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2 I.The “Common Law” Problem A.Contract Liability »Requires some type of ______________ »Only parties ________ a contract can sue for breach »Contract.

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Presentation on theme: "2 I.The “Common Law” Problem A.Contract Liability »Requires some type of ______________ »Only parties ________ a contract can sue for breach »Contract."— Presentation transcript:

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2 2 I.The “Common Law” Problem A.Contract Liability »Requires some type of ______________ »Only parties ________ a contract can sue for breach »Contract can limit liability for breach, especially for “________________ damages” –Personal injuries generate consequential damages B.Tort Liability 1.Intentional tort »Must show intent to do ___________________ »Must show that act resulted in deprivation of legal rights 2.Negligence (unintentional tort) »Must prove Plaintiff was within scope of _________________ »Must prove what Defendant did that was careless 3.If the exact act that led to the damages cannot be proven, no tort recovery

3 3 II.UCC Warranties A.General 1.Imposed “by law” – automatic if preconditions met 2.Can be _________________________, “waived” by buyer »Standard practice for seller to disclaim most 3.Remedies (for breach of warranty) can be limited by agreement »Standard practice to limit remedy to________________ »Standard practice to exclude consequential damages »Cannot exclude personal injury damages in contract for ___________________________ B.Breach of Warranty = Breach of Contract 1.Claims relating to ______________________________ is for breach of some warranty 2.Not all warranties are made by all sellers

4 4 C.Warranty of title(all sellers) 1.Guarantees legal right to __________________________ »One can sue a thief for breach of title warranty »Free from security interests, liens good against the buyer 2.Also guarantees there is no violation of _____________________. »This warranty is given ________________ IF the goods were produced in accordance to plans/specifications provided by the Buyer »Requires person claiming breach to offer defense of any litigation to the warrantor (patent, copyright, etc.)

5 5 D.Express Warranty – Made By ALL Sellers 1.ANY statement concerning a._____________________ of goods b.Particular characteristics of goods, including performance c.As would be understood by reasonable person under the circumstances 2.Does not require _____________________________ by seller 3.Includes display / demonstration of: »Sample »Model »Drawings, diagrams, etc. “Express warranty” that goods will conform to sample, etc., with adjustments necessary to fit the circumstances (E.g. if scale model shown, goods will be full size) 4.Disclaimer = can disclaim _____________________________ or written representations not included in final writing

6 6 E.Warranty of Merchantability 1.Made only by sellers _________________________ 2.Covers the sale of food or drink for on- or off-premises 3.Includes – Goods a.Pass without objection in the trade under the contract description b.in the case of __________________, are of fair average quality within the description c.are fit for the ______________________ for which such goods are used d.run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved e.are adequately contained, packaged, and labeled as the agreement may require f.conform to the promises or affirmations of fact made on the container or label if any 4.Other warranties may arise from ____________________ or usage of the trade

7 7 F.Fitness for a Particular Purpose (by any Seller) 1.Requires that the Seller choose the goods a.Knowing the ___________________________ for the goods »Type of use »Location of use »Conditions »Result desired, etc. »Delivery time/location b.Seller _______________________ with that knowledge c.Need not say “this will do for what you need” That is implied in the transaction 2.Fitness warranty applies even if the express warranties (label, etc.) ______________________ the buyer’s needs or the implied fitness representation

8 8 G.Waiver of warranties 1.General rule = all warranties can be disclaimed / waived a.Some express warranties (description, etc.) cannot be waived without defeating the existence of agreement b.Merchantability can be waived orally or in writing (1)If in writing, must be ___________________ (2)Must specifically use term “merchantable” or “merchantability” c.Fitness warranty ____________ waived in writing that is conspicuous (need not use term “fitness”) d.All implied warranties waived by _____________ 2.Disclaimer is not valid if enforcement would be “______________” »Disclaimer of consequential damages for personal injury in consumer sale is unconscionable

9 9 III.STRICT LIABILITY IN TORT A.“Ultrahazardous” Activity 1.Started with artificial mill pond (lake) when waterpower ran factories. a.“Impounded” water = most powerful agency known b.Artificial impoundment (dams, etc.) most dangerous c.Court held owner liable for all injuries, without regard to degree of care taken, information known, etc. 2.Easily expanded to other activities or things that are inherently dangerous, no matter how careful anyone is »Explosives (including gasoline) 3.Expanded to things that were dangerous if they did not meet common expectations »Building scaffolding »60-cup coffee pot with weak leg »Automobile with defective (wooden) wheel spokes

10 10 B.Theory partly based on economics 1.Activity is of a kind that is ____________________ 2.Activity can not be made totally safe, even with great care 3.Injured victim _____________________ for the general benefit derived from the activity 4.Person held liable can “_________________” by buying insurance, raising prices, etc. C.Not everything that causes some injury is automatically “ultrahazardous”

11 11 IV.PRODUCTS LIABILITY Restatement (Second) Torts, § 402A: (1)One who sells any product in a defective condition unreason- ably 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 his property, if (a)the seller is engaged in the business of selling such a product, and (b)it is expected to and does reach the consumer without substantial change in the condition in which it is sold. (2)The rule stated in Subsection (1) applies although (a) the seller has exercised all possible care in the preparation and sale of his product, and (b)the user or consumer has not bought the product from or entered into any contractual relation with the seller

12 12 A.Subsec. 2 eliminates defenses of 1. _________________________ (negligence defense) 2.No _____________ contract (contract defense) B.“Defective condition” 1.Defect can be in production (not made according to specs) »Almost automatic liability 2.Defect in design – very controversial »Ford Pinto »Chevrolet Corvair »GMC pickups (“side saddle” gas tanks) C.“Unreasonably dangerous” to user 1.More dangerous than ________________________ 2.Foreseeable misuse

13 13 Continuing controversies: 1.Can label warnings preclude seller’s liability? »Apparently not in all cases (see text) 2.What warnings are “adequate” »Inform merely that it is dangerous? »Inform of specific injuries that might occur? »Inform specifically about how injuries might occur? »Are instructions sufficiently written? (assembly, use methods) 3.Many “non-law” considerations: a.Sellers are in better position to spread cost of injuries b.Users must have some degree of responsibility for their own safety and use c.Cost of alternatives may make product too expensive d.“Market share” liability (medications cases)


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