5. Products Liability

Question 1

What theories of liability are available?

Answer 1

Theories of Liability

1. intent
2. negligence
3. strict liability
4. implied warranties of merchantability and fitness for a particular purpose, and
5. representation theories (express warranty and misrepresentation)

EXAM TIP: If the question doesn’t indicate what theory P is using, apply SL, as it is the easiest prove.

Question 2

What is required to claim SL

Answer 2

Strict Liability available if:
1. D is a merchant

• Someone who ordinarily deals in goods of this type.
• Casual sellers are not merchants.
• Services providers who use products incidentally are NOT merchants
• Lessors/renters are merchants
• All parties in a distribution chain are considered merchants - no privity of contract is required.

2. P must show the product is defective

• Manufacturing Defect
• Design Defect
• Information Defect/Inadequate Warning

3. P must prove the defect existed when D relinquished control
   * presumed when product travelled in ordinary distribution channels
4. P makes a foreseeable use of product (not necessarily the D’s only intended use)

Question 3

What are the different types of defects?

Answer 3

1] MANUFACTURING DEFECTS

• Product emerges from mfg diff from and more dangerous than the products that were made properly
• D will be liable if P can show that the product failed to perform as safely as an ordinary consumer would expect (D must anticipate reasonable misuse). Test also applies to defective food products.

2] DESIGN DEFECTS

• Warning does not eliminate activity
• P shows there is a hypothetical alternative design that is:
  1. safer than the sold product
  2. cost effective compared to sold product
  3. practical

3] Inadequate Warnings

• Product has an information defect if:
  1. it has residual risks that cannot be designed around,
  2. consumers are not aware of those risks, and
  3. the product lacks ADEQUATE warnings

NOTE:

• Noncompliance with govt safety standards establishes that it is defective
• HOWEVER, compliance with safety standards (incliding labeling requirements) is evidence—but NOT conclusive—that the product is not defective.
• Scientifically unknowable risks—D will not be held liable for dangers not foreseeable at the time of marketing
• Mfgrs will not be held liable for some dangerous products (e.g. knives) if the danger is apparent and there is no safer way to make the product.