Business Law Report- Product Liability

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Product Liability Law 2011

LAW 3000 BS1 Page 1

EXECUTIVE SUMMARY

The following report discusses the laws relating to product liability and manufacturer product

liability. For the purpose of the report, it is broken up into five main categories of product

liability, namely; Manufacturing defects, design defects, negligence, strict tort liability and

breach of warranty (both express and implied). Cases that had an impact on each form of

product liability are discussed with their details and eventual decision.

Further, in order to analyze the differences in product liability law around the world, we have

used two countries, the United States of America and the United Kingdom. Formanufacturing defects, Australia has been used instead of the UK. This will enable a

comparison on how the law varies from the two countries and how it affects businesses

operating in their markets.

Finally, we will discuss the avenues that an organization can take to defend againstallegations of breach of product liability with each possibility explored into detail.


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Table of Contents

EXECUTIVE SUMMARY ............................................................................................................................ 11. INTRODUCTION ............................................................................................................................... 4

Product liability ................................................................................................................................... 4

History of product liability .................................................................................................................. 4

2. PRODUCT LIABILITY CLAIMS ............................................................................................................ 5

2.1 Manufacturing defects and Design defects ............................................................................ 5

The Law Governing Defective Products ......................................................................................... 6

Planned or unplanned defects ......................................................................................................... 6

Manufacturing defects (Australia) .................................................................................................. 9

2.2 Design defects ......................................................................................................................... 9

Cases for manufacturing defects .................................................................................................. 10

Design Defects in Automotive Products Liability Cases ................................................................ 11

2.3 Negligence ............................................................................................................................. 12

What is negligence? ...................................................................................................................... 12

Negligence Cases ........................................................................................................................... 12

Product liability negligence: USA .................................................................................................. 12

Product liabilities: ENGLAND ........................................................................................................ 13

Comparison of the Product Liability System: Negligence ............................................................. 13

A Comparative Study of Product Liability of the United States .................................................... 14

How to Prove Negligence .............................................................................................................. 15

U.S.-U.K. CASE LAW COMPARISON ............................................................................................ 16

Manufacturing defects: Negligence .............................................................................................. 16

2.4 Strict tort liability .................................................................................................................. 18

Case of Strict product liability ....................................................................................................... 19

2.5 Breach of warranty ............................................................................................................... 21

Express Warranty .............................................................................................................................. 21

Breach of express warranty .......................................................................................................... 22

Breach of Implied warranty .............................................................................................................. 24

3. VARIOUS DEFENSES TO PRODUCT LIABILITY................................................................................. 28

Statute of limitations ........................................................................................................................ 28Statutes of repose ............................................................................................................................. 28


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Federal preemption .......................................................................................................................... 28

Unavoidable danger .......................................................................................................................... 29

Contributory negligence ................................................................................................................... 29

Intervening or superseding negligence ............................................................................................. 30Failure to mitigate ............................................................................................................................. 30

REFERENCES .......................................................................................................................................... 31


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1. INTRODUCTION

Product liabilityThe product liability provisions of the Trade Practices Act allow persons who suffer injury or

loss as the result of a defective product to sue for compensation against the supplier of that

product. A product is defective if it does not meet the level of safety that the public should

expect. The level of safety will be different from case to case and it is ultimately for the court

to decide whether a product is defective or not.

History of product liabilityPrior to the year 1900, American businesses did not need to worry about having product

liability insurance in place in case a consumer sued over a faulty or unsafe product. The

theory of being financially responsible for damages or injury caused by a product and the

need to have a business covered by an insurance plan that catered to liability insurance for

product related claims comes from the industrial revolution.

Before machinery started producing quantities of consumer goods for sale, starting in the

early 1900s, consumers were expected to use their own judgment on if a product was well

made or not. Quality craftsmen existed during this period of time, and they took pride in

making individual products for sale.

As automobiles became popular after World War One, and factory production started

including a labor force interested in running machines, the notion of product liability

insurance started to become a thought that would still take years to develop. During the 1920s

and 1930s early factory machinery did produce flawed items now and then.

Between the early 1900s and the beginning of the 1940s, consumers were buying products

based upon a long-time theory of intelligence. It was assumed that consumers could tell when

a product might be hazardous to buy, own, or operate, and that it was up to each individual

consumer to use common sense while shopping.

World War Two changed how factory productions worked, and added the female population

into the workforce. Factory machinery was streamlined, and more consumer goods enteredinto the marketplace. With the widespread use of electricity in new items becoming the norm,


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there were lots of claims entering into the court systems as consumers came in contact with

faulty electrical products.

By the 1960s our current expanded situation in product issues and the resulting liability was

set into stone. Court laws had changed to allow consumer's access to the manufacturers and

distributors of items being sold that were unsafe. While consumers still shopped with the

attitude that it was up to them to judge a products safety, the laws were letting some lawsuit

plaintiffs receive large amounts of money for claims.

Today, product liability insurance is needed by all businesses that make or offer products to

consumers. The consumer is no longer required to use any judgment at all while using a

product for the purpose that it was intended for. If the products instructions do not make itclear that an electrical appliance should not be used in a bathtub this is a potential claim

problem.

Product liability insurance covers manufacturers, retail suppliers, and store owners if a

product somehow fails to meet the public's standards. Each product sold, including those

from an antique store, must have all hazards announced to the consumer or there is a

possibility that your store will be dealing with a claim.

It is very advisable today, with the product liability situation the way that it is, that all stores,

retail supply sources, and manufacturers have some insurance on hand and available in case a

problem comes up. The courts are known to give consumers suffering damages very large

settlements at times.

2. PRODUCT LIABILITY CLAIMS

2.1 Manufacturing defects and Design defects

When a product injures someone, a court will ask the same sort of questions you would: How

did the injury happen? Was there something wrong with the product? How badly was the

person injured? Although these questions seem simple, the answers can be surprisingly

complex. Courts faced with the question "was there something wrong with the product?" use

two general theories to analyze the facts surrounding the injury: products liability (sometimesreferred to as strict products liability) and negligence. To some extent these theories overlap


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or blend but the basic difference is that products liability focuses primarily on the product

itself while negligence focuses on the manufacturer, seller or distributor's conduct as well as

the product. Both theories look at what was wrong or defective in the product.

The Law Governing Defective Products

Product defects are generally put into three categories: design defects, manufacturing defects

and marketing defects. Marketing defects are defects in the manner in which a product is

sold. This type of defect can include inadequate warnings and/or instructions. Design defects

are in a manner of speaking, intended. This type of defect is inherent in the design of the

product. For example, a chair that is designed with only three legs might be considered

defectively designed because it tips over too easily. Manufacturing defects on the other handare defects that were not intended. For example, a chair might be designed to be stable, but if

it is manufactured with one of the legs not bolted on correctly, the chair would be said to

have a manufacturing defect

Planned or unplanned defects - USA

How do they decide whether the product that injured you was defectively designed or

defectively manufactured? A very simplistic way to look at it is to look at whether the defect

was planned or unplanned. You will find a design defect in every individual product

produced according to the product plan. A manufacturing defect on the other hand is an

unplanned defect. You would generally expect to find only a small percentage of

manufacturing defects in a group of products produced according to a particular plan.

As noted above, manufacturing defects, unlike design defects, are not intended parts of the

product. A manufacturing defect is, in essence, a mistake in the manufacturing process.

Under products liability, even if the manufacturer was extremely careful in manufacturing the

product, it will still be held responsible for any manufacturing defect in the product. It does

not matter, for purposes of product liability, that all possible care was taken in the preparation

and marketing of the product. This is why products liability is sometimes referred to as

liability without fault.

The reason courts impose liability without fault is that it is believed that doing so will

encourage greater investment in product safety than would a fault-based system of liability.As might be expected, this could raise the price of products. The increase in price is an


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intended consequence because it is believed that, as a matter of social policy, consumers who

benefit from products without suffering harm should share, through increases in the prices

charged for those products, the burden of unavoidable injury costs that result from

manufacturing defects. Courts also believe the increase in the price of products with a high percentage of faults will discourage people from buying those products.

In a manufacturing defect case, the plaintiff bears the burden of proving that the product in

question had a fault or defect. Often the manufacturer's design or marketing standards can be

used to show that the product was defective. But proving how or why the flaw or defect

occurred can be a difficult if not impossible proposition for the plaintiff. By eliminating the

issue of manufacturer fault from the plaintiff's case, strict liability is thought to reduce the

transaction costs involved in litigating that issue. Additionally, in many cases manufacturing

defects are caused by the manufacturer's negligence even though plaintiffs may have

difficulty proving it. Strict liability in these cases allows deserving plaintiffs to succeed

notwithstanding what would otherwise be difficult or insurmountable problems of proof.

While liability without fault might not seem entirely fair at first glance, it is important to

remember that manufacturers invest in quality control at consciously chosen levels. The

manufacturer's knowledge that a predictable number of flawed products will enter the market

place entails an element of deliberation about the extent of injury that will result from their

activity. Finally, as a matter of social policy, between the innocent victims who suffer harm

because of defective products and the manufacturers, distributors and sellers of products, the

product sellers are in a better position than are individual users and consumers to insure

against such losses.

Design defects are based on a different theory of liability than manufacturing defects. In

some respects, a manufacturing defect case presupposes that if the product had beenflawlessly manufactured according to its design, the injury would not have occurred. For this

reason, the proof in a manufacturing defect case will often consist in part of the

manufacturer's own design or marketing standards. A design defect case on the other hand

attacks those very standards as inadequate. Because those standards are the very ones that

plaintiffs attack as unreasonable, some sort of independent balancing is necessary.

Some products are not defective merely because they are dangerous. Many risks can be

eliminated only by excessively sacrificing product features that make the products useful and


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desirable. For example, an electric knife that is too dull to injure anyone would also be

useless for its intended purpose. It is generally felt that, as to such risks, users and consumers

are the best equipped to minimize risk. The theory is that it is necessary to strike a balance

between increased costs to consumers associated with holding manufacturers liable for theirdesign choices and having individual consumers bear the risk by not being compensated for

injuries suffered.

In trying to achieve this balance, different courts use different tests to determine whether a

product is defectively designed. To some extent the tests reflect the various states' differing

social policies. Some courts say that a product is defective if it is unreasonably dangerous as

designed. Others say that a product is defective if it is not safe for its intended or reasonably

foreseeable use, as designed. A good example of the difference between these two versions of

design defect is found in the case of cars. Imagine a person injured in an automobile accident

bringing a lawsuit, which alleges that the car he was driving was defective because it was

designed in such a way that it will invariably explode if involved in an impact while going

more than thirty miles per hour. Some courts might argue that the car, as designed, is not

unsafe because it is the action of crashing the car, not the car itself, which causes the injury.

Those courts might say that since the design of the car is not unsafe, it is not defectively

designed. Other courts would say that the car was defective because it was reasonably

foreseeable that a user would crash the car while going more than thirty miles per hour, thus

the manufacturer should design the car with such collisions in mind.

While some courts require that a product be proved both defective in design and

unreasonably dangerous because of the defect, many courts have combined the defect and

danger elements. In those courts a product is defectively designed if it is unreasonably

dangerous because of its design. Courts use various definitions of "unreasonably dangerous"

including a product that is more dangerous than an ordinary consumer would expect, or a

product whose risks are so great that a reasonable seller would not place the product on the

market, or a product design whose risks outweigh its benefits.

- AUSTRALIA

Product liability law in Australia is a rapidly developing area which, in 1992, saw the

introduction of further strict liability legislation modeled on the European Community (EC)

Product Liability Directive of 1985. This legislation supplements other federal strict liability


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are faults or defects which are replicated in every unit of one or more production runs.

Examples of products with design or formulation defects include pharmaceutical products

which pose an unreasonable risk of serious side effects, machinery which poses an

unreasonable risk of injury to workers, and product packaging which is unsuitable inminimizing the risks of injury posed by a dangerous product.

Under Australian law, a product will be considered to be defective in its design or

formulation both in circumstances that the manufacturer is aware of the risk posed by the

particular design or formulation, and in circumstances that the manufacturer could have

discovered the risk with the exercise of reasonable diligence. A product will not necessarily

be considered defective in design or formulation solely because it is incapable of functioning

indefinitely or suffers from wear and tear or ordinary deterioration. Similarly, a product will

not necessarily be considered defective in design or formulation where it causes loss or

damage to abnormally susceptible persons but not to normal persons.

Cases for manufacturing defectsCase Name : White v. Howmedica, Inc.

Court : 8th Circuit Court of Appeals

Date : June 26, 2007

Expert : Medical General Practitioner. Dr. Stephen Noel, M.D.

Issue : Whether the plaintiff s failure to designate an expert by the deadline was fatal in this

manufacturing defect case?

Summary of case : Plaintiff was troubled with his prosthetic knee for 6 years. Dr. Noel

performed exploratory surgery and discovered that the prosthesis had fragmented. Plaintiff

brings product liability suit claiming a manufacturing defect.

Role of the expert : Dr. Stephen Noel was to testify that the malfunctioning prosthetic knee

was caused by a manufacturing defect. He was originally listed as a non-expert witness, but

when the plaintiffs failed to designate an expert in the required amount of time, they offered

Noel s affidavit regarding the defect, and argued that this is a case where the defect w ould be

obvious to a layman.


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Challenges to the Expert's testimony : The defense moved for summary judgment when the

plaintiff s failed to designate an expert by the date required by the court. Although the

plaintiffs submitted an affidavit by Noel relating to the manufacturing defect, it was too late

to designate him as an expert. The Court of Appeal held that the layperson exception did notapply here, as the issue of a manufacturing defect in a prosthetic knee required actual expert

testimony. The Court of Appeals held that the District Court did not abuse its discretion in

excluding Noel s affidavit and granting summary judgment to the defense.

Design Defects in Automotive Products Liability CasesThe basic elements of proof that a plaintiff in a products liability action against the

manufacturer or seller of a car or truck has to establish are that the vehicle as sold contained a

defect that created an unreasonable risk of death, personal injury, or property damage whenthe vehicle was used for its intended purpose and that the defect caused an accident or similar

incident, such as a vehicle fire, that resulted in the loss for which the plaintiff is seeking to

recover damages. Allegations of product defect in automotive products liability cases include

inadequacies in vehicle design, errors in the manufacture of vehicle parts and their assembly

into a completed car or truck, and failure to warn users of a vehicle about dangers inherent in

its use.

Claims of design defect in a motor vehicle can involve allegations about many of the

vehicle's parts or assemblies, singly or in combination. A few past examples include

allegations that the design of a fuel tank holding strap and its connection to the fuel tank

permitted the fuel tank to be pierced in a rear-end collision, that a rear seat belt design created

an unreasonable risk of abdominal injury in an accident, and that the location of the fuel tank

on a pickup truck failed to provide sufficient protection against the risk of fire in a side

collision. A subset of the overall area of design defect involves crashworthiness claims, in

which it is alleged that because manufacturers know that cars and trucks will be involved in

collisions in the ordinary course of their operation, failure to design a vehicle so as to provide

a reasonable degree of protection against injury in the event of an accident is itself a design

defect that creates liability on the part of the manufacturer. Some courts require the plaintiff

in a design defect case to introduce evidence of a feasible alternative design that could have

been employed in the place of the allegedly defective design element in the vehicle, while

other courts allow a jury to consider design defect claims without the necessity for

establishing the existence of such an alternative design.


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Products liability law in the United States, including automotive products liability law, has

evolved for over half a century out of developments in the separate legal systems of each of

the states, rather than as a single unified body of federal law. (The National Highway Traffic

Safety Administration, NHTSA for short, has enacted a body of Federal Motor VehicleSafety Standards, or FMVSS, with which every new motor vehicle must comply, and these

standards may play some part in an automotive products liability case.) While developments

in products liability law in the different states contain many similarities, the legal principles

governing claims of design defect in automotive products liability cases will vary from state

to state .

2.3 Negligence

What is negligence? Negligence is defined as an omission or careless act that causes harm and for which the law

entitles the injured party to compensation. Some of the examples of negligence include:

Serving alcohol to an already intoxicated person who subsequently harms another person due

to their increased inebriation. Careless driving by a delivery person that causes injuries to

another. Failure to ensure that an employee gets home from a company party that served

alcohol. Offering negligent professional advice such as given by a lawyer, accountant, doctor,architect or engineer

Negligence CasesThis case type most resembles an ordinary negligence lawsuit. In addition to duty, defect,

causation and injury, you need to prove that the manufacturer or seller breached its duty to

you. Usually you prove the seller or manufacturer was aware of the defect or should have

been aware based on information known or available to it.

If you're hurt by a defective product you can recover damages for various aspects of your

injury. These include the cost of immediate and future medical care, your lost wages and

future wages, and an amount to compensate you for your pain and suffering, including mental

or emotional distress.

Product liability negligence: USADefinition, a failure to behave with the level of care that someone of ordinary prudence

would have exercised under the same circumstances. The behaviour usually consists of


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actions, but can also consist of omissions when there is some duty to act (e.g., a duty to help

victims of one's previous conduct).

Overview of the primary factors to consider in ascertaining whether the person's conduct

lacks reasonable care are the foreseeable likelihood that the person's conduct will result in

harm, the foreseeable severity of any harm that may ensue, and the burden of precautions to

eliminate or reduce the risk of harm. See Restatement (Third) of Torts: Liability for Physical

Harm 3 (P.F.D. No. 1, 2005). Negligent conduct may consist of either an act, or an

omission to act when there is a duty to do so. See Restatement (Second) of Torts 282

(1965).

Five elements are required to establish a prima facie case of negligence: the existence of alegal duty to exercise reasonable care; a failure to exercise reasonable care; cause in fact of

physical harm by the negligent conduct; physical harm in the form of actual damages; and

proximate cause, a showing that the harm is within the scope of liability.

Product liabilities: ENGLANDPrevious law

A consumer who was injured or whose property was damaged by a product which he had

bought could bring an action against the retailer for damages for breach of contract. Under

the Sales of Goods Act an implied term was included in the contract to the effect that the

goods will be fit for the purpose intended. However, because of the doctrine of privity of

contract no action for damages could be brought by a third party even when it was

foreseeable that a defective product would cause him harm, e.g. a member of the purchaser's

family. In the landmark case Donoghue v. Stevenson the House of Lords acknowledged the

possibility of tort brought by the ultimate consumer against the producer, but as the difficulty

of proving negligence remained, the situation of the consumer remained relatively

unfavoured.

Comparison of the Product Liability System: NegligenceThe law and legal system of the United States evolved from the British legal system. The

development of the product liability system generated three theories, negligence liability,

warranty theory and strict liability in tort. Strict liability began with a landmark case

Greenman v. Yuba Power Products, Inc. in 1963 in California. From then on, many

manufacturing companies in the US were badly knocked to their knees by the product


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liability lawsuits and lost millions of profit. It is estimated the product liability costs

government, manufacturing and insurance companies over $100 billion annually, more than

the profit of the United States top 200 corporations and it continues to mount. Obviously

product liability is one of the most controversial topic now in the US. There are many claimsto reform product liability system. Anyway, the emergence of strict liability theory is far-

reaching. Many countries in the world have adopted it including Europe, Japan and China.

The scope of product in the US is quite br oad. Product liability has extended tangible goods

to include intangibles such as electricity after it has been delivered to the consumer (Houstin

Lighting & Power Co. V. Reynolds, Tex. 1988). In deciding whether the law of product

liability should apply, the issue should not be restricted the inquiry of whether a product is

involved. Rather the inquiry should be directed to whether or not the defendant is in the best

position to spread the loss and prevent injuries.

Some authors claim that the US is the most litigious country in the world. In fact, the product

liability system in the US is well-developed and comprehensive. Also the US legal

environment makes it easy for one person to sue another. The high damage compensation and

plenty of lawyers are two important factors contributing to the flourishing of product liability

lawsuits.

On the contrary, in China there are not many product liability lawsuits. There are many

reasons for this. First, Chinese people don t have strong legal consciousness. Second, t he

damage compensation is not so lucrative as that of the US and the court process is time

consuming. Third, the bureaucratic practice of some courts and local government protection

for its local companies make it very difficult for the plaintiff to get recovery from the court.

Besides the legal system, News media play an important role in the settlement of product

liability lawsuits as well as customer protection. In the US, 96% of the product liability cases

were settled out of court. Most companies are afraid of being exposed of product liability

cases which will bring bad effect to its business image and marketability. This loss will be

much bigger than the damage compensation ruled by the court.

A Comparative Study of Product Liability of the United StatesThe enthusiastic adoption of 402A by the majority of jurisdictions unleashed a rich

and diverse body of case law unrivalled anywhere. The abstract, and to a great extent

unclear, formulation of 402A is out-dated. A restatement of products liability law,


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measure of the degree that the aforementioned three facets have to be proven. Each facet

requires proof as follows:

Duty of care It has to be reasonably foreseeable that the defendant s conduct could have

injured the plaintiff if the plaintiff was in a zone of danger created by the defendant. Further,

there cannot be any compelling policy reason for refusing to impose duty of care.

Standard of care - Negligence takes place when the conduct by the defendant falls below a

certain standard. Factors that create a breach in the standard of care include violating a statue

which can create an arguable presumption of negligence, community custom or an

emergency that caused action by the defendant to keep an increased harm from occurring.

Causation This simply states that there must be proof by the plaintiff that carelessness on

the behalf of the defendant caused the plaintiff to suffer damage.

Standard of proof The balance of probabilities is proof of all three facets by the plaintiff.

Additionally, it must be demonstrated by the plaintiff that there was more than a 50 percent

chance that the actions of the defendant resulted in the harm to the plaintiff.

U.S.-U.K. CASE LAW COMPARISON

The evolution of case law applying 402A classified the concept of defect intomanufacturing, design, and inadequate warning or instruction defect. Unlike the U.S.,

English products liability law remained negligence based until the enactment of the

Consumer Protection Act (1987). English productliability case-law, to a certain extent,

made reference to the type of defect involved: manufacturing, design or inadequate

warning. The purpose of this section is to place the Restatement (Third) of 1997 and

the Consumer Protection Act of 1987 within their historical decisional context. To observe

how American courts applied 402A, compared to how the English negligence based

regime functioned, a case on each defect was chosen for comparative review.

Manufacturing defects: Negligence(1) United Kingdom.

In Hill v. James Crowe Ltd., the plaintiff was standing on a wooden case while loading

his truck. The wooden case collapsed because it was poorly constructed and plaintiff fell


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injuring himself. Rejecting the defendant's proof that his factory was run with reasonable

care, the court held that:

The manufacturer's liability in negligence did not depend on proof that he had either a bad

system of work or that his supervision was inadequate. He might also be vicariously

liable for the negligence of his workmen in the course of their employment. If plaintiffs

injuries were a reasonably foreseeable consequence of such negligence, the

manufacturer's liability would be established under Donoghue. Theoretically, as long as

the manufacturer exercised reasonable care in his factory, he would not be liable for

manufacturing defects. James illustrated that courts are willing to find negligence based

solely upon circumstantial evidence. This may indicate the court's liberal application of res

ipsa loquitur. Many commentators posit that "the law is tantamount to the automatic

imposition of liability for injuries caused by defects due to the product's failing to

conform to its specifications and design."

(2) United States

In Orth v. Emerson Electric Co., White-Ridgers Division, plaintiffs were severely burned

when their propane furnace in their mobile home exploded. The furnace in question

was a "sealed combustion" furnace appropriate for mobile homes. The furnace wasequipped with a control valve manufactured by defendant. The expert testimony

concluded that the "safety valve malfunctioned due to a manufacturing defect."

Consequently, propane seeped out of the furnace combustion causing the explosion and fire.

The expert testimony, the court pointed out, "though based on circumstantial evidence,

was sufficiently reliable. "This certainly," noted the court," 'justify[ies] an inference of

probability' that the valve malfunctioned." The Court of Appeals affirmed finding that

there was sufficient evidence feasible to design the product in a safer manner." Based onthe foregoing elucidation of the law, the court held that the plaintiff had presented sufficient

evidence to submit the defective design to the jury for it to decide whether the

unprotected portion of the blade met the minimum safety standards.

(3) Comparison

Unlike manufacturing defects, there are some differences between design defect cases

under English negligence law and American strict liability law. The differences are

actually in form not in substance. Both, albeit in different wording, require that the product


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be defective rendering it dangerous, and that the harm be foreseeable. Voss s

substantial likeliho od of harm" standard is another way of stating Lambert's "reasonably

foreseeable" standard. Like Lambert, Voss required that there be a safer alternative design.

Voss, however, emphasized that the alternative design must pass a cost-benefit test. It wasclear that the manufacturer in Lambert was only concerned with convenience and not

financial cost, and as such, the cost-benefit analysis of alternative designs was not an

issue. If the product was more complex or the cost was not so negligible and the

benefit so great, as is the case in Lambert, the English court would have engaged in a

cost-benefit analysis. In sum, the differences between English negligence based design

defect and American strict liability design defect are minor.

In conclusion of the foregoing comparison between the Restatement (Third) and the

Consumer Protection Act attempted, through a comparative textual analysis, to shed some

light on the differences between both systems. As we have seen in part I of the

paper, products liability in England was essentially negligence based. There was no

comparable evolution of case law toward strict liability as there was in the United States.

However, English policy trends encouraged a movement toward a United States

version of strict liability. Ironically, the evolution of United States products liability

indicates a retreat from strict liability and a return to a negligence-based

conceptualization of products liability. Finally, in the absence of judicial interpretation

of the CPA, 4 37 one cannot be certain of the direction U.K. Products liability will take

in the future. In addition to the development risk defense and hints of cost-benefit

analysis, it is extremely likely that judicial interpretation of the CPA will move toward

the Restatement (Third). That is, a strong negligence basis for products liability couched in

strict liability terminology or strict liability linguistics.

2.4 Strict tort liability

Strict tort liability basically is the Absolute responsibility for an injury that can be imposed

on the wrongdoer without proof of carelessness or fault

Strict tort liability often called absolute liability is a legal responsibility for damages or

injury, even if a person found absolutely liable was not at fault or negligent. Strict liability

has been applied to some activities in tort law, such as holding an employer strictly liable forthe torts of his/her employees. But nowadays strict tort liability is associated mainly with


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defectively produced goods. In addition, for reasons of public policy, certain activities may

be conducted only if the person conducting them is willing to insure others against the harm

that results from the risks the activities create.

People been injured by defectively produced products greatly rely on strict tort liability. This

part of it falls under the main category of product liability. A manufacturer must guarantee

their products are suitable for the products intended use when they are sold in the market for

people to use. Strict or absolute liability will hold manufacturers greatly liable for any

damages that result in putting unreasonably dangerous or hazardous products to the market

for consumers to use. Without the regard for without regard to the amount of care exercised

in preparing the product for sale and distribution and without regard to whether the consumer

purchased the product from, or entered into a contractual relationship with, the manufacturer.

- To prove a strict liability case you need to prove these facts:

The plaintiff's injury must have been caused by a "defect" in the product. Thus the

manufacturer is not deemed responsible when injury results from an unforeseeable use of its

product. The essential elements of a claim based upon an alleged manufacturing defect are:

1. The defendant was the manufacturer or supplier of a product;

2. The product possessed a defect in its manufacture;

3. The defect in manufacture existed when the product left the defendant's possession;

4. The defect in manufacture was a cause of injury to the plaintiff; and

5. Plaintiff's injury resulted from a use of the product that was reasonably foreseeable to the

defendant.

A defect in the manufacture of a product exists if the product differs from the manufacturer's

intended result or if the product differs from apparently identical products from the same

manufacturer.

Case of Strict product liabilityBrief Fact Summary

The Plaintiff, William Greenman (Plaintiff), was injured when his Shopsmith combination

power tool threw a piece of wood, striking him in the head. Plaintiff sued and the Defendant,


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Yuba Power Products, Inc. (Defenda nt) the manufacturer, defended claiming that Plaintiff s

breach of warranty claim was barred due to his failure to give timely notice.

Synopsis of Rule of Law

Individuals injured by products with design or manufacturing defects may bring suit under

strict liability regardless of a failure to give timely notice to the manufacturer for a breach of

warranty.

Facts

The Plaintiff saw a Shopsmith combination power tool demonstrated by a retailer and he

studied a brochure prepared by the manufacturer. His wife bought him a Shopsmith, and

Plaintiff bought necessary attachments to use the Shopsmith as a lathe. After working with

the lathe several times without difficulty, it suddenly threw the piece of wood he was working

with out of the machine, striking him in the head inflicting serious injuries. Approximately

ten and one-half months later, Plaintiff gave the retailer and the manufacturer written notice

of claimed breaches of warranties and filed a complaint alleging said breaches and

negligence.

Issue

Is Plaintiff s action based on representations contained in the brochure barred against the

manufacturer due to a failure to give timely notice?

Held, No Judgment affirmed

Plaintiff introduced substantial evidence from which to conclude that his injuries were the

result of defective design and construction of the Shopsmith. However, the Defendant

contends that Plaintiff did not give it notice of a breach of warranty within a reasonable time.

The Civil Code provides that failure of the buyer to give the seller notice of a breach of

warranty within a reasonable time precludes liability [Civ.Code Section: 1769]. However,

this notice requirement is inappropriate for this Court to adopt in an action by injured

consumers against manufacturers with whom they have not dealt. Because the injured party is


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generally unaware of the business practice justifying the rule, it would simply be an unfair

booby -trap for the unwary.

Even if Pla intiff s claim for breach of warranty were barred, the imposition of strict liability

is appropriate in this case. From the evidence, it can be shown

That the manufacturer placed a product on the market; knowing that it is to be used without

inspection for defects; That proved to have a defect and That caused an injury.

To establish liability, it is sufficient that Plaintiff was injured while using the Shopsmith in a

way it was intended to be used, as a result of a defect in design and manufacture.

Discussion

The Court in this case finds that an apparently applicable statute will not bar recovery. Many

of the products liability decisions tend to insure the protection of the consumer over that of

manufacturers.

2.5 Breach of warranty

Warranties are promises that a business owner makes to stand behind his products or

services, and to protect consumers against damages or injuries caused by defective products.

A warranty is also a limited promise made by a manufacturer or seller of a product that

guarantees some aspect of the product.

There are two types of warranties including express warranty and implied warranty. The legal

differences between the two can be quite dense and difficult to properly parse, but in general,an implied warranty is sort of a handshake promise to make things right, while an express

warranty is more formal

Express WarrantyAn express warranty is a specific promise or guarantee made by a manufacturer or seller

making representations concerning the quality, condition, description of performance

potential of a product. This warranty can be made in writing or verbally,


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Depending on where you live and the laws that apply, there are actually a few different things

that could be considered express warranties. As illustration, an express warrant can be:

A seller or manufacturer's oral or written promise or affirmation of fact that describes the

product at the time of sale.

A seller or manufacturer's written promise to repair or replace defective parts for a stated

period of time.

The seller's written promise containing representations that the product is defect free and/or a

promise to repair or replace it.

As illustration, , if a car dealer tells you that a vehicle has an eight cylinder engine, and youfind out that you have been delivered a car with a four cylinder engine, the express warranty

made by the car dealer has been violated. General statements about an item such as, that

paint shines like a diamond! are not express warranties. Specific statements of fact are

considered to be express warranties.

2-313. Express Warranties by confirmation, Promise, Description, or Sample.

(1) Express warranties by the seller are created as follows:

(a) Any affirmation of fact or promise made by the seller to the buyer which relates to

the goods and becomes part of the basis of the bargain creates an express warranty that the

goods shall conform to the affirmation or promise.

(b) Any description of the goods which is made part of the basis of the bargain creates an

express warranty that the goods shall conform to the description.

(c) Any sample or model which is made part of the basis of the bargain creates an expresswarranty that the whole of the goods shall conform to the sample or model.

Breach of express warrantyAlan purchases a computer and some expensive accounting software from ABC Computer.

He thoroughly explains his specialized bookkeeping needs to the salesperson and is assured

that the computer and software will do the job. The computer contains a written warranty

against defects in parts and labor for 90 days. The warranty statement says that all implied

warranties are disclaimed. The software contains no written warranty statement. It is apparentto Alan after a couple of days' work that the software simply is not sophisticated enough to


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meet the bookkeeping needs he had explained to the salesperson and that the salesperson

didn't know what he was talking about when he said it was "perfect for the job."

Two days later the computer has a major crash. Alan calls ABC and asks for the computer to

be fixed or replaced and for his money back on the software. When ABC ignores him, Alan

sues in small claims court. Alan should have no problem recovering for the price of the

computer it failed within the written warranty period. But the software raises a tougher

problem. Alan is claiming a breach of an express oral warranty (the salesperson's statement

that the software would meet his needs), and a breach of the implied warranty of general

fitness or merchantability. To succeed on the first claim, he must prove that the salesperson

did in fact assure him that the software was right for his needs, which may be difficult.

Proving the second claim will be even harder, however, because Alan must somehow prove

that the software falls below the reasonable standard for sophisticated small business

accounting packages. ABC is likely to counter Alan's claim with evidence that the software is

in wide use and is generally considered to be adequate to accomplish most accounting tasks.

In short, Alan would be smart to focus on trying to prove that in making his decision to

purchase the software, he relied on the salesperson's oral statements that the software would

meet his specific bookkeeping needs.

How should he do this? If Alan gave the salesperson a written specification detailing his

accounting needs and still has a copy, he should show it to the judge. Even better, if he has a

witness who heard the salesperson's overly optimistic promises, he should ask this person to

testify in court or at least write a letter stating what happened. Unfortunately, if Alan has no

convincing evidence as to the salesman's statements, the small claims hearing is likely to

come down to his word against the salesperson's, with the judge left to decide who appears to

be telling the truth.

Example 2

Al Dawood Shipping Lines Limited v Dynastic Maritime Incorporated (MT Napa) [2010]

EWCA Civ 104

Faced with the owners' claim for unpaid hire and damages, the charterers put forward the

defense of breach of warranty and counterclaimed for the loss of profit that they would have

made on the sub-charter had the owners complied with the warranty. To succeed, charterers


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needed to demonstrate that the owners breached the warranty, that they would have been able

to have concluded the sub-charter but for the breach and that the hire rate of such sub-charter

would have been higher than the charter hire rate.

Breach of Implied warranty In common law jurisdictions an implied warranty is a contract law term for certain assurances

that are supposed to be made in the sale of products or real property due to the conditions of

the sale. These assurances are considered as warranties irrespective of whether the seller has

specifically promised them orally or in writing. They include an implied warranty of fitness

for a particular purpose, an implied warranty of merchantability for products, and an implied

warranty of habitability. An implied warranty is one that arises from the nature of the

transaction and the inborn understanding by the buyer rather than from the expressrepresentations of the seller.

If a customer claims that the goods that he purchased did not have the quality that he or she

would reasonably expect it is known as "breach of an implied warranty." To establish this

claim he/she must prove all of the following:

1. That he/she bought the consumer goods from/ manufactured by (name of defendant)

2. That at the time of purchase (name of defendant) was in the business of selling (consumer

goods) to retail buyers manufacturing (consumer goods)

3. That the consumer good was not of the same quality as those generally acceptable in the

trade or was not fit for the ordinary purposes for which such goods are used or was not

adequately contained, packaged, and labelled or Did not measure up to the promises or facts

stated on the container or label.

For example, a fruit that looks and smells good but has hidden defects would violate the

implied warranty of merchantability if its quality does not meet the standards for such fruit

"as passes ordinarily in the trade". In Massachusetts consumer protection law it is illegal to

disclaim this warranty on household goods sold to consumers etc.

American Suzuki Motor Corp. v. Superior Court (Carney) (1995) is a great example court

case for the implied warranty of merchantability. Where class action plaintiffs allege they

have suffered no personal injury or property damage from a vehicle they claim is defectively

designed, and it is impliedly conceded that their vehicles have since the date of purchase


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An example case would be Peterson v. Lamb Rubber Co in 1960. In December, 1954,

defendant, a manufacturer of rubber bonded abrasives, sold and delivered to plaintiff's

employer, AiResearch Manufacturing Company, a corporation one hundred rubber bonded

abrasive wheels for use in grinding and burring operations. The wheels were two inches indiameter, contained no markings either to identify the manufacturer or to indicate the

maximum revolutions per minute at which the abrasive wheels could be safely operated.

In June, 1955, while plaintiff in connection with his employment was using a wheel which he

alleges was one of those sold to his employer by defendant, the wheel blew up or

disintegrated in his face and a portion of the abrasive imbedded itself in his left eye, resulting

in admittedly serious injury.

In this action to recover for personal injuries suffered by plaintiff as the result of explosion of

a grinding wheel purchased from defendant by plaintiff's employer, the trial court sustained

without leave to amend a general demurrer to the count of the complaint based on breach of

implied warranty. Trial was had on the other count, based on negligence, and the jury found

for defendant. Plaintiff appeals from the ensuing judgment for defendant.

Another implied warranty is the warranty of title which implies that the seller of goods has

the right to sell them (to make sure they are not stolen or patent infringements or already soldto someone else). This theoretically saves a buyer from having to pay again for the same

product, if it is confiscated by the rightful owner, but only if the seller can be found and

makes restitution.

The next point is implied warranty of habitability. Generally, is a warranty implied by law

that by leasing or buying a residential property, the seller is promising that the property is

suitable to be lived in. The warrant of habitability can be breached if there is no heat, hot

water, or other essential services and also, safety issues like no smoke alarm or other fire

code issues can be considered to make a residence uninhabitable.

Also if the municipality has not issued a certificate of occupancy or it is not legal and as a

result uninhabitable. The breach of the implied warrant of habitability can be used to legally

break a lease.

If the factors have been created or are controllable by the landlord and he has not fixed them

despite ample written notification, this situation can also be considered constructive eviction,


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which allows the tenant to break the lease but also may allow the tenant to sue for damages in

some jurisdictions.

In the United States a disclaimer must be conspicuous in the contract. For example in a

different kind of print or font that makes it stand out. On the other hand, express warranty

that is any confirmation of fact or promise to the buyer or a description of the good orally or

written form can be invalid or limited only if such disclaimers are not unreasonable according

to Uniform Commercial Code, Section 2-316. However some jurisdictions limit the ability of

sellers or manufacturers to disclaim the implied warranty of merchantability or fitness, such

as Massachusetts. (Massachusetts General Laws, Chapter 106: Section 2-316A).Contractual

language can also limit the remedies available for breach of an implied warranty for example,

limiting the remedy to a replacement of a defective item. However, such a term can be found

to be unconscionable. For example, if a defective product causes a personal injury, a

contractual provision limiting recovery in such a case will be deemed prima

facie unconscionable. (Uniform Commercial Code, 2-719).

Green v. Superior Court, (1974) is a great example court case for this kind of a breached

implied warranty. This is a landmark California Supreme Court case that overruled common

law practices that established a landlord had no obligation to maintain residential premises

during the course of a lease. The Court held that the landlord-tenant relationship includes an

implied warrant of habitability in a residential lease. The domicile must be within substantial

compliance of local housing and building codes, and must be maintained in a condition that

meets basic living requirements although it need not be attractive or perfect. The landlord is

required to maintain the property in compliance with basic health and safety mandates.

Breach of warranty may be raised as a defense to an unlawful detainer action. Under certain

circumstances (to be determined by the court), the tenant has the right to quit the lease or

continue in the lease with an adjustment of rent, sometimes down to zero, if the landlord is

found to have committed a gross breach of warranty.


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3. VARIOUS DEFENSES TO PRODUCT LIABILITY

These are some of the defenses that a manufacturer can use in a usual product liability

lawsuit. The laws that administer these legal defenses are quite varies and inconsistent.

Statute of limitationsIn general, there are two kinds of legal defenses: those that avoid liability, and those that

decrease the extent of liability. The statute of limitations is a defense that avoids liability by

requiring an injured person to file her lawsuit within a specified period of times. If the

lawsuit is not filed within the specified period of time it is dismissed, even if the claim is

otherwise valid.

There are some exceptions to this. If the injured person is a minor, limitations period exists

until she turns eighteen years old. Likewise, if the injury is such that a person may not know

of the injury right away (e.g. exposure to asbestos) the time period does not start until the

person discovers the facts necessary to realize he may have a claim. This exception is

normally called the discovery rule.

Statutes of reposeStatutes of repose are similar to statutes of limitations but, instead of running from a date of

injury, the time limitation usually begins to run from the date on which the product was made

or sold. While there is little uniformity among the states on how long the time period is, it is

usually at least ten years long. Additionally, in most states, statutes of repose are narrowly

interpreted and strictly enforced. As a result, once the time period expires, there is usually no

getting around the defense.

Federal preemptionThere are several situations where federal law prevents state tort law. Federal preemption is a

general principle of law that applies to many situations, not just product liability. Where a

federal statute or regulation occupies an entire field of law, and subjects it to a lot of

regulation, there is no room left for state law to operate within that field. The law of federal

preemption is very complex. The simplest example of federal preemption is when the U.S.

Congress expressly obstructs a given field, such as with the pesticides or the maritime

industry. Another example of federal prevention involves cigarettes where the Supreme


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Court held that legislation requiring warnings on cigarette packages insulated manufacturers

against lawsuits based on state product liability law.

Unavoidable dangerAlthough manufacturers and sellers have a duty to take precautions and provide adequate

warnings and instructions, the public can still obtain products that are unavoidably unsafe. A

Seller is not held strictly liable for providing the public with a product that is needed and

wanted in spite of the potential risk of danger. Prescription drugs illustrate this principle,

because all of them have the potential to cause serious harm if used unreasonably although

manufacturers of pharmaceuticals often face failure to warn cases.

Contributory negligenceThere are many kinds of contributory negligence. As a general principle, contributory

negligence is a situation in which more than one factor contributed to or caused, the injury

that forms the basis of the lawsuit. In some states, if the injured person himself contributed to

the injury, and a jury determines he was more than 50% at fault for causing the injury, no

recovery is allowed. Ho wever, in a majority of states, the injured person s recovery is simply

reduced by his percentage of fault. This is usually referred to as comparative fault. Other

kinds of contributory negligence (or comparative fault) include:

Assumption of Risk: This is the voluntary and knowing decision to place oneself in a

dangerous situation, or to use a product with full knowledge and appreciation of the danger.

In some states, assumption of risk is a complete defense that allows a manufacturer to avoid

all liability. However, in most states, it is another form of comparative fault.

Misuse: Like the assumption of risk, the misuse of a product is, in a few states, a complete

defense. In most states, however, it is another kind of comparative fault. In other words, a

fact-finder is asked to determine to what percentage degree the injury was caused by misuseof the product in comparison with the percentage attributable to the product defect.

Alteration: Alteration, like misuse, is closely related to contributory negligence. This

defense is available where the manufacturer can demonstrate that a person was injured

because the product was altered. For example, a person using a power saw may have been

injured because he removed a protective shield from the saw blade.


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REFERENCES

A Comparative Study of Product Liability of the United States. Retrieved from

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PqI87prQeK-JnIDQ&start=20&sa=N

Award., A., Pace International Law Review, Volume 10, Issue 1 Summer 1998, Article 11,

6-1-1998, The Concept of Defect in American and English, Products Liability Discourse:

Despite Strict, Liability Linguistics, Negligence Is Back with a Vengeance! . Retrieved from

http://digitalcommons.pace.edu/cgi/viewcontent.cgi?article=1262&context=pilr p275-6, 368.

Biers., S. (1963). Greenman v Yuba Power Products. Retrieved from

http://www.4lawschool.com/torts/yuba.shtml

Cf. Whitehead & Scott, 'A Comparison of Product Liability Law in the US and the EC',

(1991) European Business Law Review, 171.

Cornell University Law School. (2010). Products liability law: an overview. Retrieved from

http://topics.law.cornell.edu/wex/products_liability

Floudas, D.A., Some aspects of liability for defective products in England, France and

Greece after directive 85/374/eec . Retrieved from

http://www.intersticeconsulting.com/documents/Product_Liability_EU.pdf

Howells, 'The Consumer Protection Act 1987', (1987) p159.

John., D.P.C., (2010). Leading Tennessee Tort Cases - Comparative Fault - Strict Liability

Cases.Tennessee personal injury lawyer & attorney John Day of Law Offices. Retrieved fromhttp://www.dayontorts.com/leading-tort-cases-leading-tennessee-tort-cases-comparative-

fault-strict-liability-cases.html

Lawyers.com. (2009). Making a Product Liability Claim. Retrived from http://product-

liability.lawyers.com/Product-Liability/Making-a-Product-Liability-Claim.html &

http://product-liability.lawyers.com/Product-Liability/Making-a-Product-Liability-

Claim.html?page=2


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O'Keefe., J. (2010). Design Defects in Automotive Products Liability Cases. Retrieved from

http://www.jacksonokeefe.com/news/2010/08/design-defects-in-automotive-products-

liability-cases.html

Online Lawyer Source (2001 2010). Strict Liability Torts. Retrieved from

http://www.onlinelawyersource.com/product/sltorts.html

Pearson, op. cit., 268 et seq.; Clark, 'The Consumer Protection Act 1987', (1987) Modern

Law Review, 614.

Product Liability Lawyer. (2010). Proving Negligence. Retrieved from

http://www.productliabilitylawyer.com/proving-negligence.cfm

This increases the possibility of potential plaintiffs actively seeking the most advantageous

jurisdiction to conduct litigation ('forum shopping'); cf. Atree, 'Jurisdiction, Enforcement of

Judgement and Conflicts of Laws', in Kelly & Atree (eds.), European Product Liability Law

(1992), 147.

Whittaker, The EEC Directive on Product Liability, (1985) 5 Yearbook of European Law,

233. Markesinis & Deakin, Tort Law, Oxford (1994), 535-536.

Business Law Report- Product Liability

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