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Chapter 10 Business law
Terms in this set (80)
Product liability issues consist of.....
cigarettes, pet food, breast implats
5% of state tort trials involve product liability issues
If a company ________ or ________ a product, it should be expected to be a party to a product liability lawsuit
sells or manufactures
Product liability is based on _________
There are three primary theories of recovery in product liability cases. While the plaintiff must establish different elements under these theories, the plaintiff must generally show which two elements?
1. That the product is defective
2. That the defect existed when the product left the defendants control
manufacturing defect an example
if there is a shattered coke bottle that shatters in your hand thus there is a problem w/ the manufacture of the bottle. The defect making it more dangerous than other identical products
If you get hit and the way the seat is made causes a serious injury this is known as a design defect, b/c all the products of a particular design are defective and dangerous.
failure to provide adequate warnings
this problem occurs if for example you read a pill bottle and it doesn't say that if you take this medicine with alcohol you die. this shows that they failed to provide adequate warnings
What is a product? Can product liability be found in intangible items?
1. Reasonably certain to place life and limb in peril and may cause bodily harm if defective. Focus on tangible items.
2. Restatements of Torts provides examples of items covered by product liability claims, and a mortgage loan does not appear on the list.
To win a case based on negligence the plaintiff must prove four elements of negligence
1. Defendant manufacturer or seller owed a duty of care to the plaintiff
2. The defendant breached that duty of care by supplying a defective product
3. This breach of duty caused the plaintiffs injury
4. The plaintiff suffered actual injury
Privity of contract
means being a party to a contract, b/c most consumers do not purchase goods directly from the manufacturers, product liability cases against manufacturers were ra
Before the landmark case in 1916 MacPherson v. Buick Moto Co...
There was not much product liability cases against manufacturers
negligence was rarely used as a theory of recovery for an injury caused by a defective product because of the difficulty of establishing the element of duty. Until that case, the courts said that a plaintiff who was not a purchaser of the defective product could not establish a duty of care, b/c one could not owe a duty to someone w/ whom one was not "in privity of contract"
Since the MacPherson v. Buick Moto Co anyone(plaintiffs) can _________ a manufacturer for its _________________ of duty of care
users, consumers, bystanders
Negligent failure to warn, the plaintiff must show that the defendant knew _____________________ and what is a case that related to this?
that there was some warning, the product was dangerous for ordinary use or in a reasonably, forseeable use, yet the defendant still failed to provide warning
R.J Reynolds Tobacco didn't warn smokers about the harm of smoking
To protect themselves from product liability.....manufacturers must_______
include a warning that is for sure going to be seen by users of their product
If courts are dealing with a makeup that caused a reaction, the plaintiff must prove that there is a duty to warn if (3 things)
1. the product contained an ingredient to which an appreciable number of people would have an adverse reaction
2. the defendant knew or should have known, in the exercise of ordinary care, about the existence of this group 3. The plaintiff's reaction was due to his or her membership in the abnormal group
"sophisticated user" defense
A complete defense to failure to warn claims
Negligence per se
statute violation that causes the harm that the statute was enacted to prevent constitutes "negligence per se"
-product liability cases based on negligence
What are the two kinds of damages
are recoverable in negligence-based product liability cases are the same as those in any action based on negligence:
What are compensatory damages?
Those designed to make the plaintiff whole again, they cover items such as medical bills, lost wages and compensation of pain and suffering
What are punitive damages?
They are meant to punish the defendant for extremely harmful conduct
What are the three defenses to a negligence-based product liabilty action
3. Modified Comparative Negligence
What is assumption of the risk
Defense arises when a consumer knows that a defect exists but still proceeds unreasonably to make use of the product, creating a situation in which the consumer has voluntarily assumed the risk of injury from the defect and cannot recover. To assume if that plaintiff did indeed assume the risk, the trier of fact may consider such factors as the plaintiffs age, experience, knowledge and understanding as well as obviousness of the defect and the danger it poses.
Another defense is called misuse of the product
The misuse must be unreasonable and unforseable. The harm was caused not by the defendant's negligence but by the plaintiff's failure to properly use the product
The state of the art defense
defendant to demonstrate that his negligent behavior was reasonable given the available scientific knowledge existing the time the product was sold or produced. This shows a reasonable defense to the defendants misconduct
Compliance with federal laws defense to ___________
state tort law b/c the state tort law is preempted by a federal statute designed to ensure the safety of a particular class of products.
State tort law requires______ of the purpose of the statute
Tebbetts v. Ford Motor Co
statute of limitations are?
limit the time within which all types of civil actions may be brought
statues of repose
provide additional statutory defense by barring actions arising more than a specified number of years after the product was purchased, usually longer than statue of limitations
Strict product liability can be found in
Section 402A of the Restatement(second) of Torts
Under Strict product liability courts may hold liable the ____________________
manufacturer, distributor or retailer to any reasonably foreseeable injured party. This includes the buyer(family, guests and friends) Strict product liability focuses on the product and not the manufacturer.
What are the three things that the plaintiff must succeed in for strict liability action
1. The product was defective when sold
2. THe product was so defective that the product was unreasonably dangerous.
3. The product was the cause of the plaintiff's injury
How are products considered defective? What are they based on?
1. A flaw in its manufacturing that led to it being more dangerous
2. Defective design
3. Missing or inadequate instructions or warnings that could have reduced or eliminated foreseeable risks
Plaintiffs prove that a defect exists by means of
1. Experts who testify as to the type of flaw in the product that led to the plaintiff's injury
2. Evidence of the circumstances surrounding the accident that would lead the jury to infer that the accident must have been caused by the defect in the product.
Consumer expectation test
Did the product meet the standards that would be expected by the reasonable consumer? This test relies on experiences of the ordinary consumer and thus is not answered by the use of expert tesimony about the merits of the design
Feasible alternatives test
"risk-utility test" the court focuses on the usefulness and safety of the design and compares it to an alternative design.
Legal Principle: "product liability case based on the theory of strict product liability must be brought when a person is.....
A product liabilty case based on the theory of strict produt liability may be brought when a person is injured by a product with a manufacturing defect that caused that product to be unreasonably dangerous
Can strict product liability be used by someone other than the owner or user of the product?
They allow recovery by the bystander.
What defenses to a strict product liability action?
1. Product misuse
2. Assumption of the risk
3. Lapse of time under statutes of limitations and statutes of repose
What is the state of the art defense
This defense has been rejected in a lot of courts due to the issue in such cases is not what the producers knew at the time the products were produced but rather the product was defective and whether the defect caused it to be unreasonably dangerous. For example: Supreme court of Missouri said that the state of the art had no bearing on the outcome of a strict liability claim because the issue is the defective condition of the product, not the manufacturers knowledge, negligence or fault.
What are reasons for imposing a strict liability test?
The manufacturers and producers are able to spread the cost of the risk; the risk-spreading function does not change with the availability of scientific knowledge. However counterargument would say that it is unfair to impose duty on the manufacturer who followed the rules of the designer
What is another theory of liability for defective products? Breach of Warranty
Breach of Warranty. This comes from the contract theory rather than tort theory. Established by the UCC.
What is a warranty?
This is a guarantee or a binding promise regarding a product. The product or the products performance does not meet the manufacturers or seller's promises.
How are warranties expressed?
Clearly stated by the seller or manufacturer or implied (automatically arising out of the transaction). Either type may give rise to liability.
What are the two types of warranties that may provide the basis for product liability action?
1. Warranty of merchantability
2. Warranty of fitness for a particular purpose.
What is an express warranty?
"Promise or affirmation of a fact"
When a seller makes an affirmative representation about a product, this becomes a part of the bargain. This may be written or verbal guarantee about the product. Example: sales talk saying the car is great and a car dealer express statement that the car will work perfectly for the first 30,000 miles)
How do you establish a claim for breach of express warranty? The plaintiff must show that
1. The representation was the basis for the bargain
2. There was a breach of the representation
She just has to show the breach of a warranty not prove that it was the defendant's fault
Implied Warranty of Merchantability: What does merchantability mean?
Means that the particular goods would be accepted by others who deal in similar goods
What is an implied warranty of merchantability
means that the goods are fit for the purpose for which they are sold and used.
Example: Baseball bat that was said to unbreakable, cracks
If the disclaimer uses the word "merchantability" the disclaimer will be upheld for economic losses but not _________________
What are an implied warranty of fitness for a particular purpose?
When a customer purchases a product for a particular purpose and the seller is aware of this purpose
Buyer is relying on the sellers skill and judgement to select the particular goods.
How do you succeed on the claim for breach of implied warranty of fitness for a particular purpose? The plaintiff would need to show....
1. Knowledge: The seller had knowledge of the customer's specific purpose
2. Reliance-the customer relied on the seller's skill and judgment.
What is market share liability?
The plaintiff can typically identify the manufacturer of a defective product that caused the injury at issue. However, sometimes injury doesn't occur until much later. Recovery is much more difficult this way.
Market share theory made it possible for plaintiffs to gain_________
recovery when they didn't realize that there was a default in the product until much later that caused injuries
Sindell v. Abbot Laboratories The plaintiff must prove that....
1. All defendants are tortfeasors
2. Alledgedly harmful products are identical and share the same defective qualities
3. The plaintiff is unable to identify which defendant caused the injury through no fault of her own.
4. The manufacturers of substantially all the defective products in the relevant area and during the relevant time are named as defendants.
What do the statute of limitations do?
They limit, from the time of injury, the time within which all types of civil actions may be brought
What do the statutes of repose do?
They provide an additional statuory defense by barring actions arising more than a specified number of years after the product was purchased
Can a bystander invoke the doctrine of strict-liability in a lawsuit?
The state of the art defense is not available in all states in strict liability cases
In the market share theory a plaintiff may be able to recover in a products liability action even if the plaintiff cannot trace the harmful product to a particular manufacturer
In the Radford v. Wells Fargo Bank they realized that product liabliity focuses on ______ the court ruled that a loan is not a product for purposes of product liability law
What type of law is product liability typically based on?
What are the three common theories of recovery in product liability cases?
negligence, strict product liability and breach of warranty
WhWhat was true to the prior the landmark case of MacPherson v. Buick Motor Company?
Negligence was rarely used as a theory of recovery to an injury caused by a defective product b/c of the difficulty of establishing the element of duty
The doctrine of negligence per se is also applicable to product liability cases based on _________
What is the state-of-the-art defense?
The state of the art defense is used by a defendant to demonstrate that his alleged negligent behavior was reasonable, given the available scientific knowledge existing at the time that product was sold or produced
What is in section 402A of the Restatement of Tort (second) applies to which of the following
Strict product liability
Under the strict product liability theory, who is considered a reasonably foreseeable party who may recover if injury is sustained?
Everyone(the buyer, the buyers family, the buyers guest, foreseeable bystanders)
What is a method by which to prove a design defect?
The consumer expectation test
What is the test for determining the design defect is also referred to ask the risk-utility test
The feasible alternative test
Which of the following causes of action stem from contract theory?
Breach of warranty rather than tort theory
Under which warranty theory of liability is breach of warranty theory of liability established?
Unifrom Commercial Code
What is the market share theory?
The plaintiff can proceed even if the plaintiff cannot trace an injury caused by a product to any particular manufacturer
On strict liability theory there is no recovery on solely _____________ damages
Privity of contract is _______ necessary in order to sue for negligence so that the fact that neither alice nor her parents were in priviety of contract with the seller would not preent a negligence based action
Pritity of contract is _____necessary in order to sue based on strict liability
What does the statues of repose do?
They provide a defense by barring actions arising more than a specified number of years after the product was purchased
What does the statues of limitations do?
Limit the time from the date of injury within which all types of civil actions may be brought
When a salesperson states an opinion, they are not in any type of _____
When a seller sells a particular kind of goods there is an __________ of merchantability meaning that the particular goods would be accepted by others who deal with ____ goods
What is an implied warranty of fitness?
When a customer purchases a prodct for a particular purpose adn the seller is aware of this purpose, an implied warranty of fitness for a particular purpose arises
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