Chapter 15

Question 1

What legal theory governed consumer law from the early 18th Century until the early 20th Century?

Answer 1

Caveat emptor “let the buyer beware”

Question 2

Is false advertising protected by the First Amendment?

Answer 2

No bitch

Question 3

What is the common law remedy for fraudulent advertising? What are the five elements of this remedy?

Answer 3

1. a material misrepresentation
2. of a presently existing fact
3. intentionally/negligently made
4. justifiably relied on
5. to the plaintiff’s detriment

Question 4

What can “sales puffery” not reasonably be considered and is it grounds for a claim of false advertising?

Answer 4

Cannot be considered statements of fact and are not grounds for a claim of false advertising

Question 5

What Federal law (Act) makes illegal unfair competition and unfair or deceptive practices?

Answer 5

Section 5 of the Federal Trade Commission Act

Question 6

What Commission does the Federal Trade Commission Act create? Be able to recognize the initials FTC.

Answer 6

Fed Trade Comm.

Commission trade regulation rules, quasi-judicial rulings, advisory opinion, and agency guidelines

Question 7

What must a practice have in order to be illegal under the FTC Act?

Answer 7

The capacity or tendency to deceive – there doesn’t need to be proof

Question 8

What is the “fool’s standard” and what replaced it in 1983?

Answer 8

“not made for the protection of experts, but for the public .. including the ignorant, the unthinking and the credulous”

Question 9

Be able to recognize and list six different examples of illegal advertising that have been held to be unfair or deceptive.

Answer 9

• Bait-and-switch tactics
• Low balling tactics
• Misleading price and savings claims
• Untrue or misleading product test reports, claims or comparisons
• Endorsements b one misrepresented expressly or impliedly to be a “doctor” or “scientific expert”
• misleading television or pictorial advertising

Question 10

Be able to recognize and list five different types of FTC remedies.

Answer 10

Consent decree
Dease and desist order
Fines
Damages for persons injured 
Corrective advertising

Question 11

What are the Food and Drug Administration’s activities directed toward? Be able to recognize the initials FDA.

Answer 11

Protecting consumers from injury and fraud in the formulation, packaging and advertisement of foods, drugs, cosmetics and therapeutic devices.

Question 12

What Act created the FDA and what year was it created?

Answer 12

Food and Drug Act in 1906

Question 13

What does the Equal Credit Opportunity Act forbid?

Answer 13

Discrimination in the granting of credit based on race, sex, marital status, age, national origin, or status of receiving public assistance

Question 14

What are the three bases of liability for consumer products?

Answer 14

Breach of warranty, negligence, and strict liability

Question 15

What is a warranty, who usually makes (offers) it and who is it accepted by?

Answer 15

A warranty is a contract, usually made by the manufacturer and accepted by the purchaser

Question 16

What Code governs contracts for the sale of goods? what two types of warranties important to product liability does it recognize?

Answer 16

The uniform commercial code (article 2)

Express and implied warranties

Question 17

How is an express warranty created under the uniform commercial Code?

Answer 17

by any affirmation of fact or promise made by the seller to the buyer white relates to the goods and becomes part of the basis of the bargain

Question 18

Be able to identify and describe the two major implied warranties under the uniform commercial Code.

Answer 18

Implied warranty of merchantability: when a marchant makes a sale, a warranty of merchantability is automatically create
Implied warranty of fitness for a particular purpose: if the seller knows of the particular purpose for which the buyer is purchasing the goods and the buyer is relying on the sellers skilland judgement

Question 19

Describe how privity affects product warranties.

Answer 19

Privity: private or face-to-face relationship

If there is no privity there is no contract made

Question 20

Be able to identify four different limitations on warranties.

Answer 20

1. there needs to be a sale
2. a person must give notice of the injury within a reasonable time
3. the seller can make disclaimers
4. there is a four year statute of limitations under the code, dating from delivery of product

Question 21

What is the statute of limitations for warranties under the uniform commercial Code and when is it dated from?

Answer 21

Its 4 years, and its dated from delivery of the product

Question 22

What is the second basis for product liability?

Answer 22

Negligence

Question 23

what is the significant limitation on the application of negligence in product liability cases? (besides Duty of Care for Child Products)

Answer 23

there is a requirement to show that the manufacturer breached a duty of care (failing that proof means plaintiff looses)

Question 24

What defenses may a defendant raise in negligence-based product liability suits?

Answer 24

The same defenses as in negligence cases

Question 25

Be able to identify the three most common defenses in negligence-based product liability suits?

Answer 25

Contributory negligence, comparative negligence and assumption of risk

Question 26

What two concerns does the application of strict liability to product liability cases address?

Answer 26

1. Sometimes an injured person cannot claim any breach on contract because no contract was made
2. sometimes an injured person cannot prove negligence because the instrumentality that cause the injury has been destroyed

Question 27

Examination of what tort doctrine represents a limitation on strict liability?

Answer 27

Proximate Cause

Question 28

What provides the authority to make uniform laws on the subject of bankruptcies? Who has the authority to make these laws?

Answer 28

The constitution, congress has the authority

Question 29

What are the four purposes of modern bankruptcy law?

Answer 29

1. to provide an orderly method to get relief from by creditors
2. to provide a uniform method of accounting for a debtors assets
3. to protect honest debtors from having creditors take all their assets
4. to protect the creditors from an unseemly scramble for the assets of the bankrupt

Question 30

What are the three types (chapters) of bankruptcy described by the text?

Answer 30

Straight Bankruptcy: (chp 7) allows the honest debtor to be discharged from most obligations
Chapter 11 bankruptcy: allows a financially troubled but possible profitable business to ride out its temporary troubles (by forcing creditors to reschedule the debts owed)
Chapter 13: allows a person with regular income to reschedule their debts