Unformatted text preview: BUSINESS LAW: Text &
Cases , 14th Ed. Chapter 7
Strict Liability and
1 Product Liability Product Liability is a tort action. It is not a
new legal theory. Liability can be based on:
Warranty Theory We discussed warranties under contract law in
2 Product Liability Based
on Negligence (1) Negligence-based product liability is
based on a manufacturer’s breach of
the reasonable standard of care
and failing to make a product safe.
– A manufacturer’s, seller’s, or lessor’s
liability to consumers, users, and
bystanders for physical harm or property
damage that is caused by the goods.
3 Product Liability Based
on Negligence (2) Plaintiff must prove:
3. Defendant owed Plaintiff a duty of care;
Defendant breached that duty;
Defendant’s breach caused the injury.
I. Causation in Fact, and
II. Proximate Cause. 4. Plaintiff suffered am injury(damages). Case 7.1 Schwarck v. Artic Cat, Inc. (2016)
4 Product Liability Based
on Negligence (2) Manufacturer must exercise “due
1. Designing products;
2. Manufacturing and assembling
3. Inspecting and testing Products;
4. Placing adequate warning labels.
5 Product Liability Based
on Negligence (3) No privity of contract required between
plaintiff and manufacturer. Liability extends
to any person’s injuries caused by a
negligently-made (defective) product.
– See Case in Point 7.2 at page 135. 6 Product Liability Based on
Misrepresentation Occurs when fraud committed against
consumer or user of product and injury. i.e., label or advertisement. Fraud must have been made knowingly or
with reckless disregard for safety. Buyer must have relied on misrepresentation. Plaintiff does not have to show product was
defective (i.e., fraudulent labeling).
7 Strict Liability (Slide 1 of 4) Development of Strict Liability: Theory of strict liability started with
Rylands v. Fletcher (1868 England). See Case In Point 7.1 at page 134. Liability regardless of fault. A person
who engages in certain activities can
be held responsible for any harm that
results to others, even if the person
used the utmost care.
8 Strict Liability (Slide 2 of 4) Abnormally Dangerous Activities: Ultrahazardous or abnormally dangerous
activities: Involve serious potential harm; Involve high degree of risk that cannot be
made safe; and Are not commonly performed in the
community or area. 9 Strict Liability (Slide 3 of 4) Wild Animals: Owners keeping wild animals are strictly
liable for injuries. Persons who keep domestic animals are
liable if the owner knew or should have
known the animal was dangerous. 10 Strict Liability (Slide 4 of 4) Application of Strict Liability to
Product Liability: The manufacturer can better bear the cost
of injury because it can spread the cost
throughout society by price increases. The manufacturer is making a profit from
its activities and should bear the cost of
injury as an operating expense. 11 Strict Product Liability Manufacturers liable without regard to fault
based on public policy:
1. Consumers must be protected from unsafe
2. Manufacturers should be liable to any user of the
product (regardless of contract privity);
3. Manufacturers, sellers and distributors can bear
the costs of injuries since it is making a profit from
the activity (pass costs to consumers). CASE 7.2 BRUESEWITZ V. WYETH, LLC
12 Requirements for
Strict Product Liability
Plaintiff must show product was so
“defective” it was “unreasonably
dangerous” to recover damages:
5. Product must be in defective condition when sold.
Defendant is in the business of selling the product.
Product must be unreasonably dangerous.
Plaintiff must be physically harmed
Defective condition must be proximate cause of
6. Goods have not been substantially changed.
13 Proving a Defective
1. Plaintiff need not show why or in what
manner product became defective.
2. Plaintiff must show product was defective
when it left control of seller, and
3. The defect made it unreasonably
dangerous. 14 Unreasonably Dangerous
Products Unreasonable Dangerous Product.
1. Product was dangerous beyond the
expectation of the ordinary consumer.
2. A less dangerous alternative was
economically feasible for the manufacturer,
but the manufacturer failed to produce it. A product make be “unreasonably dangerous” due
to a flaw in the manufacturing process , defective
design or an inadequate warning label.
15 Three Types of Product
Defects 1. Manufacturing defects. – Departure from design specifications
– Opinions and expert testimony. 2. Design defects.
– Create unreasonable risk to user.
– Reasonable alternative design was available 3. Warning Defects.
– Inadequate instructions or warnings.
– A “reasonableness” test.
16 Strict Liability:
1. Manufacturing Defects Occurs when a product “departs from its
intended design (Quality Control) even
though all possible care was exercised in
the preparation and marketing of the
– See Case In Point 7.4 at page 140: Defect in
manufacturing of a 8 foot ladder.
17 Strict Liability: 2. Design
Defects Product is unreasonably dangerous as
designed even if it is manufactured
correctly. Test for Design Defects: The plaintiff
must show: 1. A reasonable alternative design was available.
2. Defendant’s failure to use a reasonable
alternative design rendered the product not
18 Strict Liability: 2. Design
Defects Risk-Utility Analysis: Determines whether
the risk of harm from the product outweighs its
utility to the user and public.
– See Case in Point 7.5 at page 141. Consumer Expectation Test: A product is
unreasonably dangerous when it fails to
perform in a manner that would reasonably be
expected by an ordinary consumer.
– See Case in Point 7.6 at page 141.
19 Strict Liability: 3. Warning
Defects Liability based on foreseeability that
proper instructions/labels would have made
the product safe to use. No duty to warn about obvious or
commonly known risk. Seller must also warn about injury due to
product misuse. Key is whether misuse is
foreseeable. See Case In Point 7.7 at page 141.
20 Strict Liability: 3. Warning
Defects Content of Warning: Courts apply a
“reasonableness” test to determine if the
warnings adequately alert consumers to the
product’s risks. Obvious Risks: No duty to warn about
obvious or commonly known risks.
– See Case In Point 7.8 at page 143.
– Risk obvious to some may not be to other, i.e.
21 Strict Product Liability Market-Share Liability: Liability when multiple defendants
contributed to manufacture of same
defective product. Each defendant is proportionately liable
based on its market share. Market-Share Liability theory not recognized
by all jurisdictions.
22 Strict Product Liability Other Applications of Strict Liability: Virtually all courts extend strict liability to
injured bystanders. Strict liability also applies to suppliers of
component parts. Defenses to Product Liability Case 7.3 VeRost v. Mitsubishi Caterpillar
Forklift America, Inc. (2015) – Where goods
altered after they were sold?
23 Defenses to
Product Liability (1) Preemption: Government regulations preempt
claims for product liability.
– SEE CASE 7.2 BRUESEWITZ V. WYETH, LLC
USSC (2011). Assumption of Risk: (1) The plaintiff knew and
appreciated the risk created by the alleged
product defect, and (2) the plaintiff voluntarily
assumed the risk, even though it was
unreasonable to do so. (product recall)
– See Case in Point 7.13 at page 145.
24 Defenses to
Product Liability (2) Product Misuse: (1) Plaintiff was
misusing the product, and (2) plaintiff’s
misuse was not reasonably foreseeable to
the defendant. Comparative Negligence (Fault):
Plaintiff’s own negligence or wrongful acts
contributed to her injury.
25 Defenses to
Product Liability (3) Commonly Known Dangers: A danger so
commonly known that the defendant had no
duty to warn plaintiff. (knife, chain-saw)
– See Case In Point 7.15 at page 146. Knowledgeable User: A danger so
commonly known by particular users of the
product that the defendant had no duty to
– See Case In Point 7.16 at page 146.
26 Defenses to
Product Liability (4) Statutes of Limitation: Vary by state law
but are typically two to four years.
– Claimed tolled until discovered. Statutes of Repose: Place outer time
limits on product liability actions so that
sellers and manufacturers are not left
vulnerable to lawsuits indefinitely. (i.e. 12
years from date of manufacturer).
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