© 2004 West Legal Studies in Business, a Division of Thomson Learning

23.1

Chapter 23Chapter 23

Product LiabilityProduct Liability

23.2

Product Liability LawProduct Liability Law

Determines when Determines when manufacturers and sellers of manufacturers and sellers of goods are liablegoods are liable

Theories of product liability Theories of product liability recovery are rules stating recovery are rules stating things a plaintiff must prove things a plaintiff must prove in order to recover damagesin order to recover damages

23.3Contract Theories of Contract Theories of Product Liability Product Liability

RecoveryRecoveryThree important contract-based Three important contract-based theories of product liabilitytheories of product liability

Express warrantyExpress warrantyImplied warranty of Implied warranty of merchantabilitymerchantabilityImplied warranty for fitness for a Implied warranty for fitness for a particular purposeparticular purpose

Each created by Article 2 of UCCEach created by Article 2 of UCCEach refers to the sale of goodsEach refers to the sale of goods

23.4

Express WarrantyExpress Warranty

Affirmations and descriptionsAffirmations and descriptions

Samples and modelsSamples and models

Basis-of-the-bargain Basis-of-the-bargain requirementrequirement

Advertisements, catalogs, Advertisements, catalogs, brochures, etc.brochures, etc.

23.5

Implied Warranty of Implied Warranty of MerchantabilityMerchantability

The merchant requirement The merchant requirement refers torefers to

Sellers who deal in products Sellers who deal in products

Sellers who deal in services or Sellers who deal in services or installations of goodsinstallations of goods

23.6

Implied Warranty of Implied Warranty of MerchantabilityMerchantability

Merchantability refers to goods thatMerchantability refers to goods that

Pass without objection in the trade Pass without objection in the trade

Are of average quality if fungible Are of average quality if fungible

Are fit for the ordinary purposes for Are fit for the ordinary purposes for which such goods are usedwhich such goods are used

Are of even kind, quality, and quantity Are of even kind, quality, and quantity within each unit within each unit

Are adequately contained, packaged, Are adequately contained, packaged, and labeled and labeled

Conform to any promises or Conform to any promises or affirmations of fact made on the affirmations of fact made on the container or labelcontainer or label

23.7

Implied Warranty Implied Warranty of Fitnessof Fitness

The seller knows of the The seller knows of the particular purpose for which particular purpose for which the buyer desires the goodsthe buyer desires the goods

The seller must have reason The seller must have reason to know that buyer is relying to know that buyer is relying on seller’s skill or judgment on seller’s skill or judgment

The buyer must actually rely The buyer must actually rely on the seller’s skill or on the seller’s skill or judgment judgment

23.8

Tort TheoriesTort Theories

Strict liability (liability Strict liability (liability without fault)without fault)

Risk spreading (liability Risk spreading (liability insurance)insurance)

Socialization of risk (passing Socialization of risk (passing costs on to consumers)costs on to consumers)

23.9

NegligenceNegligence

Improper manufacture, Improper manufacture, handling, packaging, or handling, packaging, or inspectioninspection

Duty to warn of foreseeable Duty to warn of foreseeable harmharm

Design defectsDesign defects

23.10

Strict LiabilityStrict Liability

Requirements of Section Requirements of Section 402A402A

Design in defects and failure Design in defects and failure to warnto warn

Unavoidably unsafe products Unavoidably unsafe products

Wholesalers and retailersWholesalers and retailers

23.11

The Reinstatement The Reinstatement (Third)(Third)

Manufacturing defectsManufacturing defects

Inadequate instructions or Inadequate instructions or warningswarnings

Design defects Design defects

23.12

Other Theories ofOther Theories ofProduct Liability Product Liability

Magnuson-Moss Act Magnuson-Moss Act

Misrepresentation Misrepresentation

Industry-wide liability Industry-wide liability

23.13

Type of DamagesType of Damages

Bases-of-the-bargain damages Bases-of-the-bargain damages

Consequential damagesConsequential damages

Personal injury, property damage, Personal injury, property damage, indirect economic lossindirect economic loss

Punitive damagesPunitive damages

Damages under the UCCDamages under the UCC

Tort damagesTort damages

Tort reform measuresTort reform measures

23.14

The No-Privity DefenseThe No-Privity Defense

Privity of contract is the Privity of contract is the existence of direct existence of direct contractual relationship contractual relationship between two partiesbetween two parties

Privity under the UCCPrivity under the UCC

Privity in tort casesPrivity in tort cases

23.15

Liability DisclaimersLiability Disclaimers

The easy casesThe easy cases

Express warranty disclaimersExpress warranty disclaimers

Disclaimers and tort liabilityDisclaimers and tort liability

Implied warranty disclaimersImplied warranty disclaimers

The basic testsThe basic tests

Additional ways to disclaim implied Additional ways to disclaim implied warrantieswarranties

UnconscionabilityUnconscionability

Impact of Magnuson-MossImpact of Magnuson-Moss

23.16

Defenses Involving Defenses Involving Plaintiff’s BehaviorPlaintiff’s Behavior

Traditional defensesTraditional defenses

Product misuseProduct misuse

Contributory negligenceContributory negligence

Assumption of riskAssumption of risk

Movement toward Movement toward comparative faultcomparative fault

23.17

Recap – Terms to KnowRecap – Terms to Know

Express warrantyExpress warranty

Implied warranty of fitness for a Implied warranty of fitness for a particular purposeparticular purpose

Warranty of merchantabilityWarranty of merchantability

NegligenceNegligence

Strict liability Strict liability

Restatement (Third) of TortsRestatement (Third) of Torts

DamagesDamages

Defendant’s defensesDefendant’s defenses