Products Liability - Contract vs. Tort Flashcards
1
Q
Product Liability - Paradigmatic Situation
A
- manufacturer sells product that has a defect -> goes into stream of commerce
- defective product causes injury to user -> user wants to sue manufacturer of product
2
Q
Stages in the Evolution of Products Liability
A
- Stage 1: Privity (contract)
- Stage 2: Negligence (tort)
- Stage 3: Warranty (contract)
- Stage 4: Strict Liability in Tort
3
Q
Summary of Result of Evolution in Product Liability
A
- privity is dead in the core area of tort liability (physical injury)
- negligence is still around -> claim 1
- warranty is available but don’t really need it
- strict tort liability for product injury caused by defect in the product
4
Q
Stage 1 in Products Liability
A
- emphasis on privity of contract
- no contract between buyer and manufacturer -> no liability
- would only be able to sue under some other kind of law, but if contract supposed to trump, then suit against manufacturer should be disallowed
- ex: Losee v. Clute
5
Q
Thomas v. Winchester
A
- 1852
- case w/ negligently mislabeled poison
- created exception to the traditional product liability rule (requirement of privity of contract for suit) for products that are inherently dangerous
6
Q
MacPherson v. Buick Motor Co.
A
- 1916
- important shift from privity to negligence
- def sold car to dealer -> sold to pl -> pl injured b/c of defective wheel (def didn’t make the wheel, but could’ve figured out defective from reasonable inspection)
Manufacturer has duty to its users even if no contract when:
- nature of the thing is such that it’s reasonably certain to injure if negligently made (knowledge of danger must be probable, not just possible)
- knowledge that the thing will be used w/o new tests by persons other than purchaser
- proximity or remoteness of relationship also a factor to consider
7
Q
Stage 2 - Products Liability
A
- if product will be dangerous to life + property +. it is foreseeable that a third-;arty will use or come into contact w/ it, then injured third-party can sue if product negligently made
- still in fault-based negligence system, but allowing tort to take over from contracts
8
Q
Stage 3 - Products Liability
A
- warranty: express + implied warranty extended to any person who may reasonably be expected to use, consume or be affected by product (manufacturer liable for breach)
- can exclude or modify (“as is”) but can’t limit if product is to be fit for ordinary use
- paves the way for strict liability, since under this phase, manufacturer strictly liable for breach of implied warranty of safety
9
Q
Henningson v. Bloomfield Motors - Facts
A
- 1960
- Henningson bought car as gift for wife -> she was injured while driving it due to some sort of defect
- sales order had back page that tried to disclaim all warranties + limited liability - Henningson didn’t read before signing + back page wasn’t pointed out to him
10
Q
Henningson - Ruling
A
- implied warranty of merchantability runs from manufacturer to H
- back page doesn’t negate the implied warranty - court emphasizes standard form, take-it-or-leave-it, + H didn’t know and couldn’t have reasonably been expected to understand what he was giving up if he had known about it
- H’s wife is covered even though she didn’t execute the sales contract b/c she could reasonably be expected to become a user of the car
11
Q
Stage 4 Products Liability
A
- strict liability in tort
- manufacturer is strictly liable in tort for injuries caused by its defective products
- absolute duty of safety that applies to all who use the product (vs. implied warranty runs w/ goods to all who might reasonably be expected to use)
12
Q
Escola v. Coca Cola Bottling Co.
A
- 1944
- bottle exploded + caused pl severe injuries -> pl ultimately recovers under res ipsa loquitor, but Traynor concurrence puts forth strict liability theory - manufacturer incurs absolute liability when an article that he has placed on the market, knowing it is to be used w/o inspection, proves to have a defect that causes injury
13
Q
To whom does liability extend under modern regime?
A
- retailers of product as well as manufacturers
- also extends to injuries incurred by bystanders (rather than just third-party users)*
- Note that 2d Restatement says it has no opinion on this, but Prof has said ends up being extended outwards
14
Q
Restatement (2d) Section 402A
A
One who sells any productive in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if:
a) seller is engaged in business of selling such a product AND
b) it is expected to and does reach the consumer w/o substantial change in the condition in which it is sold
- section also specifies that this applies even if no privity of contract + even if seller exercised all possible care
- also note that seller = retailer and manufacturer
15
Q
Policy Rationales for Strict Products Liability
A
- background safety - CCA, mobilization of knowledge
- spreading/fairness
- market allocation (price of item should reflect its full safety costs so consumers buy optimal amount of the item)
- enterprise theory (people who benefit from activity should pay)
- party best able to bear the loss (allows for indemnification suits up the chain of contract)
- consumer not well-positioned to understand/detect defects in products
- negligence sometimes very difficult to prove in these cases
