Ch 20 product liability Product Liability Set of rules relating to civil lawsuits and damages resulting from defendant providing plaintiff defective goal History 19th Century Caveat Emptor Let the Buyer Beware don t want to halt Industrial Rev 20th Century Caveat Venditor Let the Seller Beware Manufacturer should bear risk b c better able to End 20th Century Tort Reform Theories of Recovery Contract Based Theory Express Warranties governed by Uniform Commercial Code set of rules dealing with commercial transactions how UCC applies to sale of goods Section 2 313 ways to create express warranty in 3 situations 1 Affirmation of fact promise becomes basis of bargain express warranty that goods will conform to this affirmation EX Seller makes promise and factor in purchase decision means that becomes a basis for bargain 2 Description of goods that becomes basis of bargain express warranty that goods will conform to description EX 1 statement of brand type model 2 adjectives that characterize product waterproof 3 drawings blueprints technical specifications 3 Sample Model is sold sample creates express warranty that good will conform to sample model Can be oral OR written don t need to say warranty Statements of value or opinion don t create express warranty i e sales If statement appears in sales contract it is more likely to be regarded as statement of fact Resolution of issue is dependant of relative knowledge of parties Dealers statements to consumers more likely to be regarded as statements of fact opposed to dealer to dealer statement Advertising how specific they are determines if express warranty or sales Multiple warranties that conflict under UCC rules 1 Technical specifications trump sample model 2 Sample model trumps general description Implied Warranties 1 Merchantability warranty that goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind Only applies where def is merchant w respect to goods in question Merchantable good is fit for ordinary purpose for which it is used ex I Phone works email phone call Ipod feature Rules talk talk Tort Theory packaging a Goods that fail to function properly have harmful side effects that impact a significant amount of people are NOT MERCHANTABLE b If its reasonably foreseeable that a large number of people will suffer harmful side effects drugs not merchantable 2 Fitness for particular purpose if three conditions are met a Seller has reason to know particular purpose for which buyer is buying goods b Seller has reason to know buyer is relying on seller s skill or judgment for selection of particular goods c Buyer does actually rely on seller s skill or judgment in buying goods Applies whether seller is merchant or not Applies for particular purpose of goods rather than ordinary purpose ex 500 lb man can sue for fitness if he buys hammock made for 200 lb man but not for merchantability Factors that prevent buyer from recovering under fitness 1 Buyer inspects good and packaging says limitations 2 Buyer more expert than the seller 3 Buyer insists on particular brand brand cannot do what buyer wants it to do 1 Negligence 1 Negligent Manufacture using improper materials assembly Difficult to sue b c evidence needed is beyond your control Res Ipsa applies 2 Negligent inspection manufacturers duty to inspect products for defects that would create reasonably foreseeable risk or harm practical effective inspection Duty if you know should know lot of goods is defective as retailer Retailer who installs products Sears do have duty to inspect 3 Negligent failure to provide accurate warnings sellers and manufacturers have duty to warn if products present reasonably foreseeable risk of harm No duty if risk is open obvious ex selling set of knives 4 Negligent design manufacturers have duty to design so as to avoid reasonably foreseeable risks of harm Factors courts look at a Industry practices at time product manufactured b State of existing scientific and technical knowledge at time Ex asbestos c Product s compliance with gov t safety regulations Cost benefit analysis social utility effectiveness and cost of alternative design 2 Strict Liability almost every court uses Section 402A seller engaged in business of selling a product is liable for the physical harm or property damage suffered by ultimate user or consumer of that product if product was in defective condition unreasonably dangerous to user or consumers property Comes from restatement second tort Applies to manufacturers wholesalers and retailers Applies even if consumer has exercised all reasonable care Plaintiff doesn t have to prove breach of duty Conditions for 402A 1 Seller has to be engaged in business of selling product that harmed plaintiff 2 Product must be defective when sold and unreasonably dangerous b c of defect 3 If plaintiff modifies product after purchase and modification applies to plaintiff s injury defendant is off the hook use as defense Cases Ch 20 Felley Express warranty court says that if talking about sale of used car any representation by owner as to condition of car becomes basis of bargain Crowe Breach of implied theory of merchantability plaintiff s lose b c unable to show that vehicle they purchased was defective at point of sale Hong Breach of implied theory of merchantability court cannot decide if piece is reasonably expected to be present Kroski Negligent design negligent failure to warn evidence of prior similar incidents may be introduced to show design defect if they are substantially similar same circumstances or cause Semo Semo wins 6 million damages 1 Mitsubishi is strictly liable b c feasible alternative design to prevent rollover 2 Expert testimony to estimate future earnings was properly used How long can you wait to sue if injured by defective product Warranty theory 4 years from date of sale Tort theory 3 years from date of injury Statute of limitations special rules Damages 1 Basis of the bargain Direct economic loss value of goods as promised value of goods as received Privity of contract direct contractual relationship b t buyer seller 2 Consequential damages Personal injury indirect economic loss lost profits non economic loss loss of consortium as result of being injured spouse is unable to have sex with you 3 Punitive damages in strict liability if test is met Defendant exhibited conscious reckless disregard for safety of those likely to be affected by defective good
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