Click your mouse anywhere on the screen to advance the text in each slide After the starburst appears click a blue triangle to move to the next slide or previous slide 1 Business Law for a New Century 21 Quote of the Day Still one thing more fellow citizens a wise and frugal government which shall restrain men from injuring one another and which shall leave them otherwise free to regulate their own pursuits of industry and improvement Thomas Jefferson American president in his first inaugural address 2 Business Law for a New Century 21 Product Liability When goods cause injury there is a question of product liability There are three main issues related to product liability cases Warranty a contractual assurance that goods will meet certain standards Negligence unreasonable conduct by the defendant Strict Liability policy which holds the defendant liable regardless of his behavior 3 Business Law for a New Century 21 Express Warranties 4 An express warranty is one that the seller creates with his words or actions Any affirmation of fact or any promise can create an express warranty Any description of the goods can create an express warranty Any sample or model can create an express warranty The seller s conduct must have been part of the basis of the bargain Business Law for a New Century 21 Implied Warranties Are created by the Code itself not by any act or statement of the seller Implied Warranty of Merchantability Unless excluded or modified a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant of goods of that kind 5 Business Law for a New Century 21 Implied Warranties cont d Implied Warranty of Fitness for a Particular Purpose When the seller at the time of contracting knows about a particular purpose for which the buyer wants the goods and knows that the buyer is relying on the seller s skill and judgement there is unless excluded or modified an implied warranty that the goods shall be fit for such purpose 6 Business Law for a New Century 21 Two Last Warranties 7 The seller of goods warrants that her title is valid and that the goods are free of any security interest that the buyer knows nothing about unless the seller has clearly excluded or modified this warranty Unless otherwise agreed a merchant warrants that the goods are free of any rightful claim of copyright patent or trademark infringement Business Law for a New Century 21 Disclaimers and Defenses Disclaimer a statement that a particular warranty does not apply Oral Express Warranties may be disclaimed Written Express Warranties may NOT be disclaimed Implied Warranties of Merchantability may disclaim but must use word merchantability and the disclaimer must be conspicuous 8 Business Law for a New Century 21 Disclaimers Defenses cont d General rule may disclaim all implied warranties by using the terms as is or with all faults Remedy Limitations A limitation of remedy clause by which the parties may limit or exclude the normal remedies is permitted under the Code Consequential Damages An exclusion of consequential damages is void if it is unconscionable 9 Business Law for a New Century 21 Privity When two parties contract they are in privity In the past injured parties could only sue the party with whom he had privity This has changed In cases of personal injury the injured party may sue any responsible party regardless of privity In cases of economic loss the injured party may be required to have privity with the defendant 1 Business Law for a New Century 21 Factors That Limit the Seller s Responsibility Buyer s Misconduct Misuse of the product by the buyer will generally preclude a warranty claim Statute of Limitations and Notice of Breach The Code prescribes a four year statute of limitations The UCC requires that a buyer notify the seller of defects within a reasonable time 11 Business Law for a New Century 21 Negligence In negligence cases plaintiffs most often raise one or more of these claims Negligent design Negligent manufacture Failure to warn 1 Where a sales contract includes proper disclaimers or remedy limitations a buyer barred from a negligence case may have no remedy at all Business Law for a New Century 21 Strict Liability Need not prove that the defendant s conduct was unreasonable Strict liability may be imposed if The defective condition is unreasonably dangerous to the user Seller is in business to sell this product The product reaches the user without substantial change Strict liability may be imposed EVEN if The seller exercised all reasonable care There is no contractual relationship 1 Business Law for a New Century 21 Time Limits Tort vs Contract Statutes of Limitations in Tort Economic loss doctrine when an injury is purely economic and arises from a contract made by two businesses the injured party may only sue under the UCC The four year statute of limitations will apply in all cases of economic loss A Final Issue Statutes of Repose A statute of repose places an absolute limit on when a lawsuit may be filed regardless of when the defect is discovered 1 Business Law for a New Century 21 Other Legislation Lemon Laws Entitle buyers of cars to return them for a refund after a reasonable time if the car has substantial defects Consumer Protection Laws Focus on a merchant s bad faith or deceit Magnuson Moss Warranty Act Protects purchasers of household goods by ensuring fairness in warranties Click here to see an example of a state s lemon laws 1 Business Law for a New Century 21 Products can hurt people and the law provides many possible remedies for the injured 21 1 Business Law for a New Century Link to the Internet Clicking on the orange button below will link you to the website for this book You must first have an active link to the internet on this computer Once there click 1 Click above to return to the slide show Online Study Guide then Your choice of a chapter then Practice then Internet Applications You should then see web links related to that chapter Click here Business Law for a New Century 21