CHAPTER 19
Product
Warranty
Warranties &
Product Liability
Product Liability (Tort)
• Based on:
– Negligence
– Misrepresentation
• Requirement for Strict Liability
Express Warranty
• Warranty = Contractual promise by seller regarding
quality, character or suitability of goods sold
• Creation of Warranty/Guarantee
–
–
–
–
Specific words or intent not required
Statement of fact or promise
Concerning the goods
Which becomes a part of the bargain
• Question 2 at end of chapter
– The court found that in agreeing to produce crystal balls
conforming to the prototype sample approved by the testing
laboratory, Plastic had created an express warranty that its
product would conform to the sample. It breached that
warranty when the production balls had thinner walls that
differed from the prototype sample and would not pass the
safety test. Beck v. Plastic Products Co., Inc., 412 N.W.2d
315 (Ct. App. Minn. 1987).
Express Warranty
• Creation of Warranty/Guarantee
– Advertisements
• Bobholz v. Banaszak, p.321
– Where the seller in one advertisement described a boat as being in
“perfect condition’, in another ad described it is as “in excellent
condition”, and represented to the potential buyer in a conversation
that the boat had been properly maintained and winterized in the
previous year, that statements were held to constitute express
warranties. The statements were affirmations of fact relating to the
goods and the representation regarding the quality of the boat was a
basis of the bargain because it induced the buyer to purchase the
boat. Note what the plaintiff must show in order to be able to
recover on a theory of breach of express warranty, namely show that
the statement was an affirmation of fact relating to the goods and
that the representation was a part of the basis of the bargain because
it induced the buyer to purchase it.
Express Warranty
• Creation of Warranty/Guarantee
– Not Mere Opinion/Puffery
• Question 1.Yes. The statements in the leaflet
constituted descriptions of the capabilities of the
product and were not mere puffing. The product
was purchased—and used— in reliance on those
statements. They constituted an express warranty,
and the failure of the product to conform to the
representations was the cause of Klages’s injury.
Klages v. General Ordnance Equipment Corp., 19
UCC Rep. 22 (Super. Ct. Pa. 1976).
Express Warranty
• Creation of Warranty/Guarantee
– Advertisements
• Question 1 at end of chapter
– Yes. The court held that the statements in the
advertisements could create express warranties but that
they had to be shown to be part of the “basis of the
bargain” on which Cippolone had purchased the
cigarettes. Thus (1) Antonio Cipollone had to prove
that his wife had read, seen or heard the advertisements
in question and (2) Liggett had to have an opportunity
to prove that any advertisements read, seen, or heard by
Cipollone were not believed by her. Cipollone v.
Liggett Group, Inc., 893 F.2d 541 (3rd Cir. 1990).
Implied Warranty
• Nature - Imposed by Law
• Merchantability- Fit for Ordinary Purpose
–
–
–
–
Conform to promises or statements of fact made on label
Adequately Packaged/Labeled
Same Kind/Quality/Quantity w/I each unit
Fungible (Mixed Goods that cannot be separated, e/g. coal), of
average quality
– Acceptable in trade or business
Implied Warranty
– Denny v. Ford Motor Co., p.323
• Where the manufacturer designed a vehicle for off-road use—
but marketed and sold it knowing that most buyers intended to
use in for on-road driving—and the vehicle had a propensity
to roll over when used on the highway, the manufacturer was
held liable for breach of the implied warranty of
merchantability on the grounds it was not fit for the ordinary
purpose for which it was intended.
• Would the result have been different in this case if the product
had been marketed solely as an off-road vehicle? What if had
been marketed only as an off-road vehicle and it rolled over
while being used off-road?
Implied Warranty
– Mexacali Rose v.Superior Court, p.324
• Where a customer in a Mexican restaurant was injured by a
chicken bone contained in a chicken enchilada that he
purchased, the court majority applied the foreign-natural test
and held that if an injury producing substance is natural to the
preparation of the food served, then it can be said that it was
reasonably expected and the food cannot be considered unfit
or defective. A minority of the court dissented, stating that no
reasonable consumer would anticipate finding the bone. The
minority would have applied the reasonable expectation test.
Implied Warranty
– Klein v. Sears Roebuck & Co., p.325
• Where the buyer explained to the seller his particular needs
concerning a lawnmower and relied on the seller’s
recommendation as to the appropriate model that would be
suitable for his needs, the seller made an implied warranty of
fitness for a particular purpose which was breached when the
mower proved to be unsuitable for the buyer’s needs and he
was injured as a consequence.
• Note the dual requirements that must be
met for the implied warranty of fitness
for a particular purpose to be created:
the seller must know the particular
purpose for which the buyer needs the
goods and that the buyer is relying on
the seller to select goods suitable for
Implied Warranty
– Example: Marino v. Perna.
• This case involves two separate sales of a 1981 Oldsmobile.
In the first sale of the vehicle at an auction conducted by the
Marshall of the city of New York, the sale was considered to
be out of the ordinary course of business and carried no
warranty of title. However, when the buyer at the auction
resold the car to a co-worker, the sale did carry with it an
implied warranty of title.
Implied Warranty
– Example: Under the Code, if the seller of goods is a merchant
with respect to goods of that kind, a warranty of merchantability is
implied in the contract of sale. To be merchantable, the goods
must be at least fit for the ordinary purposes for which they are
sold and conform to any promises or affirmations of fact made on
the container or label. When a product fails to meet the
reasonable expectations of the user, it can be inferred that there
was some sort of defect that breached the warranty. A thermos
bottle that implodes or explodes when coffee and milk are poured
into it is defective. Virgil v. “Kash N’ Karry” Service Corp., 484
A.2d 652 (Ct. App. Md. 1984).
Implied Warranty
– Question 4 at end of chapter
• No. The court adopted the reasonable expectation test and
held that a jury could reasonably find that because the
nature of the food was a hamburger (which is not usually
eaten with a knife and fork), the restaurant customer
should not reasonably have anticipated the presence in it
of a bone particle. Mitchell v. BBB Services Co., Inc., 582
S.E.2d 470 (Ct. App. Ga. 2003).
Implied Warranty
– Question 5 at end of chapter.
• Yes. Where the seller at the time of contracting has reason to know
the purpose for which the goods are required, and that the buyer is
relying on the seller to furnish goods that are suitable for that
purpose, a warranty of fitness for a particular purpose arises. The
glasses were advertised as suitable for use by baseball players and
were bought and used for that purpose. The buyer relied on the
seller’s assurance that the glasses were suitable for baseball playing.
In fact, they were not. The lenses were so thin that they shattered into
exceedingly sharp splinters when broken. Since they lacked the
safety features of plastic or shatterproof glasses, they were not fit for
baseball players. Filler v. Rayex Corp., 435 F.2d 336 (7th Cir. 1970).
Implied Warranty
– Question 6 at end of chapter
• Yes. The court found that under Section 2-312 of the UCC, a
merchant selling goods warrants that he is passing clear title to
the goods. Williams breached that warranty of title when he
sold the stolen camera to Brooke because a thief cannot pass
clear title to goods, nor can his successor. It is irrelevant that
Williams did not know the goods were stolen. The court also
found that there was no effective disclaimer of the warranty of
title through the placing of “as is” signs in the store. Brooke v.
Williams, 766 P.2d 1311 (Sup. Ct. Mont. 1989).
Implied Warranty
– Bryant v. Hoffman-La Roche, Inc., p. 330
• Where a patient was given some free samples of medicine
that the manufacturer had provided to her physician, the
patient was not entitled to the benefit of the implied
warranties of merchantability and fitness for a particular
purpose because there was no privity between the patient and
the manufacturer. Note that if the doctor had provided the
medicine to someone in his family or who was a guest in his
home, the warranties would be available to the recipient of
the medicine.
Implied Warranty
– Question 3 at end of chapter
• Yes. the court held that Eveready breached the implied
warranty of merchantability when it produced batteries that
leaked battery fluid on the consumer’s ankle. The batteries
were subject to the warranty, they were defective at the time
of sale because when they were put to their intended use they
malfunctioned, and the injury was due to their defective
nature. DeWitt v. Eveready Battery Co., Inc., 565 S.E.2d 140
(Sup. Ct. 2002).
Exclusions/Modifications
• General Rules
– Parties have right to agree to
– Courts frown on seller self-limits
• Limitation of Express Warranty
– Disclaimers must not be inconsistent with
– Thacker v. Menard, p.327
• Where a written estimate clearly
disclaimed any warranty that the
materials were fit for any purpose,
even if a contract was formed, it
did not include any such warranty.
Exclusions/Modifications
• Exclusion of Implied Warranty
– For merchantability
• Must specifically mention merchantability
• If in writing must be conspicuous
– For Fitness for Particular Purpose
• Must be in writing and conspicuous
– Or by conditions of sale (e.g. “as is”)
• Unconscionable Disclaimers
– Courts may not enforce
• Limitation of Warranty
– May limit nature of liability
Who May Sue?
• Old Rule: Privity of Contract Required
• Current trend: Suits allowed against manufacturer
Who May Sue?
• Old Rule: Privity of Contract Required
• Current trend: Suits allowed against manufacturer
– Question 8 at end of chapter
• In Re air Crash Disaster at Sioux City, Iowa on July 19,
1989 / Banks v. United Airlines, Inc.
– A passenger on an airplane that crashed was not in
privity of contract with a supplier of a component
part to the aircraft and thus not able to assert a
claim for breach of warranty of fitness for a
particular purpose. The court declined to extend to
an injured passenger the warranty protection the
California legislature had given to an injured
employee.
FTC Warranty Rules
• Magnuson-Moss Warranty Act (1975)
– Purpose of Act
• Provide Minimum Warranty Protection for
Consumers
• Increase Consumer Understanding of Warranties
• Ensure Warranty Performance by Providing
Meaningful Remedies
• Encourage Better Product Reliability
FTC Warranty Rules
• Magnuson-Moss Warranty Act (1975)
– Requirements
• Seller must:
–
–
–
–
–
–
–
I.d. who can use the warranty
Must clearly describe goods covered by the warranty
Must state nature of remedy(ies)
Must state duration of warranty
Must explain process for initiating a claim
Must state any exclusions
Must inform as to possible legal variances
FTC Warranty Rules
• Magnuson-Moss Warranty Act (1975)
– Full Warranty
•
•
•
•
•
•
Fix or replace
Not limited in duration
Not limit consequential damages
Refund option if can’t repair/replace
No unreasonable duties on consumer
Notify of exclusion where improper use
FTC Warranty Rules
• Magnuson-Moss Warranty Act
(1975)
– If Not Full = Limited Warranty
– Availability of Warranty
• In writing, before sale
– Enforcement
• FTC enforces disclosures
Negligence
• Types
– Improperly Manufactured
– Misrepresented
– Failure to Disclose/Warn/Instruct Known Defects
• Question 10 at end of chapter.
– No. The court held that under the circumstances Honda
satisfied its duty to warn under the law of strict liability and
negligence. It was not necessary to warn of every
conceivable danger that could be encountered if the user
rode the bikes on public highways. The boys were old
enough to read and to comprehend the warning they were
given. Baughn v. Honda Motor Co., Ltd., 727 P.2d 655
(Sup. Ct. Wash. 1986).
Negligence
• Types
– Failure in Design Due Care
• Weigl v. Quincy Specialties Company, p. 334
– Where a lab coat marketed for that
purpose had a tendency to melt and
fuse to the user when exposed to a
flame, burned much more readily than
lab coats manufactured by other
companies, and the coat contained no
warning as to its flammability
characteristics, a person who was
badly burned while wearing the coat
was entitled to recover on the
theories of defective design,
negligent-testing, failure to warn,
and breach of warranty.
Negligence
• Types
– Failure in Design Due Care
• Question 9 at end of chapter
– Griggs v. BIC Corp., p.270-271
» Where a three-year-old child started a house fire with a
disposable lighter that seriously injured his younger brother,
the manufacturer of the lighter was potentially liable for
negligence for failing to manufacture a childproof lighter.
The court found that it was foreseeable that a lighter might
fall into the hands of a child who, although not the intended
user, could ignite it with the risk of serious injury to himself
and others. Note that the court found that strict liability was
not applicable. Could a case be made that strict liability
should be applicable to lighters?
Negligence
• Types
– Failure in Design Due Care
• Example: In designing a product, the manufacturer has a duty to design it so
that it is reasonably safe in light of the risks of injury that can be foreseen. A
risk is not foreseeable where a product is used in a manner that could not be
reasonably anticipated. The purposes of an automobile trunk are top transport,
show and secure the spare tire, luggage, and other goods, and to protect them
from the weather. The dimensions of a trunk, the height of its sill and load
floor, and the effort required to lower the trunk lid and then to engage its latch
are among the design features that encourage closing and latching it from the
outside. Its design makes it almost impossible for an adult to intentionally
enter the trunk and close the lid. Use of the trunk as a means to commit suicide
was unforeseeable and the manufacturer had no duty to design the trunk in light
of this risk. Manufacturers also have no duty to warn of a risk that is
unforeseeable. In addition, they have no duty to warn of duties that are
obvious. In fact, Daniell initially took that risk. Finally, the potential efficacy
of a warning, given Daniell’s use for a deliberate suicide attempt, is
questionable. Daniell v. Ford Motor Co., Inc., 581 F. Supp. 728 (D.N.M. 1984)
Negligence
• Types
– Failure in Design Due Care
• Example: Commonly there are three types of product defects that may give rise to a claim
that a manufacturer of a product should be liable in strict liability: (1) a flaw in the
manufacturing process resulting in a product that differs from the manufacturer’s intended
result; (2) products that are perfectly manufactured but are unsafe because of the absence
of a safety device, that is a defect in design; and (3) products that are dangerous because
they lack adequate warnings or instructions. Here, the claim is based on an asserted failure
of the dangerous propensities of Halcion that were known or scientifically knowable. The
California Supreme Court has held that a drug manufacturer may not be held strictly liable
for failure to warn of a drug’s inherent risks where it neither knew nor could have known
by the application of scientific knowledge available at the time of distribution that the drug
could not produce the undesirable side effects suffered by a plaintiff. The court was
concerned that unless limited, strict liability might make drug companies reluctant to
undertake the risks of developing and marketing beneficial new drugs. Accordingly, it set
forward the following statement of the law: A manufacturer is not strictly liable for injuries
caused by a prescription drug so long as the drug was properly prepared and accompanied
by warnings of its dangerous propensities that were either known or scientifically
knowable at the time of distribution. Accordingly, Carlin should be given an opportunity to
show that the alleged side effects were known or knowable at the time she purchased the
drug and that she was not given suitable warning concerning them. Carlin v. Superior
Court of Sutter County, 38 Cal. Rptr.2d 576 (Ct. App. Cal. 1995).
Negligence
• Obvious Danger Defense
– Not a complete defense, but a factor
• Privity/Disclaimers Not Apply
Strict Liability
• Elements
–
–
–
–
–
Sold in defective condition
Unreasonably dangerous
Product of type seller normally sells
Received in unaltered condition
Consequential harm
Strict Liability
• State Of The Art-Dangerous or Defective
– What known that could have been done to make safer?
– Uniroyal Goodrich Tire Co. v. Martinez, p.336
• The manufacturer was held strictly liable for injuries caused by
the plaintiff’s failure to follow a suitable warning where the
manufacturer was aware of a safer tire design but had not
utilized in the design of the tire that caused the injury.
Strict Liability
• Industry-wide Liability (e.g. asbestos)
• Statutory Limitations
• Statutes of Repose (like statute of limitations)
Elements Strict Liability
• Defective Condition or Unreasonably
Dangerous
• Selling Engaged in Selling Product
• Reach Consumer Without Change
• Harm/Damage From Condition
Defenses- Strict Liability
• Assumption of Risk
• Nonforeseeable Product Misuse
• Contributory/Comparative
Negligence