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Chapter 16 Interactive. Warranties and Product Liability. INTENTIONAL MISREPRESENTATION/FRAUD. Element of scienter and intent to deceive. 1. Misrepresents the quality of a product. 2. Conceals a defect in it. “AS IS”.
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Chapter 16 Interactive Warranties and Product Liability
INTENTIONAL MISREPRESENTATION/FRAUD Element of scienter and intent to deceive. 1. Misrepresents the quality of a product. 2. Conceals a defect in it.
adj. description of a condition in a sales contract in which the buyer agrees to take the property (e.g. house, horse, auto, or appliance) without the right to complain if it is faulty. However, the buyer must have had the right to reasonable inspection, so that he/she has a chance to find any obvious deficiency.Intentionally hiding a known defect will make a seller liable for fraud and serves to cancel the "as is" provision. • Black’s Law Dictionary “AS IS”
Restatement of the Law Third, Torts: Products Liability Deals with the liability of commercial product sellers and distributors for harm caused by their products. Product Liability
Question: Ever wonder why some products have strange warning labels?
Because Stupid is as Stupid does…. Cost of ripping apart a chair? $65.00 Cost of professional salaries per hour? $450.00 Catching your kid on camera doing something stupid? Priceless
Question: When this motorcycle breaks, who’s at fault? The manufacturer or the person using the motorcycle?
http://www.nydailynews.com/lifestyle/health/2010/02/22/2010-02-22_pediatricians_push_for_hot_dogs_to_get_warning_label_kidfriendly_food_poses_chok.htmlhttp://www.nydailynews.com/lifestyle/health/2010/02/22/2010-02-22_pediatricians_push_for_hot_dogs_to_get_warning_label_kidfriendly_food_poses_chok.html • “The American Association of Pediatricians (AAP) is recommending not just a warning label on franks but a recall of foods that pose a choking risk, and a commitment from food manufacturers to redesign existing foods to minimize that risk.” REALLY???
Doctrines of Negligence and Strict Liability Compared Manufacturer (negligent) Defendant Defendant Defective product Distributor Defendant Negligent party is liable Defendant Retailer All in the chain of distribution are liable Negligence Strict liability lawsuit Consumer lawsuit Defective product causes injury
To recover for strict liability, the injured party must first show that the product that caused the injury was somehow defective. Plaintiffs can allege multiple product defects in one lawsuit. Defective Product
Defective Product(continued) Design Manufacture Packaging The most common types of defects: Failure to Warn
Manufacturing Defects — when the product departs from its intended design, even if all possible care was exercised. • Design Defects — when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design, and failure to use the alternative design renders the product not reasonably safe. • Inadequate Instructions or Warnings Defects — when the foreseeable risks of harm posed by the product could have been reduced or avoided by reasonable instructions or warnings, and their omission renders the product not reasonably safe. • NAACP v. American Arms Inc.
Defect that occurs when the manufacturer fails to: • Properly assemble a product • Properly test a product, or • Adequately check the quality of a product Defect in Manufacture
Defect that occurs when a product is improperly designed. Design defects include: • Toys designed with removable parts that could be swallowed by children. • Machines and appliances designed without proper safeguards. • Trucks designed without a backup warning device. Defect in Design
Defect that occurs when a manufacturer does not place a warning on the packaging of products that could cause injury if the danger is unknown. • Proper and conspicuous warning insulates all in chain of distribution Failure to Warn
Man Catches on Fire After Applying Sunscreen The Dangers of Spray on Sunscreen - New York CBS Local w/Debra Jaliman - YouTube
Supervening Event Generally Known Dangers Assumption of the Risk Defenses to Product Liability Government Contractor Defense Misuse of the Product Contributory & Comparative Negligence Statute of Limitations
Assumption of the risk Government contractor Defense- Misuse of Product- unforeseeable misuse of product Superseding event – Alteration of the product after it leaves the seller. Defenses to Product Liability
1. Contractor who was provided specifications by the government is not liable for any defect in the product that occurs as a result of those specifications 2. Product must conform to specifications 3. Contractor must have warned of known defects or dangers • Applies to such things as Aircraft, Aerospace, weapons technology etc. Government Contractor Defense
The Story: A carrier for a well known service delivery company was delivering packages out in the West Herndon area. He had a break coming, so he decided to stop into Starbucks and get a latte. On his way out of the parking lot, he failed to stop, and went colliding into a car carrying a women and two young children. Although the children were alright, the women driver claimed to suffer neck injuries and her car was badly damaged. She sued the delivery company for a total sum of $450,000 dollars claiming bodily injury andcompensatory damages.
Who’s Liable? • Why would the company be held liable? • Would the carrier driver be responsible and liable? • Since the carrier was driving, was he still on his break or back on the job? • Since the carrier had the company shirt and logo patch, does he represent the company? • Should the carrier be responsible solely for his actions? • Is the sum of $450,000 dollars, claiming bodily injury and compensatory damages, reasonable in this case? • .
Servant and Master Relationships: • Master = Employer = Respondeat Superior • Respondeat Superior: Let the master answer! The master is held responsible for the servants conduct • Servant = Employee • Joint and Several = both master and servant are held responsible and liable for the servants conduct.
The master will make a better choice next time in servants The master will be more careful in the supervisory role. The liability of a servant is the cost of conducting business. The master can purchase liability insurance. The master can afford the costs. Respondeat Superior Justifications:
Vicarious Liability: Legal responsibility for the wrong committed by another person. Strict Liability: Liability for an action because it occurred and caused damage, not because it is the fault of the person who must pay. “Deep Pockets”: Expression used to describe those who have large sums of money. Definitions:
No one factor controls the court decision. Every court case is different, but can be based and judged on precedent setting cases. Fact situations that seem very similar may result in different decisions. The “Scope of Employment” issue will always play a role in the decision of the case. Things to Remember:
Determining whether a servant is within the scope of his or her employment. Scope of Employment
The Story… Jenny rides her bike to work from college every day. One day after school, she couldn’t find a place to lock up her bike because the bike rack was full. She decided to lock the bike up to a city meter just outside the shop where she works. Her employer saw Jenny’s bike there but didn’t mention to her that it was against the cities ordinance to lock bikes up to meters. A police officer saw the bike and decided to write the ticket out to the shop owner, rather than to Jenny. The officer claimed that since the owner knew it was against city ordinance, and Jenny was officially at work, then the shop owner should pay for the ticket. Was the officer right?
Again, was the officer right in this case? • Should the officer just asked Jenny to move her bike and not written the ticket? • Should the shop owner have told Jenny to move her bike? • Should Jenny have known not to lock her bike up the the meter? • Should Jenny pay the ticket even though it is made out to the shop owner? • Since Jenny was at work, does this fall under “Scope of Employment” guidelines? Who Pays the Ticket?
The Restatement (Second) of Agency indicates the factors that should affect the determination of whether a servant is within the scope of his or her employment. The factors include: Employee: • Time and place of occurrence. • Failure to follow directions. • Failure to Act • Acting on own accord outside of the duties and responsibilities of the job. Questions regarding the Employer’s Actions Include: • Failure to Act • Responsibility of the servant to whom? (What if there is more than one boss?)
Who Pays What? Indemnification
Greg believed in the old fashioned way of giving service at the gas station. He treated customers like he wanted to be treated. He would wipe the windows and check to make sure that customer’s tires were always filled with the proper air pressure, and ready for the road. The Story… One day, as he was working on a customer’s car, he noticed that the tires seemed a bit low. He filled them up to the regular level, not realizing that these tires were Italian, and meant to have less pressure in them then tires made in the U.S. Shortly after the customer leaves, the tires blow, causing the car to spin out of control, killing the driver and the passenger. Who’s fault was this?
Was a crime committed? Should Greg have realized that these tires were not made in the states? Should that have been reason for him to question? Should the driver have said something to Greg about his tires? Did Greg commit a crime unknowingly? Should the company Greg works for be sued? Should the owner be sued for not training Greg properly? Could this have been avoided? Where was the wrong committed?
Was the person acting as a servant for the hiring party? Did the servant commit a tort? Was the servant acting within the course and scope of the job? Is the master entitled to indemnification from the servant? Is the servant entitled to indemnification from the master? Analysis of a Servant’s Torts:
Battery: Unauthorized touching of another person without legal justification or consent. • Conspiracy: A plan to engage in criminal behavior involving two or more persons. • Solicitation: Influencing a person to engage in criminal activity. • Accessory to Crime: Assistance in a crime. i.e., driving the “get-away” car. • Indemnification: The right to be repaid by a servant, if the master has had to pay for his servant’s crime. Crimes and Intentional Torts:
Worker’s Compensation Injury on the job
The Story… Karen is a Personal Fitness Trainer for one of the well known fitness centers in town. She has worked as a trainer for six years, and is ready for a promotion. Karen was recently assigned as a personal fitness trainer to a new club member. Jim, Karen’s boss, felt that this particular individual needed a male trainer, due to his size, but for fear of being seen as a male chauvinist, he decided to let Karen have him. During a recent session, Karen was assisting the new member, and while spotting him on the free-weights, she hurt her back. She is now claming that her boss should have known better, and should have let one of the male fitness trainers handle this new member. Does Karen have a case?
Should Karen have said something from the beginning regarding this new member? • Could Karen have felt that because she was up for a promotion, her refusal to work with this new member could have been detrimental? • Should Karen claim workers compensation? • Should Jim have given Karen the new member or should he have given this new member to a male trainer, despite how it looked? • Does Karen have a lawsuit against Jim? Against the company? Insult to Injury?
Under common law, if an employee is hurt at work, the employer can utilize a number of defenses to avoid an obligation to the employee: These are two such defenses… • Negligence by the employee • The employee’s assumption of the risk Chapter 33, page 870 Injury on the Job:
Must prove that the injury occurred on the job. The injury was caused in the course and scope of the job. Some statutes vary: Some cover only major industrial occupations. Some exclude small shops w/few employees Some exclude injuries caused intentionally by the employer or other workers. Worker’s Compensation Eligibility:
