Dynamic business law 4e kubasek 4e CH10 1

Chapter 10 Product Liability Copyright © 2017 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGrawHill Education Overview • LO10-1: What are the theories of liability in product liability cases? • LO10-2: What is market share liability? 10-2 Chapter 10 Hypothetical Case • Halftime in the football game on a Sunday afternoon means time for food at Charlie Masterson's house, and Masterson is ready for his favorite, a tuna sandwich and potato chips Particularly hungry today, Masterson spreads a full can of his preferred brand of tuna, Turkey of the Ocean, on whole wheat bread The third quarter is about to start, so Charlie rushes to the living room to cheer his favorite multi-millionaires in uniform to victory Three bites into his tuna sandwich, Masterson experiences a sickening crunch in his mouth He spits out remnants of the tuna sandwich, portions of at least one pearly white molar, and a piece of glass that undoubtedly came from the tuna can After recovering from the initial shock, Masterson rushes to the kitchen to retrieve the empty tuna container In fine print on the can is the name and location of the tuna manufacturer, Turkey of the Ocean Tuna Processing Company, Inc., of Seattle, Washington Just last week, Masterson had purchased the can of tuna from his local Food Panther grocery store in Portland, Oregon • After the pain and emotional shock of the episode, as well as over $2,000 in dental treatment, Masterson wants to sue both the manufacturer of the tuna, Turkey of the Ocean Tuna Processing Company, Inc., and the grocery store where he purchased the tuna, Food Panther Grocery Stores, Incorporated Assess the likelihood of Masterson recovering from the tuna manufacturer and/or the grocery store 10-3 Chapter 10 Hypothetical Case • As Chapter 10 indicates, in a strict product liability action, courts may hold a manufacturer, distributor, or retailer liable for any reasonably foreseeable injury to a party, including the buyer, the buyer's family, guests, friends, and foreseeable bystanders In a strict product liability lawsuit, the actions of the manufacturer or seller are irrelevant Duty and breach of duty are also irrelevant; instead, strict liability focuses on the product The sole issue before the court in a strict liability action is whether the product that injured the plaintiff was in an unreasonably dangerous, defective condition when it was sold • As part of the plaintiff's burden of proof in a strict product liability action, should not the plaintiff be required to demonstrate fault (for example, negligence or recklessness) on the part of the defendant in the design, manufacture and/or sale of the product? Why or why not? 10-4 Theories of Liability for Defective Products: Overview • Three theories of recovery for product liability: • Negligence • Strict liability • Breach of warranty • A product may be defective through: • Manufacturing defect • Design defect • Inadequate warnings 10-5 Proof of Negligence • The plaintiff must show: • Defendant manufacturer/seller owed duty of care to plaintiff • Defendant breached duty of care by supplying defective product • Defendant's breach of duty caused plaintiff's injury • Plaintiff suffered actual injury 10-6 Negligence Summary • Who can sue: Any foreseeable plaintiff • Who can be liable: Any commercial supplier in distribution chain • Defenses available include: • • • • • Assumption of the risk Comparative/contributory/modified comparative negligence Misuse State-of-the-art Compliance with federal laws • Damages recoverable: • Personal injuries • Property damages 10-7 Proof of Strict Liability • The plaintiff must show: • Product defective when sold • Product was so defective that it was unreasonably dangerous • Product caused plaintiff's injury 10-8 Strict Liability Summary • Who can sue: Anyone harmed • Who can be liable: Any commercial supplier in distribution chain • Defenses available include: • Product misuse • Assumption of the risk • Lapse of time • Damages recoverable: • Personal injuries • Property damages 10-9 Breach of Warranty Summary • Warranty: A guarantee or binding promise regarding a product • Who can sue: Privity required (injured party must be buyer, buyer's family, or buyer's guest) • Who can be liable: Any seller • Defenses available include: • Assumption of the risk • Product misuse • Disclaimer • Damages recoverable: Economic only 1010 Proof of Express Warranty • Plaintiff must show: • Representation was basis for the bargain • Breach of representation 1011 Implied Warranty of Merchantability and Implied Warranty of Fitness for a Particular Purpose • Warranty of merchantability: Plaintiff must show: • Goods are fit for purpose for which they are sold and used, i.e., goods are fit for ordinary use • Warranty of fitness for a particular purpose: Plaintiff must show: • The seller had knowledge of the customer's specific purpose • Customer relies upon seller's expertise to select product that will satisfy customer's particular purpose 1012 Market Share Liability Theory • When plaintiffs cannot trace product to any particular manufacturer, and several manufacturers produced same product, court may use theory to impose portion of fault on number of manufacturers 1013 Chapter 10 Hypothetical Case • Samantha Abramowitz, a student at Orange Community College, is hungry and late for a 12:00 business law class She stops at Harry's Hop-In, a local convenience store, in a hurry to find lunch and determined to arrive at the class no later than 12:15 Abramowitz purchases a pre-packaged barbeque sandwich, heats it in the microwave, and hurriedly heads for her car Upon arriving at the college parking lot, Abramowitz unwraps the cellophane from her sandwich, bites down, and hears a sickening cracking sound Looking in her rear-view mirror, she realizes in horror that her front two teeth are broken Upon examining the sandwich, Abramowitz finds the remnants of her front two teeth, barbeque, and a hard, rounded substance Closer examination leads her to conclude it is a ½-inch-long portion of a pig bone Having learned to preserve evidence in her business law class, Abramowitz retains the remainder of the sandwich, her broken teeth, the receipt from the convenience store (documenting that one barbeque sandwich had been purchased from Harry's Hop-In Convenience Store at 12:05 p.m on August 28), and the sandwich's cellophane wrapping, depicting the name of the manufacturer of the sandwich, The Potbellied Pig Barbeque Company • Does Abramowitz have a viable cause of action against the convenience store? Does she have a viable cause of action against the sandwich maker? Is it relevant that bone is a natural part of the pig? Is it relevant whether the sandwich manufacturer complied with industry standards (including product safety standards) in the production of the sandwich? 1014 Chapter 10 Hypothetical Case • Quartile Demolition was awarded a contract to demolish a building on a busy New York City street to make way for a new skyscraper During the demolition of the building, the chain holding the wrecking ball broke loose The wrecking ball's momentum sent it into a neighboring building, where it knocked a large hole in a space that contained a day care center One child was killed and several others were injured by flying debris • Is this a case of negligence or strict liability? Explain your response in detail 1015 ... on number of manufacturers 10 13 Chapter 10 Hypothetical Case • Samantha Abramowitz, a student at Orange Community College, is hungry and late for a 12 :00 business law class She stops at Harry's... Damages recoverable: Economic only 10 10 Proof of Express Warranty • Plaintiff must show: • Representation was basis for the bargain • Breach of representation 10 11 Implied Warranty of Merchantability...Overview • LO10 -1: What are the theories of liability in product liability cases? • LO10-2: What is market share liability? 10 -2 Chapter 10 Hypothetical Case • Halftime in