increases with the original design fee being infinitesimally small by comparison.
I would like some thoughts on this, never had a problem really but this scenario is a constant discouragement.