Chapter 1: Legal Ethics
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Learning Objectives
1. What factors determine whether a
Seller’s or Lessor’s statement
constitutes an express warranty or
mere puffery?
2. What implied warranties under the
UCC?
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Learning Objectives
4. Can a manufacturer be held liable to any
person who suffers an injury
proximately caused by the
manufacturer’s negligently made
product?
5. What are the elements of a cause of
action in strict product liability?
6. What defenses to liability can be raised
in a product liability lawsuit?
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Warranties
 A warranty is an assurance or
guarantee by the seller of certain
facts concerning the goods being sold
or leased.
 If seller breaches a warranty, buyer
can recover damages, or rescind the
contract.
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Warranties
 Warranties automatically arise in
most commercial sales transactions.
 Normally warranties can be
disclaimed or modified with specific
language in the contract. 
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Warranties
 Warranties of Title.
–Under the UCC, three types of
warranties arise in sales and lease
contracts:
• Good Title.
• No Liens.
• No Infringements.
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Warranties
 Express Warranties.
–Seller can create warranty by making
representations about quality,
condition, or performance of good, by:
• Any Affirmation or Promise.
• Any Description.
• Any Sample or Model.
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Warranties
 Express Warranties.
–Seller does not have to use the words
“guarantee” or “warranty.”
–Basis of the Bargain.
• Reasonable buyer must only believe
warranty was ‘basis of the bargain.’
• Buyer must rely on warranty when he
enters into contract. 
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Warranties
 Express Warranties.
–Statements of Opinion and Value.
• Only statements of fact create express
warranties.
• Exception for Statements of Opinion by
Experts.
• Puffery versus Express Warranties.
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Warranties
 Implied Warranties.
–Implied Warranty of Merchantability:
Automatically arises from sale of goods by
merchants which are “reasonably fit for
ordinary purposes for which such goods are
sold.”
• Conform to promises on label.
• Adequately packaged and labeled.
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Warranties
 Implied Warranties.
–Implied Warranty of Merchantability:
• Merchantable Goods: fit for ordinary
purposes for which such goods are used.
• Merchantable Food: fit to eat.
• CASE 15.1 WEBSTER V. BLUE SHIP TEA ROOM,
INC. (1964). Does a patron assume the
risk of a fishbone in fresh fish soup?
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Warranties
 Implied Warranties.
–Implied Warranty of Fitness for a
Particular Purpose.
• Arises by any seller who:
–Knows the particular purpose for which the
goods are being bought; and
–Knows the buyer is relying on seller’s skill and
judgment to select suitable goods. 
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Warranties
 Implied Warranties.
–Implied Warranty of Fitness for a
Particular Purpose.
• Ordinary vs. Particular Purpose: Goods can
be merchantable but unfit for a particular
purpose.
• Knowledge and Reliance Requirements.
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Warranties
 Implied Warranties.
–Implied Warranty from Prior Dealings or
Trade Custom.
• Arises when both parties to a contract
have knowledge of a well-recognized trade
custom. Courts infer that both meant this
custom to apply to their transaction.
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Warranties
 Overlapping Warranties.
 Warranty Disclaimers: depends on
type of warranty.
–Express Warranties can be disclaimed:
• If a clear written disclaimer in contract
with specific, unambiguous language and
called to Buyer’s attention (BOLD CAPS
UNDERLINED). 
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Warranties
 Warranty Disclaimers: depends on
type of warranty.
–Implied Warranties. Unless
circumstances indicate otherwise,
warranties of fitness and
merchantability can be disclaimed with
the words “As Is,” “With All Faults. 
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Warranties
 Warranty Disclaimers: depends on
type of warranty.
–Implied Warranties. Disclaimer of the
Implied Warranty of Merchantability:
must use the word merchantability.
• Disclaimer of the Implied Warranty of
Fitness: must be in writing and
conspicuous.
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Warranties
 Magnuson-Moss Warranty Act.
–Federal law to prevent deception in
warranties by making them easier to
understand.
–Enforced by Federal Trade Commission.
• Full Warranty (free repair/replacement).
• Limited Warranty.
• Implied Warranties arise under UCC -- not
Magnuson-Moss.
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Lemon Laws
 Coverage of Lemon Laws.
– Applies primarily to automobiles.
– Give consumer remedies for automobiles
under warranty that cannot be fixed with a
certain number of attempts.
– Buyer is entitled to new car, replacement of
defective parts or return of payment.
 Arbitration is typical Procedure.
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Product Liability
 Product Liability is not a new tort.
 Liability can be based on:
–Negligence; 
–Misrepresentation; 
–Strict Liability; 
–Warranty Theory. 
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Product Liability
 Negligence.
– Based on a manufacturer’s breach of the
reasonable standard of care and failing to
make a product safe.
–Due Care Must Be Exercised in: design,
selection of materials, using appropriate
production process, assembling and
testing, adequate warnings, inspection,
and testing. 
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Product Liability
 Negligence.
–Privity of Contract Not Required. No
privity of contract required between
Plaintiff and Manufacturer. Liability
extends to any person’s injuries caused
by a negligently made (defective)
product.
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Product Liability
 Misrepresentation.
–Occurs when fraud committed against
consumer or user of product. Fraud
must have been made knowingly or
with reckless disregard for safety.
–Plaintiff does not have to show product
was defective.
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Product Liability
 Strict Product Liability.
–Strict Liability holds people liable for
results of their acts, regardless of their
intentions or exercise of reasonable
care. 
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Strict Product Liability
 Strict Product Liability and Public
Policy.
–Consumers should be protected from
unsafe products;
–Manufacturers and distributors should
be liable to any user of the product;
–Manufacturers, sellers and distributors
can bear the costs of injuries. 
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Strict Product Liability
 Strict Product Liability and Public
Policy.
–CASE 15.2 BRUESEWITZ V. WYETH, LLC
(2011). What do you think about the
ethical or moral implications of this
decision? 
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Strict Product Liability
 Requirements for Strict Liability:
1. Product must be in defective condition
when sold.
2. Defendant is in the business of selling
the product.
3. Product must be unreasonably
dangerous. 
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Strict Product Liability
 Requirements for Strict Liability:
4. Plaintiff must be physically harmed
5. Defective condition must be proximate
cause of injury.
6. Goods are in substantially same
condition.
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Strict Product Liability
 Requirements for Strict Liability:
–Proving a Defective Condition.
• Plaintiff does not need to show product or
in what manner the product become
defective.
• But plaintiff must show product was
defective and “unreasonably dangerous”
to the user. 
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Strict Product Liability
 Requirements for Strict Liability:
–Unreasonably Dangerous Products.
• The product was dangerous beyond the
expectation of the ordinary consumer.
• A less dangerous alternative was
economically feasible for the
manufacturer, but the manufacturer failed
to produce it.
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Strict Product Liability
 Product Defects – Restatement (Third
of Torts).
–Manufacturing Defects. 
–Design Defects. 
–Warning Defects. 
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Strict Product Liability
 Product Defects – Restatement (Third
of Torts).
–Manufacturing Defects.
• Occurs when a product “departs from its
intended design even though all possible
care was exercised in the preparation and
marketing of the product.”
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Strict Product Liability
 Product Defects – Restatement (Third
of Torts).
–Design Defects.
• Product is manufactured correctly, but
defect is based on design. Test: plaintiff
must show defendant’s failure to use a
“reasonable alternative design” rendered
the product not reasonably safe. 
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Strict Product Liability
 Strict Product Liability.
–Design Defects.
• Factors to be Considered.
–Magnitude and probability of
foreseeable risks.
–Relative advantages and disadvantages
of product.
–Most courts use “risk-utility” analysis.
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Strict Product Liability
 Product Defects – Restatement (Third
of Torts).
–Inadequate Warnings.
• A product may be defective because of
inadequate warnings or instructions.
• Liability based on foreseeability that
proper instructions/labels would have
made the product safe to use. 
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Strict Product Liability
 Product Defects – Restatement (Third
of Torts).
–Inadequate Warnings.
• Obvious Risks. No duty to warn.
• Foreseeable Misuses. Seller must warn
about foreseeable misuse.
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Strict Product Liability
 Market Share Liability.
–Theory of liability when multiple
Defendants contributed to manufacture
of defective product.
–Liability of each Defendant is
proportionate to the share of the
market held by each respective
Defendant.
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Defenses to Product Liability
 Assumption of Risk.
–CASE 15.3 BOLES V. SUN ERGOLINE, INC.
(2010). Why wasn’t assumption of risk
a valid defense in this case?
 Product Misuse.
–Plaintiff does not know the product is
dangerous for a particular use. 
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Defenses to Product Liability
 Comparative Negligence.
–Defendants may be able to limit
damages by apportioning fault.
–Commonly Known Dangers.
–Knowledgeable User.
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