Chapter 13 Strict Liability and Product Liability 2004

§ 1: Strict Liability ü Theory of strict liability started with Rylands v. Fletcher (1868 England). ü Defendant’s liability for strict liability is without regard to: Fault, Foreseeability, Standard of Care or Causation. ü Liability is based on abnormally dangerous activities. © 2004 West Legal Studies in Business A Division of Thomson Learning 2

Abnormally Dangerous Activities Defendant is strictly liable for an “abnormally dangerous activity” if: § Activity involves serious potential harm; § Activity involves high degree of risk that cannot be made safe; and § Activity is not commonly performed in the community or area. © 2004 West Legal Studies in Business A Division of Thomson Learning 3

Wild Animals ü Persons who keep wild animals are strictly liable for injuries caused by the beast. ü Persons who keep domestic animals are liable if the owner knew or should have known that animal was dangerous. © 2004 West Legal Studies in Business A Division of Thomson Learning 4

§ 2: Product Liability ü Product Liability is not a new tort. ü Liability can be based on: § Negligence; § Misrepresentation; or § Strict Liability; § Warranty Theory. © 2004 West Legal Studies in Business A Division of Thomson Learning 5

Product Liability (Negligence) üNegligence-based product liability is based on a manufacturer’s breach of the reasonable standard of care and failing to make a product safe. üCase 13. 1: Jarvis v. Ford Motor Co. (2002) © 2004 West Legal Studies in Business A Division of Thomson Learning 6

Product Liability (Negligence) ü Manufacturer must exercise “due care” in: § Designing products; § Manufacturing and Assembling Products; § Inspecting and Testing Products; and § Placing adequate warning labels. © 2004 West Legal Studies in Business A Division of Thomson Learning 7

Product Liability (Negligence) ü Manufacturers who violates state or federal law in the manufacture or labeling of a product, may be negligent per se. ü No privity of contract required between Plaintiff and Manufacturer. Liability extends to any person’s injuries caused by a negligently made (defective) product. © 2004 West Legal Studies in Business A Division of Thomson Learning 8

Product Liability (Misrepresentation) ü Occurs when fraud committed against consumer or user of product. ü Fraud must have been made knowingly or with reckless disregard for safety. ü Plaintiff does not have to show product was defective. © 2004 West Legal Studies in Business A Division of Thomson Learning 9

§ 3: Strict Product Liability ü Manufacturers liable without regard to fault based on public policy: § Consumers must be protected from unsafe products; § Manufacturers should be liable to any user of the product; § Manufacturers, sellers and distributors can bear the costs of injuries. © 2004 West Legal Studies in Business A Division of Thomson Learning 10

Strict Product Liability ü Requirements for strict liability: § Product is unreasonably dangerous when sold Defendant sells the product; § Plaintiff injured by use or consumption of product and defective condition is the proximate cause of injury. ü Case 13. 2: Greenman v. Yuba Power Products (1962). © 2004 West Legal Studies in Business A Division of Thomson Learning 11

Requirements for Strict Product Liability Plaintiff must show product was so “defective” it was “unreasonably dangerous”: § Product must be in defective condition when sold. § Defendant is in the business of selling the product. § Product must be unreasonably dangerous. § Plaintiff must be physically harmed § Defective condition must be proximate cause of injury. § Good are in substantially same condition. © 2004 West Legal Studies in Business A Division of Thomson Learning 12

Unreasonably Dangerous Products ü Plaintiff must only show that the product was so “defective” as to be “unreasonably dangerous” which means: § Product was dangerous beyond the expectations of the ordinary consumer, OR § A less dangerous alternative was economically feasible for the manufacturer but the manufacturer failed to produce it. © 2004 West Legal Studies in Business A Division of Thomson Learning 13

Strict Liability: Product Defects ü Three types of product defects: § Manufacturing defects. § Design defects. § Warning Defects. © 2004 West Legal Studies in Business A Division of Thomson Learning 14

Manufacturing Defects ü Occurs when a product “departs from its intended design even though all possible care was exercised in the preparation and marketing of the product. ” © 2004 West Legal Studies in Business A Division of Thomson Learning 15

Design Defects ü Occurs when the “foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative. . . and the omission of the alternative design renders the product not reasonably safe. ” © 2004 West Legal Studies in Business A Division of Thomson Learning 16

Warning Defects ü A product may be defective because of inadequate warnings or instructions. ü Liability based on foreseeability that proper instructions/labels would have made the product safe to use. ü Case 13. 3: Liriano v. Hobart Co. (1999). © 2004 West Legal Studies in Business A Division of Thomson Learning 17

Warning Defects ü There is no duty to warn about obvious or commonly known risks. ü Seller must also warn about injury due to product misuse. Key is whether misuse was foreseeable. © 2004 West Legal Studies in Business A Division of Thomson Learning 18

Market Share Liability ü Theory of liability when multiple Defendants contributed to manufacture of defective product. ü Liability of each Defendant is proportionate to the share of the market held by each respective Defendant. © 2004 West Legal Studies in Business A Division of Thomson Learning 19

§ 4: Defenses to Product Liability ü Assumption of Risk. ü Product Misuse (Plaintiff does not know the product is dangerous for a particular use). ü Contributory/Comparative Negligence. § Case 13. 4: Smith v. Ingersoll-Rand Co (2000). ü Commonly known dangers. ü Statutes of Limitation. © 2004 West Legal Studies in Business A Division of Thomson Learning 20

Law on the Web ü American Law Institute. ü Tobacco Product Liability. ü Law. com “Products Liability” website. ü Legal Research Exercises on the Web. © 2004 West Legal Studies in Business A Division of Thomson Learning 21