PSCI 427: Ch. 11: Products Liability

The Restatement (Third) of Torts Rule

" A product is defective in design when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design... and the omission of the alternative design renders the product not reasonably safe."

Warranty

1. Any promise (or a presumed promise, called an implied warranty) that certain facts are true 2. In consumer law, any obligations imposed by law on a seller that benefit a buyer; for example, the warranty that goods are merchantable and the warranty that goods sold as fit for particular purpose are fit for that purpose

The ultimate user assumes the risk of being injured by a hazardous product in three ways

1. By discovering the defect but disregarding it and using the product anyway 2. By failing to properly maintain the product 3. By failing to follow instructions or heed warnings for safe product use

Types of Warranties

1. Express warranty 2. Implied warranty of merchantability 3. Implied warranty of fitness for a particular purpose

Unreasonably Dangerous Products

1. Fault in product design 2. Error in product manufacture or assembly 3. Improper product maintenance 4. Manufacturer/seller's failure to warn

There are five elements of products liability as defined by most state courts or statutes

1. The defect must render the product unreasonably dangerous to use 2. The seller or manufacturer must be in the business of selling products such as the flawed one(s) 3. The product cannot have been substantially changed between the time it left the seller's or manufacturer's hands and the time it reached the ultimate user. 4. The defect must have proximately caused the ultimate user's injuries 5. The ultimate user must have used the product properly, that is, in the way that the product was designed to be used.

In some jurisdictions, several additional elements are required:

1. The ultimate user must have been foreseeable 2. The seller or manufacturer must have been responsible for the condition in which the product was maintained 3. In a few states, a sale of the product must have occurred. This could be a sale between the manufacturer and a wholesale, or a wholesale to a retailer, or a retailer to a customer. Basically someone at some point had to buy the defective item

Implied Warranty of Merchantability

A promise implied but not expressed by law, that goods sold will be fit for their ordinary purpose

Express warranty

A statement that a particular promise or set of facts is true Uniform Commercial Code- a set of uniform model statutes concerning commercial transactions

Danger/Utility test

A theory in products liability design that makes a product unreasonably dangerous if the danger created by its design outweighs the benefits derived from its use

Contributory or Comparative Negligence is not a Defense

Contributory negligence is a defense to negligence and negligence has no place in strict liability cases

Faulty Product Design

Courts look to see whether the product is inherently dangerous because of a poor design but for which (that is, if such a defect did not exist) the product would have been safe to use Courts decide faulty design (which make products unreasonably dangerous) in terms of three tests: the consumer contemplation test, the danger/utility test, and the state-of-the-art discoverability test

Bad Faith

Dishonesty or other failure to deal fairly with another person

Products Liability Theory and History

Est. in Greenman v. Yuba Power Products, Inc., 59 Cal. 2d 57, 377 P.2d 897, 27 Cal. Rptr. 967 (1962)

Removal of Safety Devices

For injured parties, products liability cause of action will not be available, because the product was misused and altered

Substantially Unchanged Condition Requirement

For products liability to apply, the product must reach the ultimate user without any substantial changes in this condition from the time it left the manufacturer or seller. If something happened along the product distribution chain to alter the product (perhaps creating the unreasonably dangerous condition), then it would be unfair to hold manufacturers or sellers accountable for something they did not cause

Consumer contemplation test

If a reasonable person would not have anticipated the danger created by the fault in the product, then the product is unreasonably dangerous

State-of-the-art Discoverability test

If manufacturers could have discovered hazards created by defective product designs, using current, modern, state-of-the-art technologies

Restatement (Second) vs. Restatement (Third)

In Restatement (Third) strict liability standard is now applied to manufacturing defects of products, and a different test, a risk-utility standard, is limited to design defects. For design defects, the burden is placed back on the plaintiff in the Restatement (Third) There is no longer a "consumer expectation test"- one of many factors to consider but not sole criteria Plaintiff must show reasonable alternative design that would have been safer at a reasonable cost; this is considered more of a negligence standard than a strict liability standard

Historical Development of Products Liability

In early 19th century, English and American common law held that persons injured by defective products had to sue under contract law rather than tort law Appropriate cause of action was breach of contract or breach of warranty

Negligence is Irrelevant

It does not matter how much care the seller or manufacturer used in making or maintaining the product.

The Restatement (Second) of Torts

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 The rule stated in Subsection (1) applies though The seller as exercised all possible care in the preparation and sale of this product, and The user or consumer has not bought the product from or entered into any contractual relation with the seller

Public Policy Objectives behind Products Liability

Products liability is society's decision, through its courts and legislatures, that businesses manufacturing and selling defective products are in the best economic position to bear the expenses incurred when a faulty product injures an innocent user.

Foreseeable Misuse

Reasonably foreseeable uses, even though the product may not originally have been intended or designed for such functions are acceptable uses Using a chair as a ladder is not a misuse

Ultimate User's Misuse of Product

Saying that contributory or comparative negligence is not a defense is not to say however that the plaintiff (the ultimate user) can use a defective product irresponsibly or wantonly

Business Requirement

Section 402A of the Restatement (Second) of Torts, and most common law and statutory versions of products liability, insist that the manufacturer or seller be engaged in the business of selling products such as the defective item(s) that injured the ultimate user. Its purpose to exclude products liability for people who are not in the business of selling such goods

Seller or Manufacturer's Failure to Warn

Sometimes products are unreasonably dangerous by their nature. However, purchasers may not always spot the obvious dangers. Accordingly, manufacturers and sellers have an obligation to warn the ultimate user about inherent product dangers. Failure to warn could result in strict liability.

Proximate Cause

The defective product must have been the proximate cause of the plaintiff's injury if liability is to attach

Products Liability

The responsibility of manufacturers (and sometimes sellers) of goods to pay for harm to purchasers (and sometimes other users and even bystanders) caused by a defective product

No Privity of Contract Requirement

The ultimate user need not have purchased the merchandise directly from the seller or manufacturer, although some states require that a sale of the product must have occurred somewhere between the manufacturer and the ultimate user

Statute of Limitations for Products Liability Cases

Two years statute of limitations

Failure to Properly Maintain Product

Ultimate users cannot recover in products liability if they failed to properly maintain the product for safe users

Implied Warranties

Uniform Commercial Code (UCC) is a model (suggested) statute concerning the sale of goods that has been adopted by all states. Provision sec. 2-314 concerns implied warranties that all sellers of goods provide with their goods as to the goods being "merchantable" which means that all goods must be fair or average quality and fit for their ordinary purpose Provision sec. 2-315 provides that if the seller knows of a particular purpose for which the buyer is buying then the goods must be fit for that purpose

Proper Use Requirement

User must use the product for some function for which it was designed or intended to be used If foreseeable misuse; misuse can be anticipated, in most cases it will be considered proper use

Implied warranty of fitness for a particular purpose

When a buyer relies on a seller's expertise in recommending a particular product, there is an implied promise that the product will work as described by the seller

Imminent Danger Exception

a 19th and early 20th century exception to the privity of contract requirement in defective product cases MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 (1916)

Privity of Contract

a legal relationship that exists between parties to a contract. In some cases privity must exist in order for an individual to make a claim against another. Winterbottom v. Wright, 10 Meeson & Welsby 109, 152 Eng. Rep. 402 (1842)

Restatement (Second) of Torts

a legal treatise adopted by all jurisdictions detailing the current state of tort law and trends. It is considered a highly respected secondary source of law published by the American Law Institute (ALI)

Restatement (Third) of Torts

a revision of section 402 A of the Restatement (Second) of Torts that focuses on products liability. Not all jurisdictions follow this edition

Assembly defect

a theory in products liability concerning whether a defective product is unreasonably dangerous. Errors in production, manufacture, or assembly may render a product unreasonably hazardous despite safe design

Maintenance defect

a theory in products liability concerning whether a defective product is unreasonably dangerous. If a seller fails to maintain a product properly, and the product later causes injury to the ultimate user, then the product was unreasonably dangerous

Merchantable

goods that are fit for their usual or customary purpose

Ultimate User

in products liability law, a person who is injured by a defective product. It must have been reasonably foreseeable that the injured party would use the defective product

Assumption of Risk

knowingly and willingly exposing yourself (or your property) to the possibility of harm. In most states, a person who assumes a risk of harm cannot win a negligence lawsuit against the person responsible for the harm.

Purchaser

one who acquires property through the purchase of said property

Retailer

one who makes retail sale of goods

Wholesaler

one who sells goods wholesale, rather than retail

Seller

one who sells property, either its own or through contract with the actual owner

Product manufacturer

the maker of a product that, if defective, gives rise to product liability

Deep Pocket

the one person (or organization), among many possible defendants, best able to pay a judgment; the one a plaintiff is most likely to one

Breach of warranty

the violation of either in an express of implied warranty