23.1
Chapter 23
Product Liability
© 2004 West Legal Studies in Business, a Division of Thomson Learning
23.2
Product Liability Law
Determines when manufacturers
and sellers of goods are liable
Theories of product liability
recovery are rules stating things
a plaintiff must prove in order to
recover damages
Contract Theories of
Product Liability Recovery
Three important contract-based
theories of product liability
Express warranty
Implied warranty of
merchantability
Implied warranty for fitness for a
particular purpose
Each created by Article 2 of UCC
Each refers to the sale of goods
23.3
23.4
Express Warranty
Affirmations and descriptions
Samples and models
Basis-of-the-bargain
requirement
Advertisements, catalogs,
brochures, etc.
Implied Warranty of
Merchantability
23.5
The merchant requirement refers
to
Sellers who deal in products
Sellers who deal in services or
installations of goods
Implied Warranty of
Merchantability
23.6
Merchantability refers to goods that
Pass without objection in the trade
Are of average quality if fungible
Are fit for the ordinary purposes for
which such goods are used
Are of even kind, quality, and quantity
within each unit
Are adequately contained, packaged,
and labeled
Conform to any promises or affirmations
of fact made on the container or label
Implied Warranty
of Fitness
23.7
The seller knows of the particular
purpose for which the buyer
desires the goods
The seller must have reason to
know that buyer is relying on
seller’s skill or judgment
The buyer must actually rely on
the seller’s skill or judgment
23.8
Tort Theories
Strict liability (liability without
fault)
Risk spreading (liability
insurance)
Socialization of risk (passing
costs on to consumers)
23.9
Negligence
Improper manufacture, handling,
packaging, or inspection
Duty to warn of foreseeable
harm
Design defects
23.10
Strict Liability
Requirements of Section 402A
Design in defects and failure to
warn
Unavoidably unsafe products
Wholesalers and retailers
23.11
The Reinstatement (Third)
Manufacturing defects
Inadequate instructions or
warnings
Design defects
Other Theories of
Product Liability
Magnuson-Moss Act
Misrepresentation
Industry-wide liability
23.12
23.13
Type of Damages
Bases-of-the-bargain damages
Consequential damages
Personal injury, property damage,
indirect economic loss
Punitive damages
Damages under the UCC
Tort damages
Tort reform measures
23.14
The No-Privity Defense
Privity of contract is the
existence of direct contractual
relationship between two parties
Privity under the UCC
Privity in tort cases
23.15
Liability Disclaimers
The easy cases
Express warranty disclaimers
Disclaimers and tort liability
Implied warranty disclaimers
The basic tests
Additional ways to disclaim implied
warranties
Unconscionability
Impact of Magnuson-Moss
Defenses Involving
Plaintiff’s Behavior
Traditional defenses
Product misuse
Contributory negligence
Assumption of risk
Movement toward comparative
fault
23.16
23.17
Recap – Terms to Know
Express warranty
Implied warranty of fitness for a
particular purpose
Warranty of merchantability
Negligence
Strict liability
Restatement (Third) of Torts
Damages
Defendant’s defenses