If I have it correctly, the system you are advocating would allow sales, even of harmful products, with the remedy of lawsuit if harm can be demonstrated. That in itself would be a good reason to buy from a corporation because they have more assets to win in a judgement.
But here's another idea. Prevent harmful products from being sold in the first place so that the original harm doesn't happen. Naturally, you should make sellers aware of these rules so they do not risk fine or arrest.
However, if someone decides to buck the system in play for their own financial gain, they are acting unlawfully. Now, if you claim that anyone has the right to sell whatever they want, and that right trumps the law, then I shall claim the right to be protected from criminal behavior -- not just after I am damaged, but when justified, beforehand as well. This is the only way to stop those situations where financial compensation will not do. For example, if I get sick and die because you are selling me a faulty product, my spouse will think a check, or even you in prison, not quite the same as having me around. It would also kill small businesses whose only can only back their products, not with some government standard, but assets which are few and limited.
The argument is whether something is likely to cause harm, not whether we should act, as a society, to prevent such harm from occurring -- of course we should.
I call this punk rock logic. As a punk myself back in the day, but one with a bit of a head on his shoulders, this kind of conversation always happened.
Person suggests a stupid idea, now when we follow that stupid idea, the person has to modify said stupid idea in order to not seem completely ignorant of certain pragmatic facts about the order. Once the conversation is said and done, it is obvious to anyone but the person promoting the stupid idea that if the stupid idea was followed, it would simply die off due to its own stupidity being a limiting factor in how popular it would be.
In this case, we have the ability for people to buy anything from anyone, lets stick with milk. After a few incidents of less than scrupulous people hurting customers in various ways, people are going to avoid any company that does not have safety procedures that are similar to what we have in place now. Eventually companies are not going to want to take these costs in the *** when they didn't have to before , and petition government to make sure that places are up to snuff. As opposed to having to hire an independent team themselves , and hope that people have some kind of faith in who they hired.
The small businessman now suffers because the company " Grandpa joes milk" can't hire as well known and trusted a firm to say their milk is good as Sealtest can.
Now at this point in this benny hill chase of an idea, Grandpa joe is going to want to pettition for a way that he can have just as good of a company to test his product as sealtest. At the same time sealtest is petitioning for the same thing, as they are getting about the same amount of business after the initial novelty of being able to buy milk at a shack on the highway wears off, and enough people die, or spend days in the hospital due to tainted product. But they now have to pay this new third party company that goes around attempting , somehow to convince the public of the GMP ( good manufacturing practises ) of sealtest. Remember there is no government agency that gives a stamp anymore , no standards that have to be followed. So the job of the people that now just make sure the company sits within these established standards, is not only to make sure the product is safe, but also to somehow convince the public that they arn't just stooges on sealtests payroll.
Eventually the government would think of this great idea, to have a set of rules that places have to follow, to ensure that people know what they are getting is safe. Well welcome to 19 ******* 30, when the FDA was established. The entire exercise would do nothing more than waste giant amounts of time and money for all involved, and let a few unfortunate people get sick or die due to there being no standards. Oh, but i forgot they can sue, i am sure they will get an appropriate amount of money from Uncle Stinky selling milk out of his hut at the flea market.
In short, it is a juvenile, silly idea that would simply waste time money, and possibly lives.