FINA 2244 Chapter 7

Consumer Products and Negligence: Negligence in Tort

A: MacPherson decision eliminated the privity requirement and held a manufacturer liable in tort for negligence B: A manufacturer is required to exercise reasonable care under the circumstances in the production of its product C: Defects must be revealed even if the manufacturer becomes aware of them after the sale of the product D: Producers are responsible for damages inflicted in such cases and punitive damages may be added

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; this concerns the liability that producers and sellers of goods have to those injured by their products A) Consumer Products and Negligence B) Strict Liability Under Contract Law C) Strict Liability in Tort D) Primary Areas of Product Liability Law E) Defenses in Product Liability Suits F) Statutory Limits on Liability G) Does Product Liability Need Reform?

Primary Areas of Product Liability Law: Failure to Warm

A) A manufacturer's failure to warn consumers of dangers involved in the use of a product, or to instruct consumers about proper procedures in using a product, gas long been actionable B) This applies where the manufacturer knows of a danger caused by the product's use that cannot be prevented entirely, but which users could be warned about.

Primary Areas of Product Liability Law: Design Defects

A) Design defect cases are not concerned with a product that has been poorly manufactured and causes injury. B) Rather, such cases focus on the determination of whether an injury to users could have been prevented by designing the product differently

Primary Areas of Product Liability Law: Unknown Hazards

A) The largest dollar volume and greatest number of product liability cases are based on unknown hazards or latent defects- dangers that were not known or not fully appreciated at the time the product was manufactured B) Ex) health effects of asbestos, injuries caused by IUDs, and damages caused by drug side effects

Primary Areas of Product Liability Law: The Chain of events needed to establish liability in tort

A) The product was defective B) The defect created an unreasonably dangerous product C) The defect was the proximate cause of or a substantial factor in bringing about the injury D) The injury caused damages

Consumer Products and Negligence: Rule of Caveat Emptor

A: Caveat emptor means "let the buyer beware" B: According to the U.S. Supreme Court, the rule "requires that the buyer examine, judge, and test [the product] for himself"

Strict Liability under Contract Law: An express warranty is when the manufacturer contractually provides performance promises to the consumer

A: Manufacturers often advertise quality or performance characteristics of their products. B: When such claims become part of the bargain between a manufacturer and a consumer, the manufacturer is held to have a duty of performance as to that representation. C: Does not require that injured consumers have purchased product directly from the manufacturer D: Injured consumers are not required to prove fault because the law requires manufacturers to guarantee truthfulness of their representations

Fraud: Intentional Misrepresentation or Fraud

A: The following key elements have been agreed upon to establish fraud or intentional misrepresentation: 1: There was a misstatement of an important or material fact; false information was presented as fact 2: There must be a scienter or intent to defraud; scienter means that the court finds something rotten about the deal about which the seller could not be ignorant 3: The seller must know, or have reason to know, that the statement she is making is false 4: The recipient of the information must justifiably rely on that information in making the decision to go ahead with the deal 5: There must be privity between the parties; a third party observing fraud cannot sue 6: Causation: a logical link existed between reliance on the misstatement and the losses that were then suffered by the plaintiff 7: There must be damages that were caused by the fraud B: It is a claim frequently added to a suit for breach of contract because damages for an intentional tort have a chance of including punitive damages, which contract damages alone do not allow

Strict Liability Under Contract Law: An implied warranty is when the law inserts quality standards into the relationship regardless of the actual contract terms.

EX) Henningson v. Bloomfield Motors: the New Jersey Court held the manufacturer of an automobile strictly liable to the purchaser's wife for her injuries, when the brakes failed and an accident occurred, on the basis of an implied warranty of safety.

Interference with Prospective Advantage

I: There can be a tort when a business attempts to improve its place in the market by interfering with another's business in an unreasonable and improper manner II: If the defendant's behavior is merely competitive and not predatory, the courts do not find improper interference

Tort Laws and Business

I: Costs of Tort Litigation II: Compensation for injured parties-the main purpose of tort law-accounts for less than half the total cost III: Business organizations have lobbied Congress to impose federal statutory limits on tort damages.

Interference with Contractual Relations

I: In some cases, the claim is that the injured business's contractual relations were wrongfully interfered with by another party II: When a wrongdoer intentionally causes another party to break a good contract, the motive does not matter. III: The party who suffers the breach may sue both the party who breached the contract for breach and the wrongdoer for the tort of interference with the contract.

Defenses in Product Liability Suits

I: Manufacturers are generally not liable if the consumer has engaged in improper activity that increases the risk of injury. II: Product misuse- if it can be shown that the product was misused, the injured consumer's behavior may preclude recovery for damages. III: Assumption of Risk- certain consumer products are unavoidably dangerous, such that so long as the risks are understood, consumers are presumed to accept the bad with the good

Strict Liability in Tort

I: Plaintiff can be faced with the problem of showing a warranty existed. In response to such difficulties, the courts simplified the legal basis for injured plaintiffs by adopting the rule of strict liability in tort. II: Section 402A: in the Restatement of Torts, the American Law institute adopted a strict liability in tort rule in product injury cases; the standard appears to be evolving III: Restatement (third) of Torts on Products liability: this newer version focuses on what it calls "risk-utility balancing". That is, some products cannot be made completely safe. Ex) gas

Consumer Products and Negligence

I: Privity of contract refers to the relationship that exists between contracting parties II: Since modern consumers rarely buy products directly from the manufacturers, there is often no privity between consumer and producer III: Rule of Caveat Emptor IV: Negligence in tort

Strict Liability Under Contract Law

I: Strict liability holds manufacturers liable to consumers injured by defective products regardless of whether the manufacturer exercised all reasonable care or not. Thus, the injured party is not required to attack the reasonableness of the conduct of the manufacturer, but rather focuses on problems with the product II: Strict liability under contract law is based on the relationship between the injured party and the manufacturer because of the existence of a warranty. III: A warranty is a manufacturer's assurance that a product will meet certain quality and performance standards. IV: An express warranty is when the manufacturer contractually provides performance promises to the consumer. V: An implied warranty is when the law inserts quality standards into the relationship regardless of the actual contract terms

Primary Areas of Product Liability Law

I: The chain of events needed to establish liability in tort II: Manufacturing defect: this area is straightforward III: Failure to warn IV: Design Defects V: Unknown Hazards

Does Product Liability Need Reform?

I: What has been called a "tort crisis" has abated in recent years as the Supreme Court has cracked down on massive punitive damage awards and doubtful expert testimony. II: There has also been reform legislation from Congress, to make class-action suits more difficult, and state laws that have capped liability for certain damages.

Fraud

I: When a person suffers an injury due to deliberate deception, there may be a tort of fraud, misrepresentation, fraudulent misrepresentation, or deceit II: The more serious charge is intentional misrepresentation III: Intentional misrepresentation or fraud

Statutory Limits on Liability

I: Worker's comp. II: Radiation III: Manufacturers of products made to govt. specifications are generally immune from product liability IV: Products that must follow federal regulations regarding label requirements may not be subject.