Chapter 20

Products Liability
 Introduction
Uniform Commercial Code (U.C.C.)

* Rules for commercial transactions

* All States have adopted provisions,

in whole or part

* Consistency among States

 Introduction
Sale of Goods Transactions
* Goods = tangible, movable property
- Excludes stocks, bonds, patents,
copyrights (intangible)
- Excludes real estate (not movable)
 Express Warranty
Seller’s representation as to quality,
condition, performance of goods
=
Seller’s assurance that goods conform
to representation

* Nonconformity: Seller may be liable

for breach of express warranty
 Misrepresentation
Words
* Affirmation of fact or promise
* Description of goods
or
Conduct
* Sample
* Model
 Fact
Objectively Verifiable
“100 horsepower engine”

* Excludes opinions (“sales talk”)

“First class boat”
“Excellent car”
 Reliance Justifiable
D’s words or conduct would
justifiably induce P to enter into transaction

* P’s actual reliance not necessary

* Enough that P would be
justified in relying on misrepresentation
 Injury
Personal Injury
* P’s bodily harm
and/or
Economic Loss
* “Basis of the Bargain” damages
(value promised – value received)
* Monetary loss that flows from
not getting what was bargained for
(cause & effect)
Klages v. General Ordinance
P won

D’s representation regarding

performance of mace
=
assurance that mace conforms
to representation
Lastovich v. Ford Motor

P won

Warranty was created

 Implied Warranty of
Merchantability
“Merchant”
Earns a living by selling goods of this kind

“Merchantable”
Goods fit for their ordinary purpose
=
Goods “pass without objection”
in the industry
 Welch v. Fitzgerald-Hicks
Yes, P won
* Car not merchantable
- Not fit for ordinary purpose (driving)
- Would not pass without objection
in automotive industry
 Implied Warranty of Fitness

* Buyer’s particular purpose

* Buyer’s actual and reasonable reliance

 Catania v. Brown
D breached warranty

Paint not fit for use on stucco house

(particular purpose)
 Lewis & Sims v. Key
No, P lost
* D had no reason to know
of P’s particular purpose

* No evidence of P’s reliance

on D’s expertise
 Warranty Disclaimers
Disclaim Express Warranties
* Rare
- Seller must honor promises
- Disclaimer of express warranty
in sales contract disregarded
if inconsistent with seller’s words
or conduct
- If no inconsistency, sales contract may
provide in clear & conspicuous terms
that express warranties limited
to those in sales contract
 Warranty Disclaimers
Disclaim Implied Warranties
1. By Examination
* Applies to “reasonably apparent”
defects when:
- buyer inspected product
or
- buyer had opportunity to
inspect but chose not to do so
 Warranty Disclaimers
Disclaim Implied Warranties
2. By Language
a. Merchantability
-- Must mention “merchantability”
-- If disclaimer in writing,
* must be conspicuous
b. Fitness
-- Disclaimer must be in writing
-- and conspicuous
 Cates v. Dover
Disclaimer not conspicuous
=
Disclaimer not enforceable
 Unconscionability
Unconscionable disclaimer
* Shockingly one-sided, oppressive
1. Disparity of bargaining power
or
2. Personal injury

Unenforceable disclaimer
 Disparity
P = individual, and

D = business entity, and

Enforcement of D’s disclaimer

would leave P without remedy
 Delta v. Douglas
No disparity of bargaining power

Not unconscionable to enforce disclaimer

 Personal Injury
Unconscionable to limit liability
* for personal injury
- bodily harm
* in consumer goods transaction
- goods purchased for
personal, family, or household
purpose
 Henningsen v. Bloomfield
Personal injury in consumer goods transaction

Disparity of bargaining power too

Here, disclaimer clearly unconscionable

 Strict Liability
Theory
Absolute liability
* D’s intentions irrelevant
* D’s degree of care irrelevant
 Definition
1. Defective product
a. Design defect
* Error at planning stage
or b. Manufacturing defect
* Error at factory
- Assembly/production
or c. Warning defect
* Inadequate instructions
- Lack to warn)
 Definition
2. Defect  “Unreasonably Dangerous”

i. Design defect: Risk/Utility Test

If risk of injury outweighs utility

of design

then design fails test

and defective design makes product

unreasonably dangerous
2. Defect  “Unreasonably Dangerous”

ii. Manufacturing or Warning Defect:

Consumer Expectation Test

If product more dangerous than

ordinary consumer would expect

then product fails test

and defect in manufacturing

(or warning) makes product
unreasonably dangerous
 Definition
3. D = Proximate Cause
* “But for” and “foreseeability” tests

of P’s Injury
* Physical injury to:
- Person (P’s bodily harm)
and/or
- P’s existing property
* Not “basis of the bargain” damages
 Definition
4. Merchant
Earns a living by selling goods
of this kind
 Knight v. Just Born
P’s claim:
* Due to manufacturing defect,
candy fails consumer expectation test

P has enough evidence to go to trial

* When there is evidence that product
does not live up to expectations of
ordinary consumer,
jury may infer there is defect in product
 Nevauex v. Park Place
D won
* Problem with service, not product
 Dutschke v. Piper
D won
* Substantial alteration of product
 Two Rivers v. Curtiss
No, D won
* No injury to person (bodily harm)
* No injury to existing property

* P sought reimbursement for

“basis of bargain” damages
=
Breach of warranty claim
NOT strict liability claim