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Product LiabilityLPP 255

Pat CihonSyracuse University -- SoM -- LPP

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Overview

Sellers’ or Manufacturers’ Liability for products made or sold by them

Politically Controversial Concern over “Litigation Explosion” --

McDonald’s Coffee Suit

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Agenda

Contract-Based and Tort-Based Theories Requirements and Details of Theories Damages Available under Each Theory

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CONTRACT-BASED THEORIES

Express Warranty Implied Warranty of Merchantability Implied Warranty of Fitness of Purpose

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EXPRESS WARRANTY

Art. 2-313 of Uniform Commercial Code Requirements:

Any Affirmation of Fact or Description of Product;

Providing Model or Sample of Product “Basis of the Bargain”

Becomes Promise or Warranty that Product meets Description, Model or Sample

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IMPLIED WARRANTY OF MERCHANTABILITY

Article 2-314 of Uniform Commercial Code Requirements:

Merchant: Ordinary Business of Selling Products

Product Sold in Course of Business Promise Implied by Law that Product Will

Meet Normal Consumer Expectations or Pass Under Trade Description

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IMPLIED WARRANTY OF FITNESS OF PURPOSE

Article 2-315 of Uniform Commercial Code Requirements:

Consumer Makes Retailer Aware of Purpose For Seeking Product

Retailer Recommends Product For Purpose Consumer Relies on Recommendation to Purchase

Product Promise Implied by Law that Product Will Be Fit

For Purpose of Consumer

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TORT-BASED THEORIES

Negligence Strict Liability

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NEGLIGENCE

Requirements: Duty of Care Owed by Seller / Manufacturer Seller / Manufacturer Breaches Std. of Care Injury or Damages Suffered Breach of Std. of Care was Proximate Cause

Seller or Manufacturer at Fault for Failing to Exercise Reasonable Care In Making / Selling Product

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STRICT LIABILITY

Section 402A of Restatement of Torts Requirements:

Product Sold in Ordinary Course of Business Product Has Condition that Poses Unreasonable

Danger to Consumer Condition Existed When Product Left Manufacturer Condition Causes Injury or Damage

Seller and Manufacturer Liable for Injuries Caused by Product -- No Fault Liability

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TYPES OF DAMAGES

Economic Damages - Contract Theories Direct Economic Damages - Basis of Bargain Indirect Economic Damages - Lost Profits

Personal Injury Damages-Tort & Contract Medical Injuries Property Damage

Punitive Damages - Tort Theories Only

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Disclaimers and Remedy Limitations

Disclaimer -- Attempt to Avoid Liability Under Particular Theory Must Be Reasonable -- Allow Consumer Some Remedy Only Implied Warranties Disclaimed in Consumer

Setting Remedy Limitation -- Attempt to Limit Liability

for Types of Damages Only if Reasonable Consumer Clearly Aware of Limitation