Intro to Business Law Chapter 7

implied warranty

the law inserts quality standards into the relationship regardless of the formal contract terms

scienter or intent to defraud

the party wanted to mislead the other party and intentionally deceived him: second element generally agreed upon to establish fraud or intentional misrepresentation

Rule 9(b)

"In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally."

caveat emptor

"let the buyer beware"

rule of caveat emptor

"requires that the buyer examine, judge, and test [the product] for himself" (not up to date) (negligence can be tort law)

damages

7th element generally agreed upon to establish fraud or intentional misrepresentation

a warranty theory under contract law

strict liability was first applied to product-related injuries through...

elements of intentional interference with contract

1. existence of a valid and enforceable contract or business relations 2. defendant's knowledge of the contract or relationship 3. defendant's intentional inducement of the breach of contract or interference with the relationship 4. absence of justification 5. damages resulting from the wrongful interference

defenses in product liability suits

1. product misuse 2. assumption of risk 3. bulk-supplier doctrine and sophisticated user defense

elements of strict liability or product defect law

1. product was defective 2. defect created an unreasonably dangerous product 3. defect was the proximate cause of or a substantial factor in bringing about the injury 4. the injury caused damages

manufacturing defect

a defect in a product resulting from a departure from its design specifications during production

Product liability

a general term applied to an area of the law that is primarily tort law but also involves some contract law and statutory law concerns the liability that producers and sellers of goods have to those injured by their products

interference with contract intentional

a major business tort including interference with business relations or interference with contractual relations claim is that another party wrongfully interfered with the injured business's contractual relations

warranty

a manufacturer's assurance that a product will meet certain quality and performance standards

tort of fraud, misrepresentation, fraudulent misrepresentation, or deceit involved

a person suffers an injury resulting from deliberate deception (normally involves financial injury not physical)

privity of contract

a relationship that exists between contracting parties

ultrahazardous activity

abnormally dangerous activity

Section 402A in the restatement (second) of torts

bring around nationwide acceptance of the strict liability in tort rule 1. one who sells any product in a defective condition unreasonably dangerous to the user or consumer, or to his property, is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if a. the seller is engaged in the business of selling such a product and b. it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold 2. rule stated in subsection 1 applies, although a. the seller has exercised all possible care in the preparation and sale of his product, and b. the user or consumer has not brought the product from or entered into any contractual relation with the seller

negligence

carelessness in a legal sense/fail to act the way we are obligated to behave and others suffer an injury

design defect

cases not concerned with a product that has been poorly manufactured and causes an injury, rather, such cases focus on the determination of whether an injury to users could have been prevented by designing the product differently

litigation

claim of misrepresentation or fraud is common in ______________

scienter

court finds there is something bad about the deal that the seller had to know about

misstatement of an important or material fact

false information was presented as fact: this is the first element generally agreed upon to establish fraud or intentional misrepresentation

recipient of the false information must justifiably rely on that information

fourth element generally agreed upon to establish fraud or intentional misrepresentation

Federal Rules of Civil Procedure

generally require that the complaint contain only "a short and plain statement of the claim"

Restatement (Second) of Torts

helped spur the adoption of strict liability in tort

strict liability

holds manufacturers liable to consumers injured by defective products regardless of whether the manufacturer had been negligent

bulk-supplier doctrine

holds that when a supplier sells a product to an intermediary in bulk, the supplier can discharge its duty to warn the ultimate users if it provides adequate instructions to the distributor next in line, or determines that the intermediary party is adequately trained in the use of the product

more

intentional misrepresentation is _______ serious charge than negligent misrepresentation

interference with prospective advantage

interference with prospective economic advantage or interference with prospective contractual relationship tort when a business attempts to improve its place in the market by interfering with another's fair attempt to gain new business by use of improper acts

failure to warn

it has been long actionable if a manufacturer's _________ __ ____ consumers of dangers in the use of product, or to instruct consumers about proper procedures in using a product results in damage

sophisticated user

knowledgable purchaser or learned intermediary, relieves a manufacturer of liability for failing to warn of a product's characteristics or dangers when "the end user knows or reasonably should know of a product's dangers"

unknown hazards

latent defects - dangers that were not known or not fully appreciated at the time the product was manufactured

reasonable care

liability may be imposed on a manufacturer for negligence in the preparation of the product - for failing to inspect or test the materials used in the product, for below-normal-quality workmanship, or for failing to discover possible defects

causation

logical link between reliance on the misstatement and the losses that were suffered by the plaintiff: 6th element generally agreed upon to establish fraud or intentional misrepresentation

misrepresentation

may be the basis for strict liability in tort

proof

misrepresentation as an intentional tort requires ____________

joint and several liability

most states have held that plaintiffs may sue any or all of the manufacturers of a defective product where the identity of the actual manufacturer is not clear. the manufacturers are then allowed to fight it out among themselves as to which should pay the damages

contract law

strict liability may be imposed today under ________ ___

intentional torts

occur when the tortfeasor is found to have intended to invade a protected interest, and the tortfeasor knew or should have known, of the consequences of the act that resulted in an injury

privity

parties must have been in a relationship that created a legal obligation: 5th element generally agreed upon to establish fraud or intentional misrepresentation

seller must know or have reason to know that the statement she is making is false

third element generally agreed upon to establish fraud or intentional misrepresentation

worker compensation statues

usually make that program the exclusive remedy for injured workers, unless an intentional tort was involved

does not matter

when a wrongdoer intentionally causes another party to break a good contract the motive...

express warranty

when the manufacturer provides performance promises to the consumer so they are part of the contract for sale