Study 7: Products Liability and Its Effects - Summary

Question 1

Products Liability

Answer 1

Manufacturers of goods, wholesalers, jobbers, repairers, installers, and retailers can be held liable for injuries caused by the products they manufacture, fix, install, or sell.

• Breach of Contract—Tort: Products liability claims may arise out of a breach of contract or in tort (through the wrongful action of anyone on the ladder of supply). In law, each approach applies its own set of rules.

Question 2

Ladder of Supply

Answer 2

Question 3

Burden of Proof for Products Claims

Answer 3

In tort actions, the burden of proof is upon the person bringing the action (the plaintiff) to prove that the defendant was negligent.

• Such proof can be difficult to establish for a products liability claim because a product may have become defective as it passed through some phase of preparation, handling, sales, or service.

Question 4

Contract Theory of Products Liability

Answer 4

Products liability claims may arise from breach of contract or breach of warranty under a contract of sale. If the product does not meet the warranted conditions, a suit may be brought on the basis of breach of contract.

Question 5

Products sold must be warranted to meet the following criteria

Answer 5

• Be reasonably fit for their intended use
• Be of merchantable quality

If the goods are not fit for the purpose for which they are required and consequently cause injury or damage to buyers, buyers can recover damages from the seller regardless of negligence

Question 6

Discovery of Defect

Answer 6

• If the manufacturer of a product discovers that there has been a defect in the product, it is its responsibility to warn its customers (ex. automobile recalls)
• Problem becomes critical if more than one defective item is produced
• Sistership: arose out of aircraft industry - a particular airplane was found to have a defect, so all planes of the same model were grounded
• Rivtow Marine Ltd. v. Washington Iron Works - manufacturer of cranes failed to advise a former purchaser of a known defect in a certain model, were sued after the defect was discovered for loss of profits and costs of repairs

Question 7

Product Labels and Liability Claims

Answer 7

• For warnings to be adequate, enough information must be passed on to allow the consumer to make an informed decision as to whether to accept the risk of using the product.
• As the consumer’s potential severity of injuries increases, the manufacturer’s responsibility for taking precautions and providing warnings also increases.
• If the product is inherently dangerous, or contains a possible concealed trap, the manufacturer, or one who provides, supplies, or sells these products, must provide adequate warning on the article.
• Ruegger v. Shell Oil Company of Canada Ltd. - manufacturer of weed killer is found liable because the warning on the label only advised to keep away from flowers, but use of the weed killer damaged tomatoes which were ¼ mile away

Question 8

Sensitivity of User

Answer 8

Even though a product will not have a negative effect on the majority of the population, some individuals may react to it because of an allergy.

• If one person is sensitive and has an allergic reaction, it does not necessarily mean that the product is defective and that the manufacturer will be found liable.
• However, when many persons may be affected and the results are more serious, the manufacturer may have a duty to warn the consumer.

Question 9

Contributory Negligence (defence against product liability claims)

Answer 9

The contributory negligence defence can be used when the plaintiff has misused the product, or in situations where equipment has not been tested or installed properly.

• Abnormal Use: If the defendant can prove that the product was put to a use that was totally unpredicted, it will be absolved of liability because the risk was not foreseeable.
• Voluntary Assumption of Risk: When a consumer has been provided with information about a product that would lead a reasonable person to fully appreciate the risk associated with the product and that person makes a conscious choice to continue to use the product, a court would likely rule that the claimant voluntarily assumed the risk.

Question 10

Intermediate Examination (defence against product liability claims)

Answer 10

• The consumer may receive the product in the same form as when it left the manufacturer, or the product may have been examined or interfered with by someone before the consumer received it.
• If the manufacturer can show that it could reasonably be expected that a party handling the goods or even the ultimate consumer should have noticed and corrected an obvious defect, liability may be limited.
• When an intervening activity creates a defect in a product, it could affect the injured party’s claim against the manufacturer. If it can be shown that the intervention led to the defect, the manufacturer may have recourse against another party or be held jointly responsible for the damages.

Question 11

Learned Intermediary Rule

Answer 11

• Originated in pharmaceutical legislation but applies in other contexts
• Exception to the manufacturer’s duty to warn a consumer about the risks of a product
• If the manufacturer does not apprise the learned intermediary of the risks associated with the product, the learned intermediary cannot properly make judgments about the use of the product or inform the ultimate consumer about them.
• The rule applies when the product is technical and intended to be used only under expert supervision.