1. © 2004 West Legal Studies in Business A Division of Thomson Learning 1 Chapter 6 Strict Liability and Product Liability Chapter 6 Strict Liability and Product Liability

2. © 2004 West Legal Studies in Business A Division of Thomson Learning 2 §1: Strict Liability Theory of strict liability started with Rylands v. Fletcher (1868 England). Defendant’s liability for strict liability is without regard to: Fault, Foreseeability, Standard of Care or Causation. Liability is based on abnormally dangerous activities. Theory of strict liability started with Rylands v. Fletcher (1868 England). Defendant’s liability for strict liability is without regard to: Fault, Foreseeability, Standard of Care or Causation. Liability is based on abnormally dangerous activities.

3. © 2004 West Legal Studies in Business A Division of Thomson Learning 3 Abnormally Dangerous Activities Defendant is strictly liable for an “abnormally dangerous activity” if:  Activity involves serious potential harm;  Activity involves high degree of risk that cannot be made safe; and  Activity is not commonly performed in the community or area. Defendant is strictly liable for an “abnormally dangerous activity” if:  Activity involves serious potential harm;  Activity involves high degree of risk that cannot be made safe; and  Activity is not commonly performed in the community or area.

4. © 2004 West Legal Studies in Business A Division of Thomson Learning 4 Wild Animals Persons who keep wild animals are strictly liable for injuries caused by the beast. Persons who keep domestic animals are liable if the owner knew or should have known that animal was dangerous. Persons who keep wild animals are strictly liable for injuries caused by the beast. Persons who keep domestic animals are liable if the owner knew or should have known that animal was dangerous.

5. © 2004 West Legal Studies in Business A Division of Thomson Learning 5 §2: Product Liability Product Liability is not a new tort. Liability can be based on:  Negligence;  Misrepresentation; or  Strict Liability;  Warranty Theory. Product Liability is not a new tort. Liability can be based on:  Negligence;  Misrepresentation; or  Strict Liability;  Warranty Theory.

6. © 2004 West Legal Studies in Business A Division of Thomson Learning 6 Product Liability (Negligence) Negligence-based product liability is based on a manufacturer’s breach of the reasonable standard of care and failing to make a product safe. Case 6.1: Jarvis v. Ford Motor Co. (2002) Negligence-based product liability is based on a manufacturer’s breach of the reasonable standard of care and failing to make a product safe. Case 6.1: Jarvis v. Ford Motor Co. (2002)

7. © 2004 West Legal Studies in Business A Division of Thomson Learning 7 Product Liability (Negligence) Manufacturer must exercise “due care” in:  Designing products;  Manufacturing and Assembling Products;  Inspecting and Testing Products; and  Placing adequate warning labels. Manufacturer must exercise “due care” in:  Designing products;  Manufacturing and Assembling Products;  Inspecting and Testing Products; and  Placing adequate warning labels.

8. © 2004 West Legal Studies in Business A Division of Thomson Learning 8 Product Liability (Negligence) Manufacturers who violate state or federal law in the manufacture or labeling of a product, may be negligent per se. No privity of contract required between Plaintiff and Manufacturer. Liability extends to any person’s injuries caused by a negligently made (defective) product. Manufacturers who violate state or federal law in the manufacture or labeling of a product, may be negligent per se. No privity of contract required between Plaintiff and Manufacturer. Liability extends to any person’s injuries caused by a negligently made (defective) product.

9. © 2004 West Legal Studies in Business A Division of Thomson Learning 9 Product Liability (Misrepresentation) Occurs when fraud committed against consumer or user of product. Fraud must have been made knowingly or with reckless disregard for safety. Plaintiff does not have to show product was defective. Occurs when fraud committed against consumer or user of product. Fraud must have been made knowingly or with reckless disregard for safety. Plaintiff does not have to show product was defective.

10. © 2004 West Legal Studies in Business A Division of Thomson Learning 10 §3: Strict Product Liability Manufacturers liable without regard to fault based on public policy:  Consumers must be protected from unsafe products;  Manufacturers should be liable to any user of the product;  Manufacturers, sellers and distributors can bear the costs of injuries. Manufacturers liable without regard to fault based on public policy:  Consumers must be protected from unsafe products;  Manufacturers should be liable to any user of the product;  Manufacturers, sellers and distributors can bear the costs of injuries.

11. © 2004 West Legal Studies in Business A Division of Thomson Learning 11 Strict Product Liability Requirements for strict liability:  Product is unreasonably dangerous when sold Defendant sells the product;  Plaintiff injured by use or consumption of product and defective condition is the proximate cause of injury. Case 6.2: Greenman v.Yuba Power Products (1962). Requirements for strict liability:  Product is unreasonably dangerous when sold Defendant sells the product;  Plaintiff injured by use or consumption of product and defective condition is the proximate cause of injury. Case 6.2: Greenman v.Yuba Power Products (1962).

12. © 2004 West Legal Studies in Business A Division of Thomson Learning 12 Requirements for Strict Product Liability Plaintiff must show product was so “defective” it was “unreasonably dangerous”:  Product must be in defective condition when sold.  Defendant is in the business of selling the product.  Product must be unreasonably dangerous.  Plaintiff must be physically harmed  Defective condition must be proximate cause of injury.  Goods are in substantially same condition. Plaintiff must show product was so “defective” it was “unreasonably dangerous”:  Product must be in defective condition when sold.  Defendant is in the business of selling the product.  Product must be unreasonably dangerous.  Plaintiff must be physically harmed  Defective condition must be proximate cause of injury.  Goods are in substantially same condition.

13. © 2004 West Legal Studies in Business A Division of Thomson Learning 13 Market Share Liability Theory of liability when multiple Defendants contributed to manufacture of defective product. Liability of each Defendant is proportionate to the share of the market held by each respective Defendant. Theory of liability when multiple Defendants contributed to manufacture of defective product. Liability of each Defendant is proportionate to the share of the market held by each respective Defendant.

14. © 2004 West Legal Studies in Business A Division of Thomson Learning 14 Product Defects Three types of product defects:  Manufacturing defects.  Design defects.  Warning Defects Three types of product defects:  Manufacturing defects.  Design defects.  Warning Defects

15. © 2004 West Legal Studies in Business A Division of Thomson Learning 15 Strict Liability: Manufacturing Defects Occurs when a product “departs from its intended design even though all possible care was exercised in the preparation and marketing of the product.”

16. © 2004 West Legal Studies in Business A Division of Thomson Learning 16 Strict Liability: Design Defects Occurs when the “foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative... and the omission of the alternative design renders the product not reasonably safe.”

17. © 2004 West Legal Studies in Business A Division of Thomson Learning 17 Strict Liability: Warning Defects A product may be defective because of inadequate warnings or instructions. Liability based on foreseeability that proper instructions/labels would have made the product safe to use. Case 6.3: Liriano v. Hobart Co. (1999). A product may be defective because of inadequate warnings or instructions. Liability based on foreseeability that proper instructions/labels would have made the product safe to use. Case 6.3: Liriano v. Hobart Co. (1999).

18. © 2004 West Legal Studies in Business A Division of Thomson Learning 18 Warning Defects There is no duty to warn about obvious or commonly known risks. Seller must also warn about injury due to product misuse. Key is whether misuse was foreseeable. There is no duty to warn about obvious or commonly known risks. Seller must also warn about injury due to product misuse. Key is whether misuse was foreseeable.

19. © 2004 West Legal Studies in Business A Division of Thomson Learning 19 §4: Defenses to Product Liability Assumption of Risk. Product Misuse (Plaintiff does not know the product is dangerous for a particular use). Contributory/Comparative Negligence.  Case 6.4: Smith v. Ingersoll-Rand Co (2000). Commonly known dangers. Statutes of Limitation. Assumption of Risk. Product Misuse (Plaintiff does not know the product is dangerous for a particular use). Contributory/Comparative Negligence.  Case 6.4: Smith v. Ingersoll-Rand Co (2000). Commonly known dangers. Statutes of Limitation.

20. © 2004 West Legal Studies in Business A Division of Thomson Learning 20 Law on the Web American Law Institute. American Law Institute Horvitz and Levy. Horvitz and Levy Tobacco Product Liability. Tobacco Product Liability. Legal Research Exercises on the Web. Legal Research Exercises on the Web American Law Institute. American Law Institute Horvitz and Levy. Horvitz and Levy Tobacco Product Liability. Tobacco Product Liability. Legal Research Exercises on the Web. Legal Research Exercises on the Web