Product Liability

1
Product Liability

• LPP 255
• Pat Cihon

Syracuse University -- SoM -- LPP
2
Overview

• Sellers or Manufacturers Liability for products
  made or sold by them
• Politically Controversial
• Concern over Litigation Explosion -- McDonalds
  Coffee Suit

3
Agenda

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

4
CONTRACT-BASED THEORIES

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

5
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

6
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

7
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

8
TORT-BASED THEORIES

• Negligence
• Strict Liability

9
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

10
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

11
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

12
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