© 2006 Prentice Hall Ch. 13-1 THE LEGAL ENVIRONMENT OF BUSINESS A Critical Thinking Approach Fourth Edition Nancy K. Kubasek Bartley A. Brennan M. Neil.

Slides:



Advertisements
Similar presentations
Warranties, Product Liability and Consumer Law
Advertisements

Copyright © 2004 by Prentice-Hall. All rights reserved. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 6 Strict Liability.
Problem of people being injured by “defective products.”
Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics.
Click your mouse anywhere on the screen to advance the text in each slide. After the starburst appears, click a blue triangle to move to the next slide.
Chapter 18 Defective Products. What are Express and Implied Warranties? Warranty -A statement about the product’s qualities or performance that the seller.
© 2004 West Legal Studies in Business A Division of Thomson Learning 1 IV. Strict Liability IV. Strict Liability  A. Abnormally dangerous activities 
P A R T P A R T Sales Formation & Terms Product Liability Performance of Sales Contracts Remedies for Breach of Sales Contracts 4 McGraw-Hill/Irwin Business.
Chapter 26 Warranties and Other Product Liability Theories Twomey, Business Law and the Regulatory Environment (14th Ed.)
UT-Austin Edinburgh Summer Program 2002 Product Liability When goods cause injury, there is a question of product liability. There are three main issues.
Product Liability When goods cause injury, there is a question of product liability. There are three main issues related to product liability cases: –
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license.
Product Liability Negligence Failure to exercise due care in design, materials, production, assembling, inspecting, testing and placing warnings No privity.
Prentice Hall © PowerPoint Slides to accompany THE LEGAL ENVIRONMENT OF BUSINESS AND ONLINE COMMERCE 5E, by Henry R. Cheeseman Chapter 13 Sales and.
Slides developed by Les Wiletzky Wiletzky and Associates Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany.
Chapter 25 Warranties McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 21 Warranties and Product Liability
Chapter 1: Legal Ethics 1. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use.
Chapter 6 Strict Liability and Product Liability
CHAPTER 19 WARRANTIES AND PRODUCT LIABILITY DAVIDSON, KNOWLES & FORSYTHE Business Law: Cases and Principles in the Legal Environment (8 th Ed.)
THE LEGAL ENVIRONMENT OF BUSINESS © 2009 Pearson Education, Inc. publishing as Prentice Hall Ch The Legal Environment of Business A Critical Thinking.
© 2004 West Legal Studies in Business A Division of Thomson Learning 1 Chapter 6 Strict Liability and Product Liability Chapter 6 Strict Liability and.
CHAPTER 7 Business Torts and Product Liability.
Torts and Products Liability. What is a tort? A tort is a civil wrong resulting in injury to person or property. Torts vary according to intent –Intentional.
© Cavico & Mujtaba, 2008 Business Law for the Entrepreneur and Manager Frank Cavico and Bahaudin G. Mujtaba Chapter 3 – Products Liability.
Chapter 10 Strict Liability and Product Liability
Chapter 6.  A tort is a wrong  There are three categories of torts  Intentional torts  Unintentional torts (negligence)  Strict liability 6-2Copyright.
Products Liability Tort Liability Negligence Strict Liability Restatement of Torts 402 A.
Products Liability “Liability for Defective Products”
© 2007 West Legal Studies in Business, A Division of Thomson Learning Chapter 31 Professional Liability.
1 Product Liability LPP 255 Pat Cihon Syracuse University -- SoM -- LPP.
Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning Chapter 25 Product Liability: Warranties and Torts Twomey Jennings Anderson’s.
I. Negligence A. Characteristics 1. definition 2. elements 3. defenses.
© 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 51: Liability of Accountants Chapter 51: Liability of Accountants.
Negligence and Strict Liability. Products Liability The liability of manufacturers, sellers, and others for the injuries caused by defective products.
Comprehensive Volume, 18 th Edition Chapter 27: Warranties and Other Product Liability Theories.
20-1 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.
Chapter 6 Product and Strict Liability
Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics.
Contract Law for Paralegals: Traditional and E-Contracts © 2009 Pearson Education, Upper Saddle River, NJ All rights reserved Relationship of Tort.
© 2004 West Legal Studies in Business, a Division of Thomson Learning 23.1 Chapter 23 Product Liability.
 Development of Strict Liability.  Defendant’s liability for strict liability is without regard to: Fault, Foreseeability, Standard of Care or Causation.
Chapter 6 Torts and Strict Liability. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.6-2 Three Kinds of Torts A tort is a wrong.
Strict Liability and Product Liability Chapter 7.
COPYRIGHT © 2006 West Legal Studies in Business, a part of The Thomson Corporation. Thomson, the Star logo, and West Legal Studies in Business are trademarks.
Prentice Hall © PowerPoint Slides to accompany The Legal Environment of Business and Online Commerce 4E, by Henry R. Cheeseman Chapter 6 Product.
WARRANTIES AND PRODUCTS LIABILITY. WARRANTIES under the UCC An assurance from seller that goods meet certain standards An assurance from seller that goods.
Copyright © 2006 by Pearson Prentice-Hall. All rights reserved Business Law MAN-3 Erlan Bakiev, Ph. D. Warranties, Product Liability, and Consumer Protection.
Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. and the Legal Environment, 10 th edition by Richard.
Chapter 11 Sales Law and Product Liability
CHAPTER 21 Warranties and Product Liability
STRICT LIABILITY AND PRODUCT LIABILITY
Warranties and Product Liability
TORTS “The American Recipe”
CHAPTER 23: WARRANTIES.
CHAPTER 22 Warranties and Product Liability.
Chapter 7: Strict Liability and Product Liability
STRICT LIABILITY AND PRODUCT LIABILITY
Chapter 42 Liability of Accountants & Other Professionals
Chapter 13: Product Liability
Chapter 13: Strict Liability and Prduct liability
By Richard A. Mann & Barry S. Roberts
CHAPTER 21 Warranties and Product Liability
Essentials of the legal environment today, 5e
Chapter 7 Strict Liability and Product Liability
Chapter 6 Product and Strict Liability
Chapter 25 PRODUCT LIABILITY: WARRANTIES AND TORTS
Chapter 9 Strict Liability and Product Liability.
Review Slides – Unit 3 Chapter # Questions
STRICT LIABILITY AND PRODUCT LIABILITY
Presentation transcript:

© 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS A Critical Thinking Approach Fourth Edition Nancy K. Kubasek Bartley A. Brennan M. Neil Browne Nancy K. Kubasek Bartley A. Brennan M. Neil Browne

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch CHAPTER 13 Product and Service Liability Law

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Product Liability Scope of the problem… 34.4 million product injuries per year 24,400 fatalities 1 million lawsuits $700 billion in costs

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Product Liability Theories of Recovery: NegligenceNegligence Breach of warranty Strict product liability

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch NegligenceNegligence Negligence Theory: The privity requirement Manufacturer—Retailer—Consumer MacPherson v. Buick — discarded privity

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch NegligenceNegligence Negligence Actions: Failure to warn or inadequate warning Failure to warn or inadequate warning Design defect (all units are faulty) Design defect (all units are faulty) Manufacturing defect (some units are faulty) Manufacturing defect (some units are faulty) Inadequate testing Inadequate testing Negligent advertising Negligent advertising Negligence per se Negligence per se Defenses to Negligence: Contributory negligence Contributory negligence Comparative negligence Comparative negligence Assumption of risk Assumption of risk Misuse of product Misuse of product Statute of limitations Statute of limitations Statute of repose Statute of repose State-of-the-art defense State-of-the-art defense Defenses to Negligence: Contributory negligence Contributory negligence Comparative negligence Comparative negligence Assumption of risk Assumption of risk Misuse of product Misuse of product Statute of limitations Statute of limitations Statute of repose Statute of repose State-of-the-art defense State-of-the-art defense

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Breach of Warranty Breach of Warranty Approaches: Warranties are imposed in sales of goods via UCC Article 2 Express warranties Implied warranties Implied warranty of merchantability Implied warranty of fitness for a particular purpose

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Breach of Warranty Implied Warranty of Merchantability Pass without objection in the trade Fair or average quality (and uniformly so among all units) Fit for ordinary purpose Adequate packaging Conform to promises on label Implied Warranty of Fitness for a Particular Purpose Knowledgeable seller Consumer reasonably relies on seller’s expertise in selecting the product Consumer is injured when product fails Implied Warranty of Fitness for a Particular Purpose Knowledgeable seller Consumer reasonably relies on seller’s expertise in selecting the product Consumer is injured when product fails

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Breach of Warranty Express Warranties: Seller provides: Description of goods Promise or statement about performance Model or sample Product fails, causing injury

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Breach of Warranty Defenses to Warranty Cases: Disclaimers: “As is” Limits as to type of defect Limits as to remedy Disclaimers: “As is” Limits as to type of defect Limits as to remedy Statute of Limitations: Four years for breach of warranty Cf. 3 years for tort Statute “runs” from date of discovery of breach, not from date of sale Statute of Limitations: Four years for breach of warranty Cf. 3 years for tort Statute “runs” from date of discovery of breach, not from date of sale

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Strict Product Liability Strict Liability Theory: Not based in culpability of defendant Not based in culpability of defendant Based on cost-shifting from injured plaintiff to manufacturer Based on cost-shifting from injured plaintiff to manufacturerRATIONALE Manufacturing is needed for mass production, consumer- based economy Some injuries will result Manufacturers can better absorb costs by collecting incremental price from consumers, spreading costs and purchasing liability insurance RATIONALE Manufacturing is needed for mass production, consumer- based economy Some injuries will result Manufacturers can better absorb costs by collecting incremental price from consumers, spreading costs and purchasing liability insurance

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Strict Product Liability Strict Liability in Tort Section 402(A) of the Restatement (Second) of Torts: Product defective when sold Defect made product unreasonably dangerous Product caused injury to plaintiff Seller is not excused from liability even though Reasonable care was used in manufacture No privity of contract exists

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Strict Product Liability Defects in Products Design defects (all units are faulty) Consumer expectation test Feasible alternatives test Manufacturing defects (some units are faulty)

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Strict Product Liability Section 402(A) of the Restatement (Third) of Torts Adopted in 1997 Adopted in 1997 Manufacturing defects—strict liability Manufacturing defects—strict liability Design defects—reasonableness standard Design defects—reasonableness standard Warning defects—liability imposed when risks could have been reduced via warning Warning defects—liability imposed when risks could have been reduced via warning

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Strict Product Liability Defenses to Strict Liability Product misuse Product misuse Assumption of risk Assumption of risk Majority Rule State-of-the-art defense is no defense Majority Rule State-of-the-art defense is no defense Section 402(A) involves sellers and buyers. Yet, courts have consistently held that bystanders may also sue, even though they did not purchase product What about Liability of Bystanders?

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Market Share Liability Problem: Plaintiff suffers injury caused by numerous manufacturers over a long period of exposure…but cannot claim injury was caused by specific product or seller Context: Medicinal drug cases, medical implants, multiple plaintiffs and defendants

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Market Share Liability Market Share Liability Theory: Sindell v. Abbott Laboratories (1982) “Enterprise Liability” Doctrine Plaintiffs can recover against all defendants jointly, each defendant liable in proportion to their share of market at the time of injury

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Service Liability Usual Context: professional malpractice cases Other theories of recovery: negligence; breach of contract; fraud Professional malpractice cases are increasing

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Accountants’ Liability Prevalent in the area of securities law Theories: negligence; breach of contract; fraud Standard of care: AICPA, GAAP, GAAS Parties can include both clients and third parties* Third Party Liability of Accountants *Limitations on liability  Ultramares Doctrine: no privity-no liability  Section 552 R. (2d) Torts: known reliance  Reasonable Foreseeability: possible reliance Trend in the law: increasing liability Service Liability

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Global Dimensions The foreign manufacturer may not be subject to jurisdiction Judgment may not be collectible against foreign entity Result: Local business may be liable for entire judgment What if a U.S. importer-retailer sells a defective product manufactured overseas?

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Global Dimensions International Liability: Easier, generally, for foreign plaintiff to obtain jurisdiction over U.S. entity U.S. business may be subject to many strict liability laws Foreign law even more strongly favors plaintiff- consumers

© 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch Summary Product liability law is based in tort Strict liability generally easier to prove for plaintiff Product liability law does not require privity or even a sale Plaintiff will usually name retailer, wholesaler, distributor, and manufacturer as defendants