Law chapter 15

product liability 274

The legal liability of manufacturers, sellers, and lessors of goods to consumers, users, and bystanders for injuries or damage that are caused by the goods. Those who make, sell, or lease goods can be held liable for physical harm or property damage caused by those goods to a consumer, user, or bystander. Product liability claims may be based on the warranty theories just discussed, as well as on the theories of negligence, misrepresentation, and strict liability. We look here at product liability based on negligence and misrepresentation. *****Product Liability is not a new tort. Liability can be based on: Negligence; Misrepresentation; Strict Liability; Warranty Theory

express warranty 270

A seller's or lessor's oral or written promise or affirmation of fact ancillary (secondary) to an underlying sales or lease agreement, as to the quality, condition, description, or performance of the goods being sold or leased. making representations concerning the quality, condition, description, or performance potential of the goods. Under UCC 2-313 and 2A-210, express warranties arise when a seller or lessor indicates any of the following: 1. That the goods conform to any affirmation (declaration that something is true) or promise of fact that the seller or lessor makes to the buyer or lessee about the goods. Such affirmations or promises are usually made during the bargaining process. Statements such as "these drill bits will penetrate stainless steel—and without dulling" are express warranties. 2. That the goods conform to any description of them. For example, a label that reads "Crate contains one 150-horsepower diesel engine" or a contract that calls for the delivery of a "camel's-hair coat" creates an express warranty. 3. That the goods conform to any sample or model of the goods shown to the buyer or lessee.

market-share liability 277

A theory under which liability is shared among all firms that manufactured and distributed a particular product during a certain period of time. This form of liability sharing is used only when the true source of the harmful product is unidentifiable; it is not recognized in many jurisdictions. all firms that manufactured and distributed the product during the period in question are held liable for the plaintiff's injuries in proportion to the firms' respective shares of the market for that product during that period.

implied warranty 270

A warranty that arises by law because of the circumstances of a sale rather than by the seller's express promise. one that the law derives by implication or inference because of the circumstances of a sale, rather than by the seller's express promise. In an action based on breach of implied warranty, it is necessary to show that an implied warranty existed and that the breach of the warranty proximately caused the damage sustained. ***Implied Warranty from Prior Dealings or Trade Custom. Arises when both parties to a contract have knowledge of a well-recognized trade custom. Courts infer that both meant this custom to apply to their transaction Unless circumstances indicate otherwise, warranties of fitness and merchantability can be disclaimed with the words "As Is," "With All Faults Disclaimer of the Implied Warranty of Merchantability: must use the word merchantability. Disclaimer of the Implied Warranty of Fitness: must be in writing and conspicuous.

implied warranty of merchantability 270

A warranty that goods being sold or leased are reasonably fit for the general purpose for which they are sold or leased, are properly packaged and labeled, and are of proper quality. The warranty automatically arises in every sale or lease of goods made by a merchant who deals in goods of the kind sold or leased. merchant who is in the business of selling ski equipment makes an implied warranty of merchantability every time she sells a pair of skis. A neighbor selling his skis at a garage sale does not (because he is not in the business of selling goods of this type). ****Automatically arises from sale of goods by merchants which are "reasonably fit for ordinary purposes for which such goods are sold." Conform to promises on label. Adequately packaged and labeled fit for ordinary purposes for which such goods are used. Merchantable Food: fit to eat. CASE 15.1 Webster v. Blue Ship Tea Room, Inc. (1964). Does a patron assume the risk of a fishbone in fresh fish soup?

implied warranty of fitness for a particular purpose 272

A warranty that goods sold or leased are fit for a particular purpose. The warranty arises when any seller or lessor knows the particular purpose for which a buyer or lessee will use the goods and knows that the buyer or lessee is relying on the skill and judgment of the seller or lessor to select suitable goods. when any seller or lessor (merchant or nonmerchant) knows the particular purpose for which a buyer or lessee will use the goods and knows that the buyer or lessee is relying on the skill and judgment of the seller or lessor to select suitable goods [UCC 2-315, 2A-213]. ***Arises by any seller who: Knows the particular purpose for which the goods are being bought; and Knows the buyer is relying on seller's skill and judgment to select suitable goods. Particular Purpose. Ordinary vs. Particular Purpose: Goods can be merchantable but unfit for a particular purpose. Knowledge and Reliance Requirements.

Strict Product Liability and Public Policy

Consumers should be protected from unsafe products; Manufacturers and distributors should be liable to any user of the product; Manufacturers, sellers and distributors can bear the costs of injuries CASE 15.2 Bruesewitz v. Wyeth, LLC (2011). What do you think about the ethical or moral implications of this decision?

lien 269

An encumbrance on a property to satisfy a debt or protect a claim for payment of a debt. encumbrances, (claims charges, or liabilities—see Chapter 19), against goods at the time the contract is made [UCC 2-312(1)(b), 2A-211(1)]. This warranty protects buyers who, for example, unknowingly purchase goods that are subject to a creditor's security interest (an interest in the goods that secures payment or performance, to be discussed in Chapter 18). If a creditor legally repossesses the goods from a buyer who had no actual knowledge of the security interest, the buyer can recover from the seller for breach of warranty.

Coverage of Lemon Laws.

Applies primarily to automobiles. Give consumer remedies for automobiles under warranty that cannot be fixed with a certain number of attempts. Buyer is entitled to new car, replacement of defective parts or return of payment. Arbitration is typical Procedure

Defenses to Product Liability

Assumption of Risk. CASE 15.3 Boles v. Sun Ergoline, Inc. (2010). Why wasn't assumption of risk a valid defense in this case? Product Misuse. Plaintiff does not know the product is dangerous for a particular use Comparative Negligence. Defendants may be able to limit damages by apportioning fault. Commonly Known Dangers. Knowledgeable User

product liability Negligence

Based on a manufacturer's breach of the reasonable standard of care and failing to make a product safe. Due Care Must Be Exercised in: design, selection of materials, using appropriate production process, assembling and testing, adequate warnings, inspection, and testing.

Magnuson-Moss Warranty Act

Federal law to prevent deception in warranties by making them easier to understand. Enforced by Federal Trade Commission. Full Warranty (free repair/replacement). Limited Warranty. Implied Warranties arise under UCC -- not Magnuson-Moss

unreasonably dangerous product 276

In product liability law, a product that is defective to the point of threatening a consumer's health and safety. A product will be considered unreasonably dangerous if it is dangerous beyond the expectation of the ordinary consumer or if a less dangerous alternative was economically feasible for the manufacturer, but the manufacturer failed to produce it. A court may consider a product so defective The product is dangerous beyond the expectation of the ordinary consumer. 2. A less dangerous alternative was economically feasible for the manufacturer, but the manufacturer failed to produce it. As will be discussed next, a product may be unreasonably dangerous due to a flaw in the manufacturing process, a design defect, or an inadequate warning.

Product Defects - Restatement (Third of Torts).

Manufacturing Defects. Design Defects. Warning Defects 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 Design Defects. Product is manufactured correctly, but defect is based on design. Test: plaintiff must show defendant's failure to use a "reasonable alternative design" rendered the product not reasonably safe.

Privity of Contract Not Required

No privity of contract required between Plaintiff and Manufacturer. Liability extends to any person's injuries caused by a negligently made (defective) product.

Misrepresentation

Occurs when fraud committed against consumer or user of product. Fraud must have been made knowingly or with reckless disregard for safety. Plaintiff does not have to show product was defective

Statements of Opinion and Value

Only statements of fact create express warranties. Exception for Statements of Opinion by Experts. Puffery versus Express Warranties.

Proving a Defective Condition

Plaintiff does not need to show product or in what manner the product become defective. But plaintiff must show product was defective and "unreasonably dangerous" to the user

Requirements for Strict Liability

Product must be in defective condition when sold. Defendant is in the business of selling the product. Product must be unreasonably dangerous. Plaintiff must be physically harmed Defective condition must be proximate cause of injury. Goods are in substantially same condition

Express Warranties

Seller can create warranty by making representations about quality, condition, or performance of good, by: Any Affirmation or Promise. Any Description. Any Sample or Model Seller does not have to use the words "guarantee" or "warranty." Basis of the Bargain. Reasonable buyer must only believe warranty was 'basis of the bargain.' Buyer must rely on warranty when he enters into contract ****can be disclaimed: If a clear written disclaimer in contract with specific, unambiguous language and called to Buyer's attention (BOLD CAPS UNDERLINED).

Strict Product Liability

Strict Liability holds people liable for results of their acts, regardless of their intentions or exercise of reasonable care. Strict Product Liability. Design Defects. Factors to be Considered. Magnitude and probability of foreseeable risks. Relative advantages and disadvantages of product. Most courts use "risk-utility" analysis. Product Defects - Restatement (Third of Torts). Inadequate Warnings. A product may be defective because of inadequate warnings or instructions. Liability based on foreseeability that proper instructions/labels would have made the product safe to use Product Defects - Restatement (Third of Torts). Inadequate Warnings. Obvious Risks. No duty to warn. Foreseeable Misuses. Seller must warn about foreseeable misuse Market Share Liability. Theory of liability when multiple Defendants contributed to manufacture of defective product. Liability of each Defendant is proportionate to the share of the market held by each respective Defendant

Warranties of Title

Under the UCC, three types of warranties arise in sales and lease contracts: Good Title. No Liens. No Infringements

Unreasonably Dangerous Products

Unreasonably Dangerous Products. The product was dangerous beyond the expectation of the ordinary consumer. A less dangerous alternative was economically feasible for the manufacturer, but the manufacturer failed to produce it