Product LiabilityIntroductionIntroduction Cont….Slide 4Slide 5HistoryHistory Cont...Slide 8Product Safety LawsSlide 10Exempted ProductsProduct Liability LawsDefensesFinancial LossThe FuturePrevention ProgramOrganizational StructureNew-Product ReviewProduct Review TeamPowerPoint PresentationInitial Production ReviewWarranties, Advertisements, AgreementsWarning labels/InstructionsComplaints/ClaimsRetention of RecordsOther considerations…Slide 27Product LiabilityProduct LiabilityJacob BervigJacob BervigDonny MoberleyDonny MoberleySteve StaskiewiczSteve StaskiewiczIntroductionIntroductionCompetition causes premature release of products.Technical complexity has increased severity and frequency of injuries.50 million product accidents a year.Annual cost of $50 billion.Introduction Cont….Introduction Cont….Jury verdicts favor injured party.Sympathy vote.Manufacturers try to presume these costs and pass it on to the customer.Smaller companies forced into bankruptcy.Introduction Cont….Introduction Cont….Three main reasons for product injuries–Behavior or knowledge of product user.–Environment–Designed poorly, defective.Introduction Cont….Introduction Cont….Companies can not totally account for behavior or knowledge.Safety and quality must be engineered into the product.Manufacturers are able to see safest design better than product user.HistoryHistoryGrain producers were held liable for quality in ancient times.Quality was based on one sample.By fourteenth century textile sampling was common.Seals and official stamps were used.History Cont...History Cont...In the fourteenth century there product lawsuits.By the middle of the eighteenth century there were two concepts.–Caveat emptor (Let the buyer beware)–Privity of contractHistory Cont...History Cont...1916 MacPherson V. BuickBuick held negligent by failing to inspect defective wheel from supplier.Ended privity of contract and buyer beware.Product Safety LawsProduct Safety LawsConsumer Product Safety Act of 1972.Protect public against unreasonable injury.Assist in comparing safety of products.Develop uniform safety standards.Promote research and investigate product safety.Product Safety LawsProduct Safety LawsMany states and municipalities have their own laws.Similar laws–Refrigerator Safety Act–Flammable Fabrics ActExempted ProductsExempted ProductsCarsBoats AirplanesFoodDrugsCosmeticsTobacco and Poisons.Product Liability LawsProduct Liability LawsPlantiff must prove causation in every case.51% likely to have caused the injury.Proving defectiveness is the heart of most court cases.Warranties help limit liability.DefensesDefensesNegligenceAssumption of riskMisuseStatutes of Repose (useful life) 8,10, or 12 years.Financial LossFinancial LossDefendant losses more than money.Costs–Recalls, replacements, reputation, production delays, quality.The FutureThe FutureAsbestos, Dalkon shield, and Bendectin grow 4% each year.Synthetic and toxic products.Europe adopting strict liability laws.Prevention ProgramOrganizationNew-Product ReviewInitial Production ReviewPeriodic Production AuditsControl of Warranties, Advertisements, Agreements, etc.Warning Labels/InstructionsComplains/ClaimsRetention of RecordsProduct Recall PlanOrganizational StructureDependent on size & talentsSpecify responsibilitiesNecessary authorityProduct-safety committee-Legal-Design-Manufacturing-Marketing-Quality-Safety engineerNew-Product ReviewPrototypeFirst & least expensiveConsumer safety first–Function, cost, sales appeal secondWill product work under conditions that:1. Are adverse2. Have been considered abusive3. A plaintiff’s attorney will consider foreseeableProduct Review TeamProduct Review TeamNo preconceived notions about productEvaluate product’s compliance with:1. present and foreseeable standards2. Applicable codes, laws, and regulations3. Consumer requirements and anticipated use4. Past injury dataCrushing hazardsShearing hazardsCutting hazardsEntanglement haz.Drawing-in hazardsTrapping hazardsImpact hazardsPuncture hazardsAbrasion hazardsExposed live partThermo hazardsNoise hazardsExposure hazardsFire hazardsExplosion hazardsUnexpected start-up hazardsElectrostatic exposureInitial Production ReviewFirst production itemsLimited production runDetermine adequacy of factorsWarranties, Advertisements, AgreementsTerms & conditions are limited to statement of merchantabilityLegalists analyze all advertisingSpecial warranty provisions?Analysis of dealer distributorship/franchise agreement of “defective” itemsNonconformity (unit)Evaluation of cost problems of warrantiesWarning labels/InstructionsInadequate/nonexistent = negligenceEngineers are a no goSymbols and picturesWarning calls attention to dangerInstructions prescribe proceduresComplaints/ClaimsProduct safety engineer–Cause of complaint–Nature & seriousness of complain–Failure mode–Age of defect, present when sold?–Negligence of partiesThe quicker the betterRetention of RecordsShipment, operator, machine, time, etc.Expected useful life of product plus 18 years.Other considerations…Product-Recall planCustomer
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