Law 3220 Chapter 7
privity
the parties must have been in a relationship that created a legal obligation
caveat emptor
"let the buyer beware"; requires that the buyer examine, judge, and test the product for himself.
1.misstatement of an important material fact 2. scienter 3. seller must know, or have reason to know, that the statement she is making is false. 4. recipient of the false information must justifiably rely on that information in making the decision to go ahead with the deal. 5. privity between the parties 6. causation 7. damages
What has to be present in order to have fraud case?
unknown hazards
also known as latent defects; are dangers that were not known or not fully appreciated at the time the product was manufactured
fraud
an intentional misrepresentation of a material fact designed to induce the person receiving the miscommunication to rely upon it to her detriment, so that a loss is suffered.
failure to warn
applies where the manufacturer knows of a danger caused by the product's use that cannot be prevented entirely, but about which users could be warned.
business tort
there is no such thing as this. It is a Tort law applied to business.
the elements of strict liability or product defect law
1. The product was defective 2. the defect created an unreasonably dangerous product 3. the defect was the proximate cause of or a substantial factor in bringing about the injury 4. the injury caused damages
District court held for M Appeal court affirmed she had no claim for disability.
CASE: : Lawler vs. Montbanc M makes high-end and luxury products. Sells wholesale at boutique. L was manager of a store in California and expected to work full time in 8 years In 8th year, she developed medical conditions --Dr. Said, "could only work 20 hours/week" She told M, they said have to work 40 hours Company president was critical of how her store was run. L said he was unpleasant Company said she had to work full 40 hours and offered severance pay. She refused and sued for disability discrimination and intentional infliction of emotional distress District court held Appeal court
Trial court says not advertising held as evidence Appealed Appeal court says it did, B. wins
CASE: Baxter vs. Ford Motor Ford said glass won't shatter B. buys car, rock hits windshield, glass hits him in the eye. he sues Trial court Appealed Appeal court says
G sued M and IDCA for Interference with Perspective advantage District Court awards G with $220000 IDCA appeals Appeal Court affirmed decision
CASE: Gieseke vs. IDCA inc Brothers--Mike and Arthur-- own Standard water. G works for them Brothers fight and Arthur starts a new company (Diversified water) taking G with him. (competing with Standard water) Mike buys Arthur's half of the company and makes it IDCA (new company) Mike changes all of the business correspondence for Diversified water to other address, takes equipment to IDCA. Makes G unable to do business. G sued M and IDCA District Court IDCA appeals Appeal Court
District Court held for G against Shopsmith. Appeal Court held affirmed. He was using the machine like it was intended to be used but it malfunctioned.
CASE: Greenman vs. Yuba Power Products G wife bought him a Shopsmith ( a power tool that could be used as a saw, drill, and wood lathe.) G had studies material about the product and asked his wife to buy it. 2 years later, G using machine and a piece of wood flew out of the machine and struck him, inflicting serious damages. G sued the manufacturer, and the retail dealer alleging breach of warranties and negligence. How did they find?
Held that Lightle committed fraudulent misrepresentation. Awarded Seeley damages and suspended Lightle's real estate license. Lightle appealed Superior court upheld the decision. Lightle appealed again Affirmed the ruling, upholding the commission's decision.
CASE: Lightle vs. Real Estate Commission
Trial court says Mac wins Appeal Court says who has control of manufacturing (Buick). Could have discovered defects of tires if they tested or inspected. Buick makes most money. Affirms Trial court decision, Mac. wins. Was it really Buick or wheel maker? Buick knows the wheel maker, knows validity of tires, contracted with him, etc.
CASE: MacPherson vs. Buick Buick sells cars to a dealer--Mac. Wheels on Mac car come off. Mac sued Trial court Appeal Court says
District court granted summary judgement for the manufacturers P appealed Appeal court affirmed the decision concluding that a reasonable fact finder could not conclude that the defendant's warnings were inadequate.
CASE: Parish vs. Icon P was jumping on a backyard trampoline, made by Jumpking, that was surrounded by a safety net made by Icon. He did a back somersault but landed on his head and was rendered a quadriplegic. He sued Icon and Jumpking for faulure to warn of the dangers involved in using the products. What was held?
Trial court found for Driving Force. Slater appealed Appeal Court reversed and remanded saying "not just nature of competition" Is the claim for intentional interference with contractual relations?
CASE: Slater Numistatics vs. Driving Force Slater works with ICG with coins. They ship to cable shopping network. Taylor and Williams (work with Slater) leave and start Driving Force which drove ICG out of business. They offer Cable a better deal and took account away from Slater. Slater sued Trial court Slater appealed Appeal Court
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, as in the case with abestros. The manufacturers are then allowed to fight it out among themselves as to which should pay the damages. May be applied where 2 or more defendants are found liable for damages. Plaintiff may collect the entire judgement from any one of the defendants or from any and all of the defendants in varying amounts until the judgement is paid.
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.
reasonable care
a manufacturer is required to exercise this in the production of its product. 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.
warranty
a manufacturer's assurance that a product will meet certain quality and performance standards. May be either expressed or implied.
interference with prospective advantage or with economic advantage or with a business relationship
a tort where there is an intentional and unjustified intervention with a relationship that a party had been developing with others in an effort to obtain new business or more business
ultrahazardous activity (abnormally dangerous)
activity such as one that "necessarily involves a risk of serious harm to the person, land, or chattels of one another which cannot be eliminated by the exercise of the utmost care" and "is not a matter of common usage" applied to such things as blasting with explosives, allowing chemicals to seep into water supplies, crop dusting, and transporting chemicals
interference with contract
common business tort; a tort in which there is a valid contract, and the defendant knew of the contract but intentionally caused a breach of the contract, resulting in damages to the plaintiff.
fraud
deliberate deception
damages
even if there is fraud, if there is no injury, there should be no award. The losses suffered by the plaintiff resulting from reliance on the fraud
strict liability doctrine
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. the supplier has the duty to take reasonable steps to ensure that its buyer is knowledgeable and equipped
scienter
intent to defraud; that is the party wanted to mislead the other party and intentionally deceive him. means that the court finds that there is something rotten about the deal about which the seller could not be ignorant.
manufacturers
must warn of possible dangers in the use, storage, and handling of their products
sophisticated user defense
or knowledgeable purchaser; 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"
defenses in product liability suits
product misuse, assumption of risk, bulk supplier doctrine and sophisticated user defense
privity of contract
refers to the relationship that exists between contracting parties. It is essential to a contract it exists between the parties.
Section 402A
says that 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 the seller is engaged in the business of selling such a product and it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold. 2. the rule stated in subsection 1 applies, although the seller has exercised all possible care in the preparation and sale of his product and the user or consumer has not bought the product from or entered into any contractual relation with the seller.
design defect
these cases are not concerned with a product that has been poorly manufactured and causes an injury. These cases focus on the determination of whether an injury to users could have been prevented by designing the product differently.
Restatement (Third) of Torts on Products Liability Section 2
this categorizes product defect
risk-utility test
when evidence shows that a reasonable person would conclude that the benefits of a product's particular design compared to a reasonable alternative design did not outweigh the dangers inherent in the original design.
misstatement of an important or material fact
when false information was presented as fact
implied warranty
when the law inserts quality standards into the relationship regardless of the actual contract terms
express warranty
when the manufacturer contractually provides performance promises to the consumer
misrepresentation
words or conduct by a person to another that, under the circumstances, amount to a false statement. May be the basis for strict liability in tort.
