Warranties and Product Liability OBE 118, Section 3, Fall 2004 Professor McKinsey

Warranties A contractual theory of responsibility for sellers for how a good performs Often the UCC is involved Two Categories of warranties: 3 ways to create: 3 types: Statement of fact Description of goods Samples or models

Express Warranties Opinions and Puffing are not warranty Statement of fact that a product will meet a standard or do a specific thing. Examples (yes or no?) This blade will last for over 100 hours Will kill any weed you spray it on I think this car is the best I think this car will last another 100,000 miles without any major maintenance This is the best product on the market

Implied Warranties Title Warranties – with nearly all sales of goods Implied Warranty of Merchantability – only possible when merchant seller Implied Warranty of Fitness for a Particular Purpose – certain circumstances

Implied Title Warranties Three types: Good Title – sellers owns the goods No Liens – good is free of claims by others No Infringements – good is free from Intellectual Property(IP) claims

Implied Warranty of Merchantability When a merchant sells a good, it is warranted to be fit for use in general purpose “ ” Goods must be reasonably fit for the ordinary purposes for which such goods are used, meet label expectations and be safe Victim must have harm caused by the breach of warranty

Implied Warranty of Fitness for a Particular Purpose Arises when any seller recommends goods to the buyer for a particular purpose: 1) Seller aware of particular use 2) Buyer relies on seller’s knowledge or skill 3) Seller aware of buyer’s reliance 4) Seller recommends goods for particular use

Handling Warranties A warranty creates terms in the contract Warranty failure is a potential breach of contract The act of ensuring no warranties is called “disclaiming” Warranty disclaimers often have to meet requirements to be effective

Disclaiming Warranties Merchantability Conspicuous disclaimer with “ ” in it Fitness for a Particular Purpose Use the words: “ ” and “ ”

Product Liability Contractual theory- using warranties (express and implied) within a contract Negligence theory- was product negligently made or sold? Strict liability theory – does product fall under the strict liability doctrine

Product Liability using Negligence To prove negligence the part must show a breach of the duty of care. Proximate cause may limit the number of people in the chain of commerce that can be held liable Key part is finding a “smoking gun” or other evidence showing fault.

PL based on Strict Liability 1. D sold product in defective condition 2. D normally in business of selling product 3. Product unreasonably dangerous* 4. P suffers physical harm through use of product 5. Defective condition is proximate cause 6. No substantial changes to product since sold

PL using Strict Liability Theory Advantages: lots of possible parties to sue, no need to show fault Disadvantages: has to meet one of three types of “defective products”