Tuesday, 13 October 2026
The growing use of artificial intelligence, connected devices and automated systems is prompting a major reconsideration of corporate responsibility in England and Wales. A consultation launched by the Law Commission on 8 October 2026 proposes significant changes to legislation governing compensation for harm caused by unsafe products. The reforms could extend legal exposure beyond traditional manufacturers to software developers, technology providers and digital marketplaces, potentially affecting industries ranging from consumer electronics to construction and property management.
The review examines legislation dating from 1987, when consumer products were predominantly physical goods and digital technology played a much smaller role in everyday life. Modern products increasingly depend on software, remote connectivity and automated decision-making, creating uncertainty over responsibility when technology malfunctions. The proposed changes would allow software and artificial intelligence systems to be considered products for liability purposes, whether installed within equipment, downloaded separately or accessed through online services. The proposals would also cover certain digital products supplied without direct payment from users.
Online platforms could face additional legal responsibilities under the proposed framework. Technologies influencing how users interact with social media, gaming environments and other digital services would potentially fall within the revised rules. These include automated recommendations, personalised notifications and features designed to influence user engagement. The proposals also consider circumstances in which online marketplaces and other intermediaries could become responsible for defective products, particularly where the original manufacturer or another directly accountable business cannot be identified.
Another significant area concerns the difficulties individuals encounter when attempting to establish why sophisticated technology has caused harm. Artificial intelligence systems and interconnected software can be difficult to examine, especially when essential technical information remains under the control of developers. The Law Commission is considering whether courts should be permitted to assume that a product was defective in exceptional cases where obtaining sufficient evidence is particularly difficult. Businesses would have an opportunity to challenge that assumption, while a proposed alternative mechanism could allow partial compensation where specified conditions are satisfied.
The consultation also examines the types of losses eligible for compensation and the period during which claims may be pursued. Proposed changes include broader recognition of certain psychological injuries, damage to personal digital information and reasonable expenditure incurred to prevent physical harm. Some claims involving injuries that become apparent only after many years could remain possible for up to 25 years. Significant alterations to products, including certain software changes, could also affect when liability periods begin. These measures may require manufacturers, technology companies and insurers to reconsider how long they retain technical records and maintain financial protection against potential claims.
For the real estate and construction industries, the proposals raise questions about responsibility for increasingly sophisticated building technologies. Commercial and residential properties now incorporate digital systems controlling heating, ventilation, security, access arrangements and energy consumption. Where defective software or connected equipment causes injury or qualifying property damage, the proposed framework could influence how responsibility is allocated among technology developers, equipment manufacturers and other businesses involved in supplying the systems. Property owners, developers and facilities managers may consequently need to examine procurement agreements, maintenance obligations and insurance arrangements more closely. The precise implications will depend on the final legislation and the circumstances of individual cases.
The proposals could also influence the commercial adoption of artificial intelligence within property operations. Automated building management, predictive maintenance and intelligent security technologies offer opportunities to improve efficiency, but their growing complexity creates additional questions about accountability. Companies introducing such systems may need clearer arrangements governing software updates, technical support, cybersecurity and responsibility for defects. The consultation does not propose a general regulatory regime for artificial intelligence, nor does it automatically make building owners responsible for failures involving third-party technology. Instead, it addresses the circumstances in which defective products could give rise to compensation claims.
The review comes as the European Union prepares to apply its revised product liability framework from December 2026. The European legislation also extends coverage to digital technologies, although the proposals being considered in England and Wales are not identical. Northern Ireland is expected to operate under arrangements linked to the updated European rules, potentially creating different compliance requirements within the United Kingdom. Businesses operating across European markets may therefore need to accommodate separate legal frameworks when developing, importing or distributing technology-based products.
The consultation remains open until 14 January 2027, with the Law Commission expecting to publish its recommendations towards the end of 2027. Any subsequent legislative changes would require government consideration and parliamentary approval. Although the proposals remain at an early stage, they highlight a growing challenge for businesses adopting digital technologies: determining who should bear the financial consequences when increasingly autonomous and interconnected products cause harm. For the property sector, where buildings are becoming more dependent on software and automated infrastructure, the outcome could have implications for future investment, procurement and operational risk management.
Source: CMS
