Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics

Copyright © 2004 by Prentice-Hall. All rights reserved.

PowerPoint Slides to AccompanyPowerPoint Slides to AccompanyBUSINESS LAWBUSINESS LAW

E-Commerce and Digital Law E-Commerce and Digital Law International Law and EthicsInternational Law and Ethics

55thth Edition Editionby Henry R. Cheesemanby Henry R. Cheeseman

Slides developed by

Les Wiletzky

Wiletzky and Associates, Puyallup, WA

Chapter 5Product and Strict Liability

Chapter 5Product and Strict Liability

Copyright © 2004 by Prentice-Hall. All rights reserved. 5 - 2

Products LiabilityProducts Liability

The liability of manufacturers, The liability of manufacturers, sellers, and others for the injuries sellers, and others for the injuries caused by defective products.caused by defective products.


Tort Liability Based on FaultTort Liability Based on Fault

NegligenceIntentional

Misrepresentation


Tort Liability Based on Fault Tort Liability Based on Fault (continued)(continued)

NegligenceNegligence A tort related to defective products.A tort related to defective products. The plaintiff must prove that the defendant The plaintiff must prove that the defendant

breached a duty of due care to the plaintiff breached a duty of due care to the plaintiff that caused the plaintiff’s injuries.that caused the plaintiff’s injuries.

In a negligence lawsuit, only a party who was In a negligence lawsuit, only a party who was actually negligent is liable to the plaintiff.actually negligent is liable to the plaintiff.


Landmark LawLandmark Law

In In MacPherson v. Buick Motor Co.,MacPherson v. Buick Motor Co., the the court held that an injured consumer could court held that an injured consumer could recover damages from the manufacturer of recover damages from the manufacturer of the product even though he or she was only the product even though he or she was only in privity of contract with the retailer from in privity of contract with the retailer from whom he or she had purchased the product.whom he or she had purchased the product.



NegligenceNegligence (continued)(continued)

Failure to exercise due care includes:Failure to exercise due care includes: Failing to assemble the product carefully.Failing to assemble the product carefully. Negligent product design.Negligent product design. Negligent inspection or testing of the product.Negligent inspection or testing of the product. Negligent packaging.Negligent packaging. Failure to warn of the dangerous propensities Failure to warn of the dangerous propensities

of the product.of the product.



Intentional MisrepresentationIntentional Misrepresentation When a seller or lessor (1) fraudulently When a seller or lessor (1) fraudulently

misrepresents the quality of a product, or (2) misrepresents the quality of a product, or (2) conceals a defect in it, and a buyer is injured conceals a defect in it, and a buyer is injured thereby.thereby.


The Doctrine of Strict LiabilityThe Doctrine of Strict Liability

In In Greenmun v. Yuba Power Products, Greenmun v. Yuba Power Products, Inc.,Inc., the California Supreme Court adopted the California Supreme Court adopted the the doctrine of strict liability in tortdoctrine of strict liability in tort as a as a basis for product liability actions.basis for product liability actions.


The Doctrine of Strict LiabilityThe Doctrine of Strict Liability (continued)(continued)

Liability Without FaultLiability Without Fault Unlike negligence, Unlike negligence, strict liabilitystrict liability does not does not

require the injured person to prove that the require the injured person to prove that the defendant breached a duty of care.defendant breached a duty of care.

Strict liability is imposed irrespective of faultStrict liability is imposed irrespective of fault on manufacturers, sellers, and lessors who on manufacturers, sellers, and lessors who make and distribute defective products that make and distribute defective products that cause injury to users and others.cause injury to users and others.



Chain of DistributionChain of Distribution All parties in the All parties in the chain of distributionchain of distribution of a of a

defective product are defective product are strictly liablestrictly liable for the for the injuries caused by that product.injuries caused by that product.

All manufacturers, distributors, wholesalers, All manufacturers, distributors, wholesalers, retailers, lessors, and subcomponent retailers, lessors, and subcomponent manufacturers may be sued under this manufacturers may be sued under this doctrine. doctrine. (doctrine of strict liability in tort)(doctrine of strict liability in tort)



Privity of contract is not required for a plaintiff Privity of contract is not required for a plaintiff to sue for strict liability.to sue for strict liability.

The doctrine applies even if the injured party The doctrine applies even if the injured party had no contractual relations with the had no contractual relations with the defendant.defendant.

The damages recoverable in a strict liability The damages recoverable in a strict liability action vary by jurisdiction.action vary by jurisdiction.



Punitive damages are often awarded in strict Punitive damages are often awarded in strict liability lawsuits if the plaintiff proves that the liability lawsuits if the plaintiff proves that the defendant either:defendant either: Intentionally injured him or her; orIntentionally injured him or her; or Acted with reckless disregard for his or her Acted with reckless disregard for his or her

safety.safety.

Copyright © 2004 by Prentice-Hall. All rights reserved. 5 - 13Defective product causes injury

Negligence

lawsuit lawsuit

Strict liabilityConsumer

Retailer

Distributor

Manufacturer (negligent)

Defective product

DefendantDefendant

Defendant

Defendant

All in the chain of distribution are liable

Negligent party is liable

Doctrines of Negligence and Strict Liability ComparedDoctrines of Negligence and Strict Liability Compared


The Concept of DefectThe Concept of Defect

To recover for strict liability, the injured party To recover for strict liability, the injured party must first show that the product that caused must first show that the product that caused the injury was somehow the injury was somehow defectivedefective..

Plaintiffs can allege multiple product defects Plaintiffs can allege multiple product defects in one lawsuit.in one lawsuit.


The Concept of Defect The Concept of Defect (continued)(continued)

The most The most common common types of types of defects:defects:

ManufactureManufacture DesignDesign

PackagingPackagingFailure to WarnFailure to Warn



Defect in Manufacture –Defect in Manufacture – a defect that a defect that occurs when the manufacturer fails to:occurs when the manufacturer fails to:

1.1. Properly assemble a productProperly assemble a product

2.2. Properly test a product, orProperly test a product, or

3.3. Adequately check the quality of a productAdequately check the quality of a product



Defect in Design –Defect in Design – a defect that occurs a defect that occurs when a product is improperly designed.when a product is improperly designed.

Design defects include:Design defects include:

1.1. Toys designed with removable parts that Toys designed with removable parts that could be swallowed by children.could be swallowed by children.

2.2. Machines and appliances designed without Machines and appliances designed without proper safeguards.proper safeguards.

3.3. Trucks designed without a backup warning Trucks designed without a backup warning device.device.



Defect in DesignDefect in Design (continued)(continued)

In evaluating the adequacy of a product’s In evaluating the adequacy of a product’s design, the courts apply a design, the courts apply a risk-utility analysisrisk-utility analysis and consider the:and consider the: Gravity of the danger posed by the designGravity of the danger posed by the design Likelihood that injury will occurLikelihood that injury will occur Availability and cost of producing a safer designAvailability and cost of producing a safer design Social utility of the productSocial utility of the product


Crashworthiness DoctrineCrashworthiness Doctrine

The courts have held that automobile The courts have held that automobile manufacturers are under a duty to design manufacturers are under a duty to design automobiles so they take into account the automobiles so they take into account the possibility of harm from a person’s body possibility of harm from a person’s body striking something inside the automobile striking something inside the automobile in the case of a car accident.in the case of a car accident.



Defect in Packaging –Defect in Packaging – a defect that occurs a defect that occurs when a product has been placed in when a product has been placed in packaging that is insufficiently tamperproof.packaging that is insufficiently tamperproof. Manufacturers owe a duty to design and Manufacturers owe a duty to design and

provide safe packages for their products.provide safe packages for their products. Failure to meet this duty subjects the Failure to meet this duty subjects the

manufacturer and others in the chain of manufacturer and others in the chain of distribution of the product to strict liability.distribution of the product to strict liability.



Failure to Warn –Failure to Warn – a defect that occurs when a defect that occurs when a manufacturer does not place a warning on a manufacturer does not place a warning on the packaging of products that could cause the packaging of products that could cause injury if the danger is unknown.injury if the danger is unknown.



Other Product DefectsOther Product Defects Failure to provide adequate instructionsFailure to provide adequate instructions Inadequate testing of productsInadequate testing of products Inadequate selection of component parts or Inadequate selection of component parts or

materialsmaterials Improper certification of the safety of a Improper certification of the safety of a

productproduct


Generally Generally Known DangersKnown Dangers

Supervening Supervening EventEvent

Assumption of Assumption of the Riskthe Risk

Misuse of the Misuse of the ProductProduct

Statute of Statute of LimitationsLimitations

Government Government Contractor Contractor DefenseDefense

Contributory & Contributory & Comparative Comparative NegligenceNegligence

Defenses Defenses to Product to Product LiabilityLiability


Defenses to Product Liability Defenses to Product Liability (continued)(continued)

Supervening Event –Supervening Event – an alteration or an alteration or modification of a product by a party in the modification of a product by a party in the chain of distribution that absolves all prior chain of distribution that absolves all prior sellers from strict liability.sellers from strict liability.



Generally Known Dangers –Generally Known Dangers – a defense that a defense that acknowledges that certain products are acknowledges that certain products are inherently dangerous and are known to the inherently dangerous and are known to the general population to be so.general population to be so. Sellers are not strictly liable for failing to warn Sellers are not strictly liable for failing to warn

of of generally known dangersgenerally known dangers..



Government Contractor Defense –Government Contractor Defense – a a defense that says a contractor who was defense that says a contractor who was provided specifications by the government is provided specifications by the government is not liable for any defect in the product that not liable for any defect in the product that occurs as a result of those specifications.occurs as a result of those specifications.



Assumption of Risk –Assumption of Risk – a defense in which a defense in which the defendant must prove that:the defendant must prove that:

1.1. The plaintiff knew and appreciated the risk, The plaintiff knew and appreciated the risk, andand

2.2. The plaintiff voluntarily assumed the risk.The plaintiff voluntarily assumed the risk.



Misuse of the Product –Misuse of the Product – a defense that a defense that relieves the seller of product liability if the relieves the seller of product liability if the user user abnormallyabnormally misused the product. misused the product. Products must be designed to protect against Products must be designed to protect against

foreseeableforeseeable misuse. misuse.



Statute of Limitations and Statute of Statute of Limitations and Statute of Repose Repose Statute of LimitationsStatute of Limitations: : a statute that a statute that

requires an injured person to bring an action requires an injured person to bring an action within a certain number of years from the time within a certain number of years from the time that he or she was injured by the defective that he or she was injured by the defective product.product.



Statute of Limitations and Statute of Statute of Limitations and Statute of Repose Repose (continued)(continued)

Statute of ReposeStatute of Repose:: a statute that limits the a statute that limits the seller’s ability to a certain number of years seller’s ability to a certain number of years from the date when the product was first sold.from the date when the product was first sold.



Contributory and Comparative NegligenceContributory and Comparative Negligence Contributory NegligenceContributory Negligence:: a defense that a defense that

says a person who is injured by a defective says a person who is injured by a defective product but has been negligent and has product but has been negligent and has contributed to his or her own injuries, cannot contributed to his or her own injuries, cannot recover from the defendant.recover from the defendant.



Contributory and Comparative Negligence Contributory and Comparative Negligence (continued)(continued)

Comparative NegligenceComparative Negligence:: a doctrine that a doctrine that applies to strict liability actions that says a applies to strict liability actions that says a plaintiff who is contributorily negligent for his plaintiff who is contributorily negligent for his or her injuries is responsible for a proportional or her injuries is responsible for a proportional share of the damages.share of the damages.


International Law:International Law:Product Liability in JapanProduct Liability in Japan

Product liability claims are rare in Japan for Product liability claims are rare in Japan for several reasons:several reasons:

1.1. The plaintiff has the difficult burden of The plaintiff has the difficult burden of proving that the company was negligentproving that the company was negligent

2.2. Japanese courts do not allow discoveryJapanese courts do not allow discovery

3.3. Claimants must pay a percentage of any Claimants must pay a percentage of any damages requested (not won) as court feesdamages requested (not won) as court fees


International Law:International Law:Product Liability in Japan Product Liability in Japan (continued)(continued)

4.4. Awards granted by courts are small (by Awards granted by courts are small (by U.S. standards)U.S. standards)

5.5. Punitive damages are not availablePunitive damages are not available

Documents

Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics