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Bus Law > Chapter 15: Products Liability: Warranties and Strict Liability > Flashcards

Chapter 15: Products Liability: Warranties and Strict Liability Flashcards

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1
Q

product liability

A

liability of manufacturers and sellers of goods for a defective product or its failure to perform adequately

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2
Q

expectations of buyers, other users, or those affected by the goods

A
  • expectations will be met or seller is liable

- expectations regarding safety, dependability, longevity, etc

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3
Q

expectations of sellers or others in the chain of distribution

A

-unless the seller has expressly warranted the goods, after the sale is completed the defeated expectations of he buyer are the buyer’s problem

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4
Q

various legal theories that are causes of action

A
  • negligence
  • misrepresentation
  • violation of a statutory duty
  • warranty
  • strict liability on tort
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5
Q

warranties

A
  • arise only by virtue of contract law
  • assurance or guarantee of conformity to a standard - with respect to title, quality, condition, durability, or performance
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6
Q

sources of warranty law

A
  • UCC (state law)
  • Magnuson-Moss Warranty Act (federal law-trumps UCC when it applies)
  • Various state “lemon laws” - common for motor vehicle warranties
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7
Q

does a sale of goods contract have to have warranties?

A

no; it may or may not have express or implied warranties

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8
Q

express warranties

A

written into the contract

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9
Q

who has the burden of ascertaining the truth?

A

when there is a warranty, this burden is placed on the seller and the beneficiary of a warranty is not required to confirm the warranted facts

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10
Q

do warranties arise in a non contractual transfer?

A

no; if it’s gifted there is not a warranty

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11
Q

how are express warranties created?

A
  • seller makes some statement of fact
  • seller makes a promise w/ respect to the goods
  • conformity to description
  • conformity to sample or model
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12
Q

seller makes some statement of fact w/ respect to the goods (elements)

A
  • must relate to the goods
  • must be part of the basis of the bargain
  • fact v. opinion issues (seller has right to puff sales)
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13
Q

seller makes a promise w/ respect to the goods (elements)

A
  • must relate to the goods

- must be part of the basis of the bargain

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14
Q

conformity to description (elements)

A
  • must relate to the goods
  • must be part of the basis of the bargain
  • may be created by course of dealing or usage of trade
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15
Q

conformity to sample or model

A
  • not very common
  • you sample what you’re going to buy, you expect to get that
  • must be part of the basis of the bargain
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16
Q

which type of express warranty is most important to us as consumers?

A

seller makes a promise w/ respect to the goods

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17
Q

does the seller have to intend to create a warranty?

A

no; their intent is not necessary to have one arise if the facts are right-in other words, the seller may not realize that a warranty has been created

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18
Q

meaning of part of the basis of the bargain

A
  • must simply be one of the elements of the transaction from the buyer’s perspective which induced them to enter into the contract
  • get it in writing (parol evidence rule makes it difficult to prove oral warranties after contract is signed)
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19
Q

what happens if a warranty is given by the seller after the contract is entered into?

A

its considered a contract modification and requires no consideration to be binding

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20
Q

Implied Warranty of Merchantability

A
  • arises by operation of law in contracts involving merchant sellers only (tier 1 merchant-merchants who deal in the good of the kind)
  • goods must be merchantable
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21
Q

what makes goods merchantable?

A
  • performance of desired function

- duration of the ability of the goods to perform desired function

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22
Q

statute of limitations on implied warranties of merchantability

A

generally a breach of warranty legal action must be started w/in 4 years of the tender of the goods by the seller-effective duration is therefore 4 years

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23
Q

does merchantability arise in the sale of used goods?

A

yes! but only if it’s appropriated given the nature of the goods

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24
Q

implied warranty of fitness for a particular purpose elements

A
  • seller knows of buyer’s particular purpose for purchasing the goods
  • seller knows of buyer’s reliance on seller to select or furnish suitable goods
  • justifiable reliance by buyer on seller to select or furnish suitable goods
  • goods do not meet particular purpose
  • can exist in non-merchant seller transactions
25
Q

warranty of title 2-312 elements (the clean title warranty)

A
  • title conveyed is good
  • transfer is rightful (transaction doesn’t violate right of any 3rd parties)
  • goods are free of any security interest or lien (unless buyer knows anywise)
26
Q

waiver of warranties

A
  • buyer examines good pre-contract will not have warranty protection as to obvious defects (you should’ve addressed it before signing)
  • seller demands that buyer examine goods pre-contract and buyer refuses will not have warranty protection as to defects buyer would’ve discovered had they looked
27
Q

disclaimers

A
  • contract provisions eliminating or limiting warranty protection
  • if given by Manu. the disclaimer is also generally effective as to component manus.
28
Q

disclaiming express warranties

A
  • seller largely controls, during the contract formation process, whether express warranties are made
  • generally difficult to disclaim express warranties
  • parol evidence rule problem - hard to introduce oral proof
29
Q

disclaiming implied warranties

A
  • doesn’t apply to implied warranty of title
  • use of catchphrases
  • merchantability
  • fitness of purpose
30
Q

catch phrases

A
  • as is
  • with all faults
  • can be oral or written
  • does not effectively disclaim the clean title warranty
  • must be conspicuous if in writing
  • not effective for intentional deception
31
Q

disclaiming implied warranties of merchantability

A
  • disclaimer can be oral or written
  • if in writing must be conspicuous
  • must incorporate merchantability
32
Q

disclaiming fitness for a particular purpose warranties

A
  • disclaimer must be in writing and conspicuous

- suggested language from the UCC

33
Q

how might the enforceability of disclaimer be challenged?

A

on the basis of unconscionability

34
Q

what is a potential trap rule about warranties

A

-buyer must give notice of breach to seller under 2-607 or is barred from any remedy (w/in a reasonable period of time)

35
Q

plaintiff conduct as a defense that the defendant can argue:

A
  • contributory negligence (not a defense in most states)
  • voluntary assumption of risk
  • privity issues (parties w/ rights can sue)
36
Q

who can be sued for breach of warranty?

A

generally anyone in chain of distribution - privity of contract not a requirement (in Wisconsin privity is required tho; Wisconsin is a minority in this requirement)

37
Q

who can sue?

A
  • status of plaintiff option
  • type of plaintiff option
  • types of damages recoverable option
38
Q

status of plaintiff option

A

a seller’s warranty whether express or implied extends to: -any natural person who is in the family or household of his user

  • or who is a guest in his home
  • if it is reasonable to expect that such person may use, consume, or be affected by the goods
  • and who is injured in person by breach of the warranty
39
Q

type of plaintiff option

A

a seller’s warranty whether express or implied extends to:

  • any natural person
  • who may reasonably be expected to use, consume, or be affected by the goods
  • and who is injured in person by breach of the warranty
40
Q

types of damages recoverable option

A

a seller’s warranty whether express or implied extends to:

  • any person
  • who may reasonbly be expected to use, consume, or be affected by the goods
  • and who is injured by the breach of the warranty
41
Q

which option for who can sue is most common?

A

status of plaintiff option

42
Q

can consequential damages be limited or excluded?

A

yes! as long as the limitation or exclusion is not unconscionable

43
Q

what are consequential damages?

A
  • any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by over or otherwise
  • injury to person or property proximately resulting from any breach of warranty
44
Q

can contracts include provisions which limit available remedies?

A

yes! they can limit buyers remedies typically to repair, replace, or refund the purchase price -but the limited remedy must not fail its essential purpose

45
Q

summary of seller’s strategies to avoid or limit warranty claims

A
  • do not create express warranties
  • disclaim implied warranties or merchantability or fitness
  • limit duration of implied or express warranties
  • limit remedies to repair, replace, or refund purchase price
  • limit buyer’s right to recover consequential damages
  • argue that buyer did not give seller timely notice of the breach of warranty
  • argue that the plaintiff is not a warranty beneficiary under 2-318
46
Q

Magnuson-moss warranty act

A
  • federal law that supersedes UCC when applicable
  • applies to written warranties for consumer produced purchase by consumers
  • basically you need to make sure its understandable
  • must be fully and conspicuously disclosed in simple and readily understood language
  • if the goods cost $10 or more, warranty must be designated “full” or “limited”
47
Q

consumer product

A

any tangible personal property normally used for personal, family, or household purposes

48
Q

consumer

A
  • buyer other than for resale of the consumer product
  • a person to whom the produced is transferred during the duration of the implied or written warranty
  • any person entitled to enforce the warranty obligations
49
Q

written warranty

A
  • any written affirmation of fact or promise asserting that material or workmanship is free of defects or will meet a specified level of performance over a specified time
  • any written undertaking to refund, repair, replace, or take other remedial action if the product is defective or fails to meet the specified level of performance (must be basis of the bargain)
50
Q

“full” warranty

A

seller must agree:

  • if warranty is breached, to at a min. remedy the problem w/in a reasonable period of time (free of charge)
  • no limitation may be imposed on duration of any implied warranty
  • any limitation or exclusion of consequential damages must be conspicuous and on the face of the warranty
  • if reasonable # of repair attempts does not remedy problem, seller must afford the buyer the option of either replacement or refund or price
  • warranty service must be provided to anyone who owns the product during the warranty period
51
Q

aspects of a “limited warranty”

A
  • seller may limit the duration of an implied warranty
  • seller cannot disclaim or modify the implied warranties of merchantability or fitness
  • duration can be limited
52
Q

warranties for goods costing more than $15

A

must be written and must be available to customers to read before buying the product

53
Q

strict liability

A
  • section 402a of restatement of torts
  • to overcome the burden of privity of contract or the need to prove negligence on the part of the defendant
  • imposes liability of those in business of selling
  • adopted by most states
  • basis is condition of product NOT negligence
54
Q

reasons why strict liability exists

A
  1. to serve as a cost shifter (high cost of injury taken off consumer and given to Manu.)
  2. fundamental fairness to the injured person
  3. provides a strong incentive for deterrence (encourages manus to prevent injury if reasonable)
55
Q

who is susceptible to strict liability?

A

if elements are established, all sellers in the chain of distribution-manus, distributors, retailers- are strictly liable to the plaintiff (w/ rights of contribution against each other)

56
Q

elements of strict liability in tort cause of action

A
  1. product is sold in defective condition
  2. defendant must be engaged in the business of selling such products
  3. product was unreasonably dangerous as a result of the defect (and not open/obvious)
  4. defect existed at time product left hands of defendant
  5. defective condition attributable to the defendant
  6. plaintiff sustained physical harm or property damage
  7. defect cause injuries/loss sustained by plaintiff
57
Q

types of defects

A
  • manu. defect (not properly assembled in production)
  • design defect (design itself created dangerous situation)
  • inadequate warning, instructions, or packaging
58
Q

other characteristics of strict liability in tort

A
  • not dependent on contract
  • reliance not required
  • lack of privity not a defense
  • notice is not required
  • liability generally cannot be disclaimed, excluded, or modified
59
Q

defenses to strict liability

A
  • comparative negligence
  • misuse, modification, or abuse of the product by the buyer
  • economic loss doctrine

Bus Law (20 decks)

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