Business Law 6: Product and Strict Liability

intentional misrepresentation

-AKA fraud -a tort in which a seller or lessor fraudulently misrepresents the quality of a product and a buyer is injured thereby

merchants

-a business that engages in selling a particular good -liable for product liability -differentiated from casual sales (like a yard sale) -you don't have product liability for casual sales

defect in design

-a defect that occurs when a product is improperly designed -businesses obliged to make safe products, but they don't have to be the safest in the world -cost-benefit analysis -if you are injured and can find that there is an alternative design that is safer and economically feasible, there is product liability -ex: improper design, lacking proper safeguards, parts easily removed/swallowed by children

contributory negligence

-a defense that says a person who is injured by a defective product but has been negligent and has contributed to his or her own injuries cannot recover from the defendant

comparative negligence

-a doctrine which applies strict liability actions that says a plaintiff who is contributorily negligent for his/her injuries is responsible for a proportional share of damages

negligence

-a tort related to defective products in which the defendant has breached a duty of due care and caused harm to the plaintiff

generally known dangers

-acknowledges that certain products are inherently dangerous and are known to general population to be so -you don't need to disclose "knives are sharp"

chain of distribution

-all manufacturers, distributors, wholesalers, retailers, lessors, and sub-component manufacturers involved in a transaction

supervening event

-an alteration/modification of a product by a party in the chain of distribution that absolves all prior sellers from strict liability -modified product is no longer safe -protected until the product is materially changed

domesticated animals

-animals that return home at night or require some care by humans -farm animals are domesticated -no strict liability unless you know of an animals's propensity to bite someone -"one bite rule" -exception: dangerous animals (pit-bulls, Rottweilers) don't get a one-bite rule

correction of product defect

-car companies can correct a product defect (recalls) -they have to notify you of the defect and the possibility to fix it -the moment they give notice, they clear themselves of strict liability, even if the person is unaware of the notice

wild animals

-every animal not considered domesticated -you always have strict liability if you keep a wild animal -exception: if someone trespasses onto your property and you give notice that there is a wild animal in the building

abnormally dangerous activities

-fireworks, firearms, toxic chemicals, etc. -you always have strict liability -even if you take all the necessary precautions to prevent anything from happening, even if someone else causes the damage, you are liable

product liability

-liability of manufacturers, sellers, and others for the injuries caused by defective products -all we care about is the products (not services) -*MERCHANTS* CAN BE LIABLE

statute of repose

-limits the seller's liability to a certain number of years from the date when the product was first sold -very important for products liability (must be met) -if you get injured by a product sold 50 years ago, it is not fair to hold that company liable -statute of repose is 10 years (from date of selling)

strict liability

-makes manufacturers, distributors, wholesalers, retailers, and others in the chain of distribution of a defective product liable for the damages caused by the defect, irrespective of fault -liability without fault -doesn't matter if it was intentional or negligent... -burden/risk is shifted from consumer to the producer/manufacturer -there is nothing you can do to waive or disclaim liability (we have insurance on this)

punitive damages

-monetary damages awarded to punish a defendant who either intentionally or recklessly injured the plaintiff

government contractor defense

-provides that contractors that manufacture products to government specifications are not usually liable if such a product causes injury -if you follow government designs, you are protected... as long as you did as you were told/following specifications

assumption of the risk

-rarely applied -generally, only done when working with wild animals -ex: tiger trainers at the Mirage are assuming the risk of their job since it is dangerous

abnormal misuse

-relieves a seller of product liability if the user abnormally misused a product -when a generally safe product is used in an unsafe manner, no product liability -exception: if you know people are misusing the product... there will be foreseeable risk so there needs to be a warning label (ex: aerosol cans)

statute of limitation

-requires an injured person to bring an action within a certain number of years from the time that he or she was injured by a defective product -very important for products liability (must be met) -2 years in CA -beginning from date of injury

crashworthiness doctrine

-says automobile manufacturers are under a duty to design automobiles so they take into account the possibility of harm from a person's body striking something inside the automobile in the case of a car accident

product defect

-something wrong, inadequate or improper in the manufacture, design, packaging, warning or instructions about a product

failure to warn

-when a manufacturer does not place a warning on the packaging of products that could cause injury if the danger is unknown -the product has to be inherently dangerous (guns, knives, axes, etc.) -products need adequate and conspicuous warning label -something is already dangerous and can't be made safer... just warn them

failure to provide adequate instructions

-when a manufacturer does not provide detailed directions for safe assembly and use of a product -the more dangerous an item is, the more detailed instructions are required

defect in packaging

-when a product has been placed in packaging that is insufficiently tamperproof -defects in warnings on the packaging -the packaging itself (and warnings) are unsafe -if you fail to properly differentiate similar products -ex: children being able to open prescription drugs easily

one bite rule

-you are allowed one bite -once your animal has bitten someone, you know that it might possibly do it again -you will be liable for the next bite

eBay and product liability

-you might be considered a merchant... -if you sell your iPhone once, it's just a casual sale -if I get into the business of collecting phones and selling them, I am a merchant

defect in manufacture

a defect that occurs when a manufacturer fails to... (1) properly assemble a product, (2) properly test a product, or (3) adequately check the quality of the product -some products come out of the production process as different/more dangerous -the difference is what makes it more dangerous than the other products -ex: product assembled incorrectly, product lacks quality control, etc.

common types of product defects

defect in manufacture defect in design failure to warn defect in packaging failure to provide adequate instructions

defenses to product liability

generally known dangers abnormal misuse of a product assumption of the risk correction of product defect superseding event government contractor defense statutes of limitation statutes of repose contributory/comparative negligence