Business Notes PRODUCT LIABILITY

Michael Thorp, born in Seattle in 1984, suffers mental retardation, malformed limbs and other handicaps, all aspects of a condition known as fetal alcohol syndrome. Now a court is wrestling with the question of who, if anyone, is responsible for his condition.

Michael's mother, Candance Thorp, admits she drank up to half of a fifth of Jim Beam bourbon every day while she was pregnant. But in a trial that began last week in Seattle, she blames the Chicago distiller for her child's injuries because the bottles did not carry labels warning that alcohol could harm unborn children. The distiller claims that doctors had urged Thorp to stop drinking while pregnant.

( The James Beam distillery is the first liquor manufacturer to come to trial in a case involving fetal alcohol syndrome. Starting in November, all manufacturers of beer, wine and liquor must put labels on their containers warning that alcohol can cause birth defects and other health problems.