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Chapter

13

Warranties, Product

Liability, & Consumer Law

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Warranties of Title

Warranties of Title - automatic in most sales

contracts:

Good Title No Liens

No Infringements

Disclaimer of Title Warranty

Only good with specific language

Transferring only such rights held

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What is an express warranty?

Oralor written representations offactabout quality,condition, description or performance of goods.

Warranty must be basis of the bargain

Goods must conform to model or sample shown

Statements of opinion do notcreate express

warranties.

Experts opinion?

This will never break.

Reasonableness and context ?

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What is an implied warranty?

A warranty that the UCC/law derives fromimplication or inference of the circumstances.

Implied Warranty of Merchantability:

Sale made by a Merchant

Product is fit for the general purpose intended Merchantable goods and food

Webster v. Blue Ship Tea Room, Inc. (1964)

Implied Warranty of Fitness for a Particular Purpose Seller is aware of Buyers particular needs

Buyer must rely on skill or knowledge of Sellerin selectinggoods (Merchant?)

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Warranty Disclaimers

Express warranties preempt implied warranties - exceptfor implied warranties of fitness for a particularpurpose.

Express Warranty Disclaimers Must be conspicuous

Buyer must be aware of disclaimer at time of sale

Implied Warranty Disclaimers Disclaimer of Implied Warranty of Merchantability (Courts dont like)

Disclaimer of the Implied Warranty of Fitness (As Is)

Must be in writing and conspicuous

Buyers Refusal to Inspect

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Product Liability-Negligence

Manufacturers, sellers, and lessors of goodscan be liable for a defective good that causesinjury to a 3rd party.

Negligence: Due care in designing the product

Selecting materials

Assembly, inspection, testing

Adequate warning label for ordinary person Privity of contract notrequired

MacPherson v. Buick Motor Co. (1916)

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What is strict product liability?

Liability without regard to faultor standard of care.

Tort doctrine

Injured person can be 3rd party

California first state to impose

Legal assumption that:

Consumers should be protected against unsafe products

Manufacturers and distributors should notescape liability for defectiveproducts

Manufacturers and sellers are in a better position to bear the costs ofinjury

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Requirements for Strict Liability

Bases for an action in strict liability:

Product must be in a defective condition when sold

Defendant must be engaged in selling that product

Product must be unreasonably dangerous:product isdangerous beyond ordinary expectation or less dangerousalternative was not used

Plaintiff must incur injuryto self or property by use or

consumption of the product

Defective condition must be cause of injury / damages

Goods have not been substantiallychanged from time of sale

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3 Types of Product Defects

Manufacturing Defects - departure from design specifications

Design Defects -flaw in design

Inadequate Warningsreasonableness?

Wyeth v. Levine (2009)

Manufacturer must warn ifforeseeable misuse will cause injury

No duty to warn about that are obvious or commonly known

Factors to consider: user groups, content of message

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Defenses to Product Liability

Assumption of Risk

Product Misuse

Severely limited by foreseeability?

Comparative Negligence

Commonly Known Dangers

Sharp knives and guns

Knowledgeable User Defense

McDonalds case

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Consumer Protection Laws

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PufferyVague generalities and obvious exaggerations arepermissible and not considered deceptive. Opinion

Federal Trade Commission v. QT, Inc (2008)

Bait and Switch

The advertising of a product at an attractively low priceto lure customers in to buy more expensive items.

Greenwashing

The practice of disingenuously spinning products andpolicies as environmentally friendly.

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Deceptive Advertising

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FTC ActionsAgainst Deceptive Advertising

The FTC is charged with enforcing federal lawsagainst deceptive advertising. When

appropriate it can:

Issue cease and desist orders With respect to a particular product or advertisement

With regard to multiple product orders

Impose counter-advertising Correct misinformation

Tobacco

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Questions?