Business Law Chapter 13 (Strict Liability and Product Liability)

What are Inadequate (Defective) Warnings?

A product may also be defective because of inadequate instructions or warnings! A product will be considered defective "when the foreseeable risks of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller or other distributor...and the omission of the instructions and warnings renders the product not reasonably safe."

Strict Liability Applies to:

Abnormally Dangerous Activities - damages proximately caused by an abnormally dangerous, or ultrahazardous, activities. Abnormally dangerous activities involve high risk of serious harm to persons or property that can not be completely guarded against by the exercise of reasonable care! (Examples: blasting; storing explosives) Keeping Animals Owners keeping wild animals are strictly liable for any harm inflicted by the animals. Owners keeping domestic animals (such as dogs, cats, cows) may be strictly liable for harm if the owner knew, or should have known, that animal was dangerous or had a propensity to harm others.

Strict Product Liability also includes:

Bystanders: Almost all courts extend the strict liability of manufacturers and other sellers to injured bystanders. Component Part Suppliers: strict liability also applies to suppliers of component parts. (example, Toyota buys brake pads from a subcontractor and puts them in Corollas without changing their composition; both Toyota and the supplier will be held strictly liable for the injuries caused by the defects).

Manufacturers can be Liable Misrepresentation (Fraud) if and when:

Consumer injured as a result of a manufacturer's or seller's fraudulent misrepresentation. Misrepresentation must have been made knowingly or with reckless disregard for safety (may include intentional mislabeling or intentional concealment of a product's defects). Material fact involved. Seller intended to induce the buyer's reliance on the misrepresentation; Buyer reasonably relied.

Where is there a potential for Negligence for Manufacturers?

Designing the product Selecting the materials Using the appropriate production process Assembling and testing the product Placing adequate warnings on the label to inform users of dangers of which an ordinary person might not be aware Inspecting and testing any purchased components

What is Product Liability?

Liability that applies to those who make, sell, or lease goods can be held liable for physical harm or property damage caused by those goods under theories of Negligence, Misrepresentation (Fraud), Warranties, Strict liability

Does Negligence require Privity of Contract?

Not required. A product liability action based on negligence does not require privity of contract between the injured plaintiff and the defendant-manufacturer.No privity of contract required between plaintiff and manufacturer.

What are Manufacturing Defects:

Occurs when a product "departs from its intended design even though all possible care was exercised in the preparation and marketing of the product." A manufacturing defect is a departure from a product's design specifications that results in products that are physically flawed, damaged, or incorrectly assembled.

What is Market-Share Liability?

Ordinarily, a plaintiff must prove the defective product that caused his or her injury, was the product of a particular defendant! Courts have dropped this requirement when the plaintiff can not prove which of many manufacturers/distributors supplied the harmful product; hold each defendant liable based on its market share.

What are the defenses of Strict Product Liability:

Preemption Government regulations preempt claims for product liability; an injured party may not be able to sue the manufacturer of defective products that are subject to comprehensive federal regulation. Voluntary Assumption of Risk Some courts do not allow this defense to be used in strict product liability claims. Product Misuse: The product is used for a purpose for which it was not intended ("Primitive Pete ABCs of Hand Tools"). Comparative Negligence Commonly Known Dangers (matches; knives) Knowledgeable User (electricians) Statutes of Limitation and Repose

What are the requirements for Strict Liability (Six)

Requirements for Strict Liability (Six) 1. Product must be in defective condition when the defendant sells it; 2. Defendant must be engaged in the business of selling (or otherwise distributing) that product. 3. Product must be unreasonably dangerous to the user or consumer because of its defective condition. 4. Plaintiff must incur physical harm to self or property by use or consumption of the product. 5. The defective condition must be the proximate cause of the injury. 6. The goods must not have been substantially changed from the time the product was sold to the time the injury was sustained.

What is Strict Product Liability?

The law imposes strict product liability as a matter of public policy. Consumers, users and bystanders should be protected against unsafe products. Manufacturers and distributors should not escape liability for faulty products simply because there is no privity of contract with the ultimate user. Manufacturers and distributors can better bear the costs associated with caused by their products.

What are Design Defects:

Unlike a product with a manufacturing defect, a product with a design defect is manufactured correctly but still results in injury to the user because of a design defect. Test: plaintiff must show (i) a reasonable alternative design was available, and (ii) defendant's failure to use the alternative design rendered the product not reasonably safe. (Was the harm reasonably preventable?)

The Doctrine Of Strict Liability states that:

a person who engages in certain activities can held responsible for any harm that results to others, even if that person used the highest standard of reasonable care. (Rylands V. Fletcher [reservoir flooded coal mine incident])

What is Privity of Contract

refers to the relationship that exists between the parties to a contract; normally, only the parties to a contract can enforce that contract.