Chapter 9: Business Torts and Product Liability

Question 1

fraud

Answer 1

• broad concept
• intentional tort
• tort based on negligence

Question 2

intentional misrepresentation

Answer 2

has been made

1. knowingly or
2. w/o belief in its truth or
3. recklessly, careless whether it be true or false

Question 3

Elements of Fraud/Mis

Answer 3

1. Misstatement of an important or material fact
2. scienter or intent to defraud
3. seller must know/have reason to know the statement is false
4. the recipient of the false statement must justifiably rely on that information in making the decision to go ahead w the deal
   5, privity b/t parties - parties must have been in a rlts that created a legal obligation
5. causation: logical link existed b/t reliance on the misstatement and losses that were then suffered by the plaintiff.
6. damages

Question 4

interference with contractual relations

Answer 4

The claim is that the injured business’s contractual relations were wrongfully interfered with by another party. Elements:
1. the existence of a contractual rlts b/t the injured business and another party, (2) that was known to wrongdoer, who (3) intentionally interfered w that rlts

Question 5

interference with prospective advantage

Answer 5

a business attempts to improve its place in the market by interfering w another’s business in an unreasonable and improper interference

Question 6

product liability

Answer 6

a general term applied to an area of the law that is primarily tort law but also involves some contract law and statutory law

Question 7

privity of contract

Answer 7

rlts that exists b/t contracting parties

Question 8

rule of caveat emptor - let the buyer beware

Answer 8

• injured parties have no privity of contract w manufacturer
• requires buyer examine, judge, and test for himself

Question 9

reasonable care

Answer 9

manufacturer is required to exercise reasonable care under the circumstances in the production of its product

Question 10

strict liability

Answer 10

holding manufacturer liable to consumers injured by defective products regardless of whether the manufacturer exercised all reasonable care or not

Question 11

warranty

Answer 11

manufacturer’s assurance that a product will meet certain quality and performance standards

Question 12

express warranty

Answer 12

when manufacturer contractually provides performance promises to the consumer

Question 13

implied warranty

Answer 13

when the law inserts quality standards into the rlst regardless of the actual contract terms

Question 14

strict liability based on implied warranty

Answer 14

• in area of food and drink

- safety to other consumer products

Question 15

strict liability based on express warranty

Answer 15

• does NOT require that injured consumers have purchased the product directly from manufacturer
• injured customers do not need to prove fault b/c the law requires manufacturers to guarantee the truthfulness of their representations
• misrepresentation

Question 16

unknown hazards - latent defects

Answer 16

dangers that were not known or not fully appreciated at the time the product was manufactured

Question 17

joint and several liability

Answer 17

2 or more defendants are found liable for damages

Question 18

defense in product liability suits

Answer 18

• Product misuse
• Assumption of risk
• Bulk-supplier doctrine and sophisticated user defense

Question 19

Bulk-supplier doctrine

Answer 19

when a supplier sells a product to an intermediary in bulk, the supplier can discharge its duty to warn the ultimate users if it provides adequate instructions to the distributor next in line, or determines that the intermediary party is adequately trained in the use of the product

Question 20

sophisticated user defense

Answer 20

relieves a manufacturer of liability for failing to warn of a product’s characteristic or dangers when “the end user knows or reasonably should know of a products’ dangers

Question 21

ultrahazardous activity

Answer 21

activity that involves risk of serious harm which cannot be eliminated by the exercise of the utmost care