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Copyright © 2004 by Prentice-Hall. All rights reserved. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 6 Strict Liability.

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Presentation on theme: "Copyright © 2004 by Prentice-Hall. All rights reserved. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 6 Strict Liability."— Presentation transcript:

1 Copyright © 2004 by Prentice-Hall. All rights reserved. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 6 Strict Liability and Product Liability Chapter 6 Strict Liability and Product Liability

2 5 - 2 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Products Liability The liability of manufacturers, sellers, and others for the injuries caused by defective products.

3 5 - 3 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. CheesemanChapter 13 Negligence and Fault Negligence Intentional Misrepresentation

4 5 - 4 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Negligence and Fault (continued) Negligence –A person injured by a defective product may sue. –The plaintiff must prove that the defendant breached a duty of due care to the plaintiff that caused the plaintiff’s injuries. –In a negligence lawsuit, only a party who was actually negligent is liable to the plaintiff.

5 5 - 5 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Negligence and Fault (continued) Negligence (continued) –Consumer can recover damages from the manufacturer of the product even though he or she was only in privity of contract with the retailer

6 5 - 6 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Tort Liability Based on Fault (continued) Negligence (continued) Failure to exercise due care includes: –Failing to assemble the product carefully. –Negligent product design. –Negligent inspection or testing of the product. –Negligent packaging. –Failure to warn of the dangerous propensities of the product.

7 5 - 7 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Tort Liability Based on Fault (continued) Misrepresentation –Seller or lessor fraudulently misrepresents the quality of a product, or conceals a defect in it –Recovery limited to persons injured because they relied on the misrepresentation.

8 5 - 8 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Strict Liability In Greenmun v. Yuba Power Products, Inc., the California Supreme Court adopted the doctrine of strict liability in tort as a basis for product liability actions.

9 5 - 9 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Strict Liability (continued) Liability Without Fault –Unlike negligence, strict liability does not require the injured person to prove that the defendant breached a duty of care. – Strict liability is imposed on manufacturers, sellers, and lessors who make and distribute defective products that cause injury to users and others.

10 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Strict Liability (continued) Chain of Distribution –All parties in the chain of distribution of a defective product are strictly liable for the injuries caused by that product. –All manufacturers, distributors, wholesalers, retailers, lessors, and subcomponent manufacturers may be sued under doctrine of strict liability in tort

11 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Strict Liability (continued) Privity of contract is not required for a plaintiff to sue for strict liability. The doctrine applies even if the injured party had no contractual relations with the defendant. The damages recoverable in a strict liability action vary by jurisdiction.

12 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Strict Liability (continued) Damages recoverable for personal injuries –May be dollar limited Property damage recoverable Economic loss rarely granted Punitive damages are often awarded if the plaintiff proves that the defendant either: –Intentionally injured him or her; or –Acted with reckless disregard for his or her safety.

13 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defective product causes injury Negligence lawsuit Strict liability Consumer Retailer Distributor Manufacturer (negligent) Defective product Defendant All in the chain of distribution are liable Negligent party is liable Doctrines of Negligence and Strict Liability Compared

14 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defective Product To recover for strict liability, the injured party must first show that the product that caused the injury was somehow defective. Plaintiffs can allege multiple product defects in one lawsuit.

15 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defective Product (continued) The most common types of defects: Manufacture Design Packaging Failure to Warn

16 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defect in Manufacture Defect that occurs when the manufacturer fails to: 1. Properly assemble a product 2. Properly test a product, or 3. Adequately check the quality of a product

17 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defect in Design Defect that occurs when a product is improperly designed. Design defects include: 1. Toys designed with removable parts that could be swallowed by children. 2. Machines and appliances designed without proper safeguards. 3. Trucks designed without a backup warning device.

18 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defect in Design (continued) In evaluating the adequacy of a product’s design, the courts apply a risk-utility analysis –Gravity of the danger posed by the design –Likelihood that injury will occur –Availability and cost of producing a safer design –Social utility of the product

19 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Crashworthiness Doctrine The courts have held that automobile manufacturers are under a duty to design automobiles so they take into account the possibility of harm from a person’s body striking something inside the automobile in the case of a car accident.

20 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Failure to Warn Defect that occurs when a manufacturer does not place a warning on the packaging of products that could cause injury if the danger is unknown. Proper and conspicuous warning insulates all in chain of distribution

21 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defect in Packaging Defect that occurs when a product has been placed in packaging that is insufficiently tamperproof. –Manufacturers owe a duty to design and provide safe packages for their products. –Failure to meet this duty subjects the manufacturer and others in the chain of distribution of the product to strict liability.

22 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Other Product Defects Failure to provide adequate instructions Inadequate testing of products Inadequate selection of component parts or materials Improper certification of the safety of a product

23 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Generally Known Dangers Supervening Event Assumption of the Risk Misuse of the Product Statute of Limitations Government Contractor Defense Contributory & Comparative Negligence Defenses to Product Liability

24 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defenses to Product Liability (continued) Generally Known Dangers –Certain products are inherently dangerous –Products are known to the general population to be so –Sellers are not strictly liable for failing to warn of generally known dangers.

25 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defenses to Product Liability (continued) Government Contractor Defense –Contractor who was provided specifications by the government is not liable for any defect in the product that occurs as a result of those specifications –Product must conform to specifications –Contractor must have warned of known defects or dangers

26 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defenses to Product Liability (continued) Assumption of Risk –Defendant must prove that the plaintiff knew and appreciated the risk –the plaintiff voluntarily assumed the risk

27 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defenses to Product Liability (continued) Misuse of the Product –Relieves the seller of product liability if the user abnormally misused the product. –Products must be designed to protect against foreseeable misuse.

28 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defenses to Product Liability (continued) Correction of a Product Defect –Manufacturer must notify purchasers and users –Must correct defect –Usually achieved through recall and repair or replacement

29 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Defenses to Product Liability (continued) Supervening Event –Alteration or modification of a product by a party that absolves seller from strict liability –Modification must be made after it leaves seller’s possession –Alteration must cause injury

30 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Statute of Limitations Statute that requires an injured person to bring an action within a certain number of years from the time that he or she was injured by the defective product Limitation period set by each state Defendant relieved of liability if action not brought within limitation period

31 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Statute of Repose Limits the seller’s liability to a certain number of years from the date when the product was first sold Varies from state to state

32 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Contributory Negligence Person who is injured by a defective product Injured party has been negligent – contributed to his or her own injuries Cannot recover from the defendant.

33 © 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Comparative Negligence Plaintiff is contributorily negligent for his or her injuries Responsible for a proportional share of the damages Damages proportioned between plaintiff and defendant


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