Torts - Strict Liability + Enterprise Liability

Limitations on Warranties

(1) Warranty CAN be disclaimed, if done clearly (K based claims) (2) Warranties for injuries CANNOT be disclaimed (3) Warranty claim requires timely notice of the breach to the seller

6-Factor Analysis for Abnormally Dangerous Activities: (Analyze whether each factor is Negligence or Strict Liability)

1) Existence of a high degree of risk of some harm to the person, land or chattels of others. (question of probability); 2) Likelihood that the harm that results from it will be great; 3) inability to eliminate the risk by the exercise of reasonable care. (If you can eliminate the risk by exercising reasonable care, then you have a potential claim for negligence, not strict liability); 4) extent to which the activity is not a matter of common usage. (If the activity is common = Negligence / If the activity is not common = Strict Liability); 5) inappropriateness of the activity to the place where it is carried on. (Appropriate location = negligence / Inappropriate location = strict liability); and 6) extent to which its value to the community is outweighed by its dangerous attributes.

"Excessive Preventable Danger" - Strict Products Liability (Used to prove a design defect) CA's version of the risk-utility test (JURISDICTION LUMSDEN) (Use for Final Exam)

Ask: Does the risk of danger inherent in the design outweigh the benefit of the design? Consider the: 1) Gravity of the danger posed (by the design); 2) Likelihood that such danger would occur; 3) Mechanical feasibility of a safer alternative; 4) Financial cost of an improved design; 5) Adverse consequences to the product and to the consumer that would result from an alternative design + other factors.

Implied Warranty of Merchantability (Breach of Warranty) Products Liability (Defective Products)

Commercial seller warrants that product is reasonably safe for ordinary purposes. Reasonable care is no defense! Typically limited by privity requirement since based in contract (k). Implied warranty of merchantability: -First instance of strict liability for injuries caused by product defects. -Food contamination cases open door to ending privity in this context. P must show: 1) D was a dealer of goods of that kind (and this D sold the goods); 2) The goods were not fit for the ORDINARY purposes for which they were sold; and 3) P suffered personal injury AS A RESULT OF [P's reliance on] their fitness for that purpose (Causation and Damages).

Implied Warranty of Fitness for a Particular Purpose (Breach of Warranty) Products Liability (Defective Products)

Commercial seller warrants that product is reasonably safe for particular use. Reasonable care is no defense! P must show: 1) D was a dealer of goods of that kind (and this D sold the goods); 2) D knew that P was purchasing the goods for a particular purpose, OR P was relying upon D's skill or judgement to furnish appropriate goods. (e.g. wife did NOT rely on seller to choose bread); and 3) P suffered personal injury as a result of [P's reliance on] their fitness for that purpose. (Reliance on the seller to FURNISH the goods)

Enterprise Liability

Courts impose negligence liability to: 1) Deter negligent conduct (deterrence of harms that can be avoided) (by individuals!); and 2) Correct the injustice resulting from negligently caused injuries.

Risk/Utility 7-Factor Test (Used to prove a design defect)

Does the RISK OF DANGER inherent in the challenged design OUTWEIGH THE BENEFIT of such design? Rule: If the risks of the design outweigh its benefits, the design is defective. Used for complicated products that are difficult for the ordinary person to understand. Factors: (Burden of proof is on the manufacturer in CA) 1) Usefulness of product (i.e., the "utility" to user and public); 2) Safety aspects 3) Availability of substitute product; 4) Manufacturer's ability to eliminate risk while maintaining utility. 5) User's ability to avoid danger; 6) General public knowledge of obvious (dangerous) condition; and 7) Feasibility of manufacturer spreading loss (i.e., via price hike or insurance)

Design Defects Strict Liability for Defective Products (Modern Approach):

If product is defectively designed, the application of strict liability OR negligence varies by jurisdiction (both can be applied). Apply NEGLIGENCE to CONDUCT and STRICT LIABILITY to PRODUCT. Plaintiff must show: 1) D was a COMMERCIAL SELLER. 2) The product was defective (Prove it with Consumer Expectations Test or "Excessive Preventable Danger" Test or Risk/Utility 7-Factor Test). 3) The product was defective at the time it left the Defendant's hands.

Express Warranty (Breach of Warranty) Products Liability (Defective Products)

If the promise is specific, has been relied on, and breach causes injury, D is liable. Reasonable care is No defense! Express warranties are limited: 1) Need specific representations. 2) Buyer must notify the seller of the breach. 3) P must claim that the specific feature that was the subject of the warranty caused P's injury. Theory: If the promise is specific, has been relied on, and breach causes injury, D is liable. Ask: Is there a specific promise regarding the goods? Did P rely on the promise/warranty in purchasing the product Did the breach (of the warranty) cause P's injury?

Manufacturing Defects Strict Liability for Defective Products (Modern Approach):

If there is a material defect in construction leading to injury, strict Liability will USUALLY be imposed. Plaintiff must establish that... 1) Defendant was a COMMERCIAL SELLER (Not "Mom" or "Pop" selling on eBay). 2) The product was DEFECTIVE [prove it!]. (Was the product actually defective? Did THIS DEFENDANT manufacture the defective product? Or was it someone else?); 3) AT THE TIME IT LEFT DEFENDANT'S HANDS (Was the defect present at the time of sale, or was there a subsequent modification?); and 4) The product defect CAUSED the Plainitff's HARM.

Implied Warranty (Breach of Warranty)

Implied warranties arise by operation of law, and are not based on any representations by seller. Implied warranties arise automatically, and allows recovery without any showing of negligence or misrepresentation by the seller. Typically, implied warranties are limited by privity requirement since they are based in contract. Note: -There are no implied warranties in providing SERVICES. -Promise only reasonable skill. -But...a MD can make an express warranty. 1) Implied Warranty of Merchantability 2) Implied Warranty of Fitness for a Particular Purpose

Strict Liability

Liability for abnormally dangerous activities or defective products that does not depend on actual negligence or intent to harm, but that is based on the breach of an absolute duty to make something safe. Strict liability is imposed regardless of the fault or negligence of the D; and strict liability does NOT replace negligence liability! Potential Benefits of Strict Liability: -Greater accuracy -Administrative cost savings -Activity-level Effect i. Potential injurers save a greater incentive to consider whether to shift to safer alternatives if possible -- perhaps leading to a more efficient allocation of resources. ii. Additional research incentives. iii. More extensive loss distribution.

Warning Defects

One who supplied directly or through a third-party a chattel for another to use is subject to liability to those endangered by its probable use, for physical harm if (1) the supplier was a commercial seller, (2) a warning defect existed (Either NO warnings or instructions provided or INADEQUATE warning), (3) the manufacturer knew or should have known of the risk of harm; and (4) the warning or instructions defect caused the P harm. Heeding Presumption: Requires the person responsible for the warning (mfr/supplier) to show that the user would NOT have heeded an adequate warning. (i.e., Courts presume that an injured party would have heeded an adequate warning, so the burden shifts the manufacturer, not the victim or the P, to prove that even if they tried to give a warning, the injured party would have ignored it anyway). Should be used for drugs that cause harm.

Consumer Expectations Test (Used to prove a design defect)

The product failed to perform as safely as an ordinary consumer would expect when used in an intended or reasonably foreseeable manner. Test used for simple products that everyone can understand. If used to show a design defect in a complicated product that is openly and obvious dangerous, you're going to lose.

Abnormally Dangerous Activities

To determine whether an activity that appears to be "abnormally dangerous" is going to receive strict liability treatment by courts, you must apply the 6-factor analysis. Only applies if dangers/risk of harm are to other people, otherwise, the actor is assuming the risk/danger to themselves. Focused on the liability of enterprises for activities that target a lot of people. The MORE DANGEROUS AND THE LESS COMMON THE ACTIVITY, the more likely that it qualifies as abnormally dangerous and the more likely SL is imposed. Actions = Negligence Products = Liability