WARRANTIES AND PRODUCTS LIABILITY

WARRANTIES under the UCC An assurance from seller that goods meet certain standards An assurance from seller that goods meet certain standards May be Express or Implied May be Express or Implied May relate to ownership or quality May relate to ownership or quality Part of the sales contract Part of the sales contract

WARRANTIES OF QUALITY Express Warranties May include: Express Warranties May include: all affirmations of fact or promises made about the goods all affirmations of fact or promises made about the goods description of goods description of goods model or sample of goods model or sample of goods

Warranty must have been part of the Basis of Bargain

Plaintiff must prove Seller made an express warranty Seller made an express warranty The express warranty was breached The express warranty was breached The breach caused injury to plaintiff The breach caused injury to plaintiff

Implied Warranties Merchantability: fit for the ordinary purpose for which the product was intended Merchantability: fit for the ordinary purpose for which the product was intended Must prove: Must prove: Merchant sold product Merchant sold product Product was not merchantable at the time of sale Product was not merchantable at the time of sale Plaintiff was injured by the product Plaintiff was injured by the product Defect was the cause of the injury Defect was the cause of the injury

Implied Warranties Fitness for a Particular Purpose Fitness for a Particular Purpose Must prove: Must prove: B has a special need B has a special need S has reason to know of B’s particular purpose S has reason to know of B’s particular purpose S makes statement that goods will the serve this purpose S makes statement that goods will the serve this purpose B relies on S’s skill & judgment to purchase B relies on S’s skill & judgment to purchase

Comment 2, §2-315: A "particular purpose" differs from the "ordinary purpose" for which the goods are used in that it envisages a specific use by the buyer which is peculiar to the nature of his business whereas the ordinary purposes for which goods are used are those envisaged in the concept of merchantability and go to uses which are customarily made of the goods in question. For example, shoes are generally used for the purpose of walking upon ordinary ground, but a seller may know that a particular pair was selected to be used for climbing mountains.

Implied Warranty could also arise from: Course of dealing Course of dealingOr Usage of trade Usage of trade

Inconsistent warranties – Priorities: Fitness for a particular purpose Fitness for a particular purpose Express warranty Express warranty Custom or usage of trade Custom or usage of trade Merchantability Merchantability

Disclaimers are implied by Exclusionary language Exclusionary language Inspection of goods Inspection of goods Condition is consistent with course of dealing or trade usage Condition is consistent with course of dealing or trade usage

LIABILITY TO THIRD PARTIES Common Law: Privity of contract Common Law: Privity of contract UCC alternatives-who can sue? UCC alternatives-who can sue? Buyer, family, guests in home, Buyer, family, guests in home, Natural persons reasonably expected to use (personal injury only) Natural persons reasonably expected to use (personal injury only) Any person (including corporation) who would reasonably be expected to use (personal injury and property damage) Any person (including corporation) who would reasonably be expected to use (personal injury and property damage)

TORTS ACTIONS USED IN PRODUCTS LIABILITY CASES Negligence Negligence Strict Liability Strict Liability

NEGLIGENCE Elements Elements Duty to use reasonable care Duty to use reasonable care Breach of duty Breach of duty Injury or loss Injury or loss Proximate cause Proximate cause Defenses Defenses Assumption of risk Assumption of risk Contributory negligence Contributory negligence Comparative negligence Comparative negligence

STRICT LIABILITY §402A of the Restatement of Torts 2d Elements Elements Defective product Defective product Unreasonably dangerous Unreasonably dangerous Defective at time of sale Defective at time of sale Condition is substantially unchanged Condition is substantially unchanged Seller is in the business of selling the product Seller is in the business of selling the product Injury or loss Injury or loss Proximate cause Proximate cause Defenses Defenses Assumption of risk Assumption of risk (Some states) comparative negligence (Some states) comparative negligence

WEBB V. ZERN Webb purchased a quarter-keg of beer from distributor, Zern. Webb purchased a quarter-keg of beer from distributor, Zern. That same day his brother tapped the keg & about a gallon of beer was drawn from it. That same day his brother tapped the keg & about a gallon of beer was drawn from it. Later that evening when Webb entered the room, the keg exploded, severely injuring him. Later that evening when Webb entered the room, the keg exploded, severely injuring him. Which tort actions? Which tort actions?

WEBB V. ZERN- Add to the facts Assume the manufacturer of the keg is out of business. Assume the manufacturer of the keg is out of business. This is an action against the distributor. This is an action against the distributor. Assume the keg was manufactured in a defective manner. Assume the keg was manufactured in a defective manner. Assume this was not the distributor’s fault Assume this was not the distributor’s fault He handled the keg in a proper manner He handled the keg in a proper manner He could not have prevented this. He could not have prevented this. Latent defect-inspection would not have revealed. Latent defect-inspection would not have revealed. Which tort actions? Which tort actions?

WHAT MAKES A PRODUCT DEFECTIVE? A manufacturing defect A manufacturing defect A design defect A design defect Defects caused by inadequate warnings or instructions Defects caused by inadequate warnings or instructions

WARNINGS, LABELS AND INSTRUCTIONS Courts have held that a product is defective if adequate warnings are not provided with the product upon sale. Courts have held that a product is defective if adequate warnings are not provided with the product upon sale. This extends to all written materials connected with the product including instructions for use and maintenance. This extends to all written materials connected with the product including instructions for use and maintenance.

There is a clear duty to warn of a danger in that product if: 1. The product is dangerous 1. The product is dangerous 2. This fact is or should be known to the manufacturer or seller 2. This fact is or should be known to the manufacturer or seller 3. The danger is not one which is obvious or known, or readily discoverable by the user and is not one which arises only because the product is put to some unforeseeable unexpected use 3. The danger is not one which is obvious or known, or readily discoverable by the user and is not one which arises only because the product is put to some unforeseeable unexpected use

NEGLIGENCE STRICT LIABILITY BREACH OF WARRANTY (Express) (Implied) SOURCE OF LAW? WHO CAN SUE? WHO CAN BE HELD LIABLE? STATUTE OF LIMITATIONS DEFENSES

PRODUCTS LIABILITY PROBLEM Waldo purchased a toaster from Acme Appliances. It was manufactured by Testy Toaster Co. When Waldo used the toaster, it caught fire, causing injury & damage. From whom can Waldo recover in a negligence action? A strict liability action? A breach of warranty action in each of the following independent scenarios? Waldo purchased a toaster from Acme Appliances. It was manufactured by Testy Toaster Co. When Waldo used the toaster, it caught fire, causing injury & damage. From whom can Waldo recover in a negligence action? A strict liability action? A breach of warranty action in each of the following independent scenarios? Assume the toaster was manufactured in a defective manner, and that Acme carefully inspected the toaster, handled it properly, and did nothing to alter its condition. Assume the toaster was manufactured in a defective manner, and that Acme carefully inspected the toaster, handled it properly, and did nothing to alter its condition.

Assume that the toaster was manufactured properly, but Acme made adjustments to it. Assume that the toaster was manufactured properly, but Acme made adjustments to it. Assume the toaster was manufactured properly, and Acme made no adjustments to it, but Waldo adjusted it so that it would get hotter. Assume the toaster was manufactured properly, and Acme made no adjustments to it, but Waldo adjusted it so that it would get hotter. You think this is Waldo’s fault, but is there still an argument he can make? You think this is Waldo’s fault, but is there still an argument he can make?