Roberts v. lanigan auto sales

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19 Warranties and Product Liability

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Express Warranty

The sellers of goods are liable for breach of warranties that they make. For example,

when a jewelry store sells a diamond ring, it states the 4Cs of the ring: cut, clarity, color,

and carat weight. If a party purchases a ring but it does not meet the 4Cs as stated by the

seller, the seller has breached a warranty. The purchaser can sue the seller for breach of

warranty.

Learning Objectives

After studying this chapter, you should be able to:

1. Identify and describe express warranties.

2. Describe the implied warranty of merchantability and the implied warranty of

fitness for a particular purpose.

3. Identify warranty disclaimers and determine when they are unlawful.

4. Describe product liability and define the doctrine of strict liability.

5. Describe the product defects in manufacturing, design, and failure to warn.

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Chapter Outline

Introduction to Warranties and Product Liability

Express Warranty

Implied Warranties

Ethics • Implied Warranty of Merchantability

Warranty Disclaimers

Case 19.1 • Roberts v. Lanigan Auto Sales

Product Liability

Negligence

Strict Liability

Product Defects

Case 19.2 • Shoshone Coca-Cola Bottling Company v. Dolinski

Critical Legal Thinking Case • Domingue v. Cameco Industries, Inc.

Case 19.3 • Patch v. Hillerich & Bradsby Company

Case 19.4 • Thompson v. Sunbeam Products, Inc.

“When a manufacturer engages in advertising in order to bring his goods

and their quality to the attention of the public and thus to create consumer

demand, the representations made constitute an express warranty running

directly to a buyer who purchases in reliance thereon. The fact that the sale

is consummated with an independent dealer does not obviate the warranty.”

—Francis, Justice

Henningsen v. Bloomfield Motors, Inc.

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Introduction to Warranties and Product Liability

The doctrine of caveat emptor—“let the buyer beware”—governed the law of sales and

leases for centuries. Finally, the law recognized that consumers and other purchasers

and lessees of goods needed greater protection. Article 2 of the Uniform Commercial

Code (UCC), adopted in whole or in part by all 50 states, establishes certain warranties

that apply to the sale of goods. Article 2A of the UCC, adopted in almost all states,

establishes warranties that apply to lease transactions.

“A manufacturer is strictly liable in tort when an article he places on the market,

knowing that it is to be used without inspection for defects, proves to have a

defect that causes injury to a human being.”

Greenman v. Yuba Power Products, Inc.

59 Cal.2d 57, 27 Cal.Rptr. 697, 1963 Cal. Lexis 140 (1963)

Warranties are the buyer’s or lessee’s assurance that the goods meet certain

standards. Warranties that are based on contract law may be either expressly stated or

implied by law. If the seller or lessor fails to meet a warranty, the buyer or lessee can sue

for breach of warranty.

warranty

A seller’s or lessor’s express or implied assurance to a buyer or lessee that

the goods sold or leased meet certain quality standards.

Sales and lease warranties are discussed in this chapter.

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Express Warranty

Express warranties are created when a seller or lessor affirms that the goods he or

she is selling or leasing meet certain standards of quality, description, performance, or

condition [UCC 2-313(1), 2A-210(1)]. Express warranties can be either written, oral, or

inferred from the seller’s conduct. It is not necessary to use formal words such as

warrant or guarantee to create an express warranty. Express warranties can be made by

mistake because the seller or lessor does not have to specifically intend to make the

warranty [UCC 2-313(2), 2A-210(2)].

express warranty

A warranty that is created when a seller or lessor makes an affirmation that

the goods he or she is selling or leasing meet certain standards of quality,

description, performance, or condition.

Sellers and lessors are not required to make express warranties. Generally, express

warranties are made to entice consumers and others to buy or lease their products. That

is why these warranties are often found in advertisements, brochures, catalogs, pictures,

illustrations, diagrams, blueprints, and so on. Buyers and lessees can recover for breach

of an express warranty if the warranty induced the buyer to purchase the product or the

lessee to lease the product.

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Creation of an Express Warranty

An express warranty is created when a seller or lessor indicates that the goods will

conform to:

1. All affirmations of fact or promise made about the goods

Examples

Promises are statements such as “This car will go 100 miles per hour” or “This

house paint will last at least five years.”

2. Any description of the goods

Examples

Descriptions of goods include terms such as Idaho potatoes and Michigan

cherries.

3. Any model or sample of the goods

Example

A model of an oil-drilling rig or a sample of wheat taken from a silo creates an

express warranty.

Buyers and lessees can recover for a breach of an express warranty if the warranty was

a contributing factor that induced the buyer to purchase the product or the lessee to lease

the product [UCC 2-313(1), 2A-210(1)]. Generally, a retailer is liable for the express

warranties made by manufacturers of goods it sells. A manufacturer is not liable for

express warranties made by wholesalers and retailers unless the manufacturer authorizes

or ratifies a warranty.

“Warranties are favored in law, being a part of a man’s assurance.”

Coke First Institute

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Statement of Opinion

Many express warranties arise during the course of negotiations between a buyer and a

seller or a lessor and a lessee. A seller’s or lessor’s statement of opinion (i.e.,

puffing) or commendation of the goods does not create an express warranty. It is often

difficult to determine whether a seller’s statement is an affirmation of fact (which creates

an express warranty) or a statement of opinion (which does not create a warranty). An

affirmation of the value of goods does not create an express warranty [UCC 2-313(2),

2A-210(2)].

statement of opinion (puffing)

A commendation of goods, made by a seller or lessor, that does not create

an express warranty.

Examples

A used car salesperson’s saying “This is the best used car available in town” does not

create an express warranty because it is an opinion and mere puffing. However, a

statement such as “This car has been driven only twenty thousand miles” is an

express warranty because it is a statement of fact.

Examples

Statements such as “This painting is worth a fortune” or “Others would gladly pay

$20,000 for this car” do not create an express warranty because these are statements

of value and not statements of fact.

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Damages Recoverable for Breach of Warranty

Where there has been a breach of warranty, the buyer or lessee may sue the seller or

lessor to recover compensatory damages. The amount of recoverable compensatory

damages is generally equal to the difference between (1) the value of the goods as

warranted and (2) the actual value of the goods accepted at the time and place of

acceptance [UCC 2-714(2), 2A-508(4)]. A purchaser or lessee can recover for personal

injuries that are caused by a breach of warranty.

compensatory damages

Damages that are generally equal to the difference between the value of the

goods as warranted and the actual value of the goods accepted at the time

and place of acceptance.

Example

A used car salesperson warrants that a used car has been driven only 20,000 miles.

If true, that would make the car worth $20,000. The salesperson gives the buyer a

“good deal” and sells the car for $16,000. Unfortunately, the car was worth only

$10,000 because it was actually driven 100,000 miles. The buyer discovers the

breach of warranty and sues the salesperson for damages. The buyer can recover

$10,000 ($20,000 warranted value minus $10,000 actual value). The contract price

($16,000) is irrelevant to this computation.

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Implied Warranties

In addition to express warranties made by a manufacturer or seller, the law sometimes

implies warranties in the sale or lease of goods. Implied warranties are not expressly

stated in the sales or lease contract but instead are implied by law. The most common

forms of implied warranties are the implied warranty of merchantability, the implied

warranty of fitness for human consumption, and the implied warranty of fitness for a

particular purpose. These warranties are discussed in the following paragraphs.

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Implied Warranty of Merchantability

If a seller or lessor of a good is a merchant with respect to goods of that kind, the sales

contract or lease contract contains an implied warranty of merchantability of the good

unless this implied warranty is properly disclaimed [UCC 2-314(1), 2A-212(1)]. This

implied warranty requires that the following standards be met:

implied warranty of merchantability

Unless properly disclosed, a warranty that is implied that sold or leased

goods are fit for the ordinary purpose for which they are sold or leased, as

well as other assurances.

1. The goods must be fit for the ordinary purposes for which they are used.

Examples

A chair must be able to safely perform the function of a chair. If a normal-

sized person sits in a chair that has not been tampered with, and the chair

collapses, there has been a breach of the implied warranty of merchantability.

If, however, the same person is injured because he or she uses the chair as a

ladder and it tips over, there is no breach of implied warranty because serving

as a ladder is not the ordinary purpose of a chair.

2. The goods must be adequately contained, packaged, and labeled.

Example

The implied warranty of merchantability applies to a milk bottle as well as to the

milk inside the bottle.

3. The goods must be of an even kind, quality, and quantity within each unit.

Example

All the goods in a carton, package, or box must be consistent.

4. The goods must conform to any promise or affirmation of fact made on the

container or label.

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Example

The goods must be capable of being used safely in accordance with the

instructions on the package or label.

“Law should be like death, which spares no one.”

Charles de Montesquieu

5. The quality of the goods must pass without objection in the trade.

Example

The goods must be of such quality that other users of the goods would not

object to their quality.

6. Fungible goods must meet a fair average or middle range of quality.

Example

To be classified as a certain grade, such as pearl millet grain (Pennisetum

glaucum) or iron ore (magnetite Fe O ), goods must meet the average range

of quality of that grade.

The following ethics feature discusses the issue of the implied warranty of

merchantability.

3 4

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Ethics

Implied Warranty of Merchantability

“Plaintiff introduced a Ford marketing manual that predicted many

buyers would be attracted to the Bronco because utility vehicles

were suitable to ‘contemporary lifestyles’ and were ‘considered

fashionable’ in some suburban areas.”

—Titone, Judge

Nancy Denny purchased a Bronco, a sport-utility vehicle (SUV) that was

manufactured by Ford Motor Company. Denny testified that she purchased the

Bronco for use on paved city and suburban streets and not for off-road use. When

Denny was driving the vehicle on a paved road, she slammed on the brakes in an

effort to avoid a deer that had walked directly into her SUV’s path. The Bronco

rolled over, and Denny was severely injured. Denny sued Ford Motor Company to

recover damages for breach of the implied warranty of merchantability.

Denny alleged that the Bronco presented a significantly higher risk of occurrence

of rollover accidents than did ordinary passenger vehicles. Denny introduced

evidence at trial that showed that the Bronco had a low stability index because of

its high center of gravity, narrow tracks, and shorter wheelbase, as well as the

design of its suspension system.

Ford countered that the Bronco was intended as an off-road vehicle and was not

designed to be used as a conventional passenger automobile on paved streets.

However, the plaintiff introduced a Ford marketing manual that predicted many

buyers would be attracted to the Bronco because utility vehicles were suitable to

“contemporary lifestyles” and were “considered fashionable” in some suburban

areas. According to this manual, the sales presentation of the Bronco should take

into account the vehicle’s “suitability for commuting and for suburban and city

driving.”

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The trial court found that Ford had violated the implied warranty of merchantability

and awarded Denny $1.2 million. The court of appeals upheld this verdict. Denny

v. Ford Motor Company, 87 N.Y.2d 248, 662 N.E.2d 730, 639 N.Y.S.2d 250, Web

1995 N.Y. Lexis 4445 (Court of Appeals of New York)

Ethics Questions

Did Ford act ethically in alleging that the Bronco was sold only as an off-road

vehicle? Was this argument persuasive?

The implied warranty of merchantability does not apply to sales or leases by

nonmerchants or casual sales.

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Examples

The implied warranty of merchantability applies to the sale of a lawn mower that is

sold by a merchant who is in the business of selling lawn mowers. The implied

warranty of merchantability does not apply when one neighbor sells a lawn mower to

another neighbor.

Restaurant

The implied warranty of fitness for human consumption is an implied warranty

that food and drink served by restaurants, grocery stores, fast-food outlets, coffee

shops, bars, vending machines, and other purveyors of food and drink be safe for

human consumption. The warranty applies to food and drink consumed on or off the

seller’s premises. The UCC incorporates this warranty within the implied warranty of

merchantability.

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Implied Warranty of Fitness for a Particular Purpose

The UCC contains an implied warranty of fitness for a particular purpose. This

implied warranty attaches to the sale or lease of goods if the seller or lessor has made

statements that the goods will meet the buyer’s or lessee’s needs or purpose. This implied

warranty is breached if the goods do not meet the buyer’s or lessee’s expressed needs.

The warranty applies to both merchant and nonmerchant sellers and lessors.

implied warranty of fitness for human consumption

A warranty that applies to food or drink consumed on or off the premises of

restaurants, grocery stores, fast-food outlets, coffee shops, bars, vending

machines, and other purveyors of food and drink.

The warranty of fitness for a particular purpose is implied at the time of contracting if

[UCC 2-315, 2A-213]:

implied warranty of fitness for a particular purpose

A warranty that arises when a seller or lessor warrants that the goods will

meet the buyer’s or lessee’s expressed needs.

The seller or lessor has reason to know the particular purpose for which the buyer is

purchasing the goods or the lessee is leasing the goods.

The seller or lessor makes a statement that the goods will serve this purpose.

The buyer or lessee relies on the seller’s or lessor’s skill and judgment and purchases

or leases the goods.

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Example

Susan wants to buy lumber to build a small deck in her backyard. She goes to Joe’s

Lumber Yard to purchase the lumber and describes to Joe, the owner of the lumber

yard, the size of the deck she intends to build. Susan also tells Joe that she is relying

on him to select the right lumber for the project. Joe selects the lumber and states that

the lumber will serve Susan’s purpose. Susan buys the lumber and builds the deck.

Unfortunately, the deck collapses because the lumber was not strong enough to

support it. Susan can sue Joe for breach of the implied warranty of fitness for a

particular purpose.

Concept Summary

Express and Implied Warranties

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Warranty Disclaimers

Warranties can be disclaimed, or limited. If an express warranty is made, it can be

limited only if the warranty disclaimer and the warranty can be reasonably construed

with each other. All implied warranties of quality may be disclaimed. The rules for

disclaiming implied warranties are:

warranty disclaimer

A statement that negates express and implied warranties.

“As is” disclaimer. Expressions such as as is, with all faults, or other language that

makes it clear to the buyer that there are no implied warranties disclaims all implied

warranties. An “as is” disclaimer is often included in sales contracts for used

products.

Disclaimer of the implied warranty of merchantability. If the “as is” type of

disclaimer is not used, a disclaimer of the implied warranty of merchantability

must specifically mention the term merchantability for the implied warranty of

merchantability to be disclaimed. These disclaimers may be oral or written.

Disclaimer of the implied warranty of fitness for a particular purpose. If the “as

is” type of disclaimer is not used, a disclaimer of the implied warranty of fitness

for a particular purpose may contain general language, without specific use of the

term fitness. The disclaimer has to be in writing.

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Conspicuous Display of Disclaimer

Written disclaimers must be conspicuously displayed to be valid. The courts construe

conspicuous to mean noticeable to a reasonable person [UCC 2-316, 2A-214]. A

heading printed in uppercase letters or a typeface that is larger or in a different style than

the rest of the body of a sales or lease contract is considered to be conspicuous.

Different-color type is also considered conspicuous.

conspicuous

A requirement that warranty disclaimers be noticeable to a reasonable

person.

The following case addresses the issue of a warranty disclaimer.

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Case 19.1 State Court Case Warranty Disclaimer

Roberts v. Lanigan Auto Sales

2013 Ky. App. Lexis 4 (2013)

Court of Appeals of Kentucky

“A valid ‘as is’ agreement prevents a buyer from holding a seller liable if the

thing sold turns out to be worth less than the price paid.”

—Vanmeter, Judge

Facts

Evan Roberts purchased a used vehicle from Lanigan Auto Sales. The sales contract

contained a clause stating that the vehicle was “sold as is.” Subsequently, Roberts

obtained a report that stated that the vehicle had previously been involved in an accident

and suffered damage to the undercarriage of the vehicle. Roberts sued Lanigan for

damages, alleging that Lanigan breached express and implied warranties by not

disclosing the vehicle’s prior damage and accident history. Lanigan maintained it had

never represented the quality of the vehicle and filed a motion to dismiss Roberts’ action.

The trial court dismissed Roberts’ action on the basis that the sales contract contained the

express term that the vehicle was “sold as is.” Roberts appealed.

Issue

Did the “sold as is” language of the sales contract bar Roberts’ action?

Language of the Court

A valid “as is” agreement prevents a buyer from holding a seller liable if the thing sold

turns out to be worth less than the price paid. Thus, by agreeing to purchase

something “as is,” a buyer agrees to make his or her own appraisal of the bargain and

to accept the risk that he or she may be wrong, and the seller gives no assurances,

express or implied, concerning the value or condition of the thing sold.

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Decision

The court of appeals affirmed the trial court’s decision that the “sold as is” language in the

sales contract prevented Roberts from recovering damages from Lanigan Auto Sales.

Ethics Questions

Why do sellers include “sold as is” clauses in sales contracts? Did Roberts act ethically in

trying to avoid the “sold as is” clause of the sales contract?

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Magnuson-Moss Warranty Act

The Magnuson-Moss Warranty Act is a federal statute that covers written warranties

related to consumer products. This act is administered by the Federal Trade

Commission (FTC). Consumer transactions, but not commercial and industrial

transactions, are governed by the act.

Magnuson-Moss Warranty Act

A federal statute that regulates written warranties on consumer products.

The act does not require a seller or lessor to make an express written warranty. However,

sellers or lessors who do make express warranties are subject to the provisions of the act.

If a warrantor chooses to make an express warranty, the Magnuson-Moss Warranty Act

requires that the warranty be labeled as either “full” or “limited.”

Full warranty. For a warranty to qualify as a full warranty, the warrantor must

guarantee that a defective product will be repaired or replaced free during the

warranty period. The warrantor must indicate whether there is a time limit on the full

warranty (e.g., “full 36-month warranty”).

Limited warranty. In a limited warranty, the warrantor limits the scope of the

warranty in some way. A warranty that covers the costs of parts, but not the labor, to

fix a defective product is a limited warranty.

Limited warranties are made more often by sellers and lessors than full warranties. The

act stipulates that sellers or lessors who make express written warranties related to

consumer products are forbidden from disclaiming or modifying the implied warranties of

merchantability and fitness for a particular purpose.

The act authorizes warrantors to establish an informal dispute-resolution procedure, such

as arbitration. A successful plaintiff can recover damages, attorneys’ fees, and other

costs incurred in bringing the action.

1

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Product Liability

The law provides that persons injured by defective products, and heirs of persons killed

by defective products, may bring tort actions to recover for damages. This is called

product liability . The following paragraphs cover these tort doctrines.

product liability

The liability of manufacturers, sellers, and others for the injuries caused by

defective products.

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Negligence

Often, the plaintiff who brings a product liability action relies on the traditional tort theory

of negligence . Negligence requires the defendant to be at fault for causing the

plaintiff’s injuries. To be successful, the plaintiff must prove that the defendant breached a

duty of due care to the plaintiff and thereby caused the plaintiff’s injuries. In other words,

the plaintiff must prove that the defendant was at fault for causing his or her injuries.

negligence

A tort related to defective products in which the defendant has breached a

duty of due care and caused harm to the plaintiff.

Failure to exercise due care includes failing to assemble a product carefully, negligent

product design, negligent inspection or testing of a product, negligent packaging, failure

to warn of the dangerous propensities of a product, and such. It is important to note that

in a negligence lawsuit only a party who was actually negligent is liable to the plaintiff.

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Example

“An injustice anywhere is an injustice everywhere.”

Samuel Johnson

Assume that the purchaser of a motorcycle is injured in an accident. The accident

occurred because a screw was missing from the motorcycle. How does the buyer

prove who was negligent? Was it the manufacturer, which left out the screw during

the assembly of the motorcycle? Was it the retailer, who negligently failed to discover

the missing screw while preparing the motorcycle for sale? Was it the mechanic, who

failed to replace the screw after repairing the motorcycle? To be successful, the

plaintiff must prove that the defendant breached a duty of due care to the plaintiff and

thereby caused the plaintiff’s injuries. In other words, the plaintiff must prove that the

defendant was at fault for causing his or her injuries. Negligence remains a viable, yet

sometimes difficult, theory on which to base a product liability action.

strict liability

A tort doctrine that makes manufacturers, distributors, wholesalers,

retailers, and others in the chain of distribution of a defective product

liable for the damages caused by the defect, irrespective of fault.

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Football Field

Football helmets and other sports equipment are usually designed to be as safe as

possible. However, many manufacturers have discontinued making football helmets

because of the exposure to product liability lawsuits.

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Strict Liability

In the landmark case Greenman v. Yuba Power Products, Inc ., the California

Supreme Court adopted the doctrine of strict liability in tort as a basis for product

liability actions. Most states have now adopted this doctrine as a basis for product liability

actions.

The doctrine of strict liability removes many of the difficulties for the plaintiff associated

with other theories of product liability. This section examines the special features of the

doctrine of strict liability.

Liability without Fault

Unlike negligence, strict liability does not require the injured person to prove that the

defendant breached a duty of care. Strict liability is liability without fault. A seller can be

found strictly liable even though he or she has exercised all possible care in the

preparation and sale of his or her product. Strict liability may not be disclaimed.

The doctrine of strict liability applies to sellers and lessors of products who are engaged in

the business of selling and leasing products. Casual sales and transactions by

nonmerchants are not covered. Thus, a person who sells a defective product to a

neighbor in a casual sale is not strictly liable if the product causes injury.

Strict liability applies only to products, not services. In hybrid transactions that involve

both services and products, the dominant element of the transaction dictates whether

strict liability applies.

Example

In a medical operation that requires a doctor to insert an electronic pacemaker to help

a patient’s heart pump blood regularly, the surgical operation would be the dominant

element and the provision of the pacemaker would not be the dominant element.

Therefore, the doctor would not be liable for strict liability if the pacemaker is

defective and fails, causing injury to the patient. However, the manufacturer and seller

of the defective pacemaker (a product) would be strictly liable.

2

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All in the Chain of Distribution Are Liable

All parties in the chain of distribution of a defective product are strictly liable for the

injuries caused by that product. Thus, all manufacturers, distributors, wholesalers,

retailers, lessors, and subcomponent manufacturers may be sued and assessed liability

under the doctrine of strict liability in tort. This view is based on public policy. First, the

injured party will have more parties from whom to recover damages for injuries. This is

particularly important if the negligent party is out of business or does not have the money

to pay the judgment. Second, lawmakers presume that sellers and lessors will insure

against the risk of a strict liability lawsuit and spread the cost to their consumers by

raising the price of their products. Third, parties in the chain of distribution may be more

careful about the products they distribute.

chain of distribution

All manufacturers, distributors, wholesalers, retailers, lessors, and

subcomponent manufacturers involved in a transaction.

A defendant who has not been negligent but who is made to pay a strict liability judgment

can bring a separate action against the negligent party in the chain of distribution to

recover its losses.

Critical Legal Thinking

What is the public policy for holding parties in the chain of distribution of a

product strictly liable without fault? Can they protect against liability for some

other party’s negligence?

Example

Suppose a subcomponent manufacturer produces a defective tire and sells it to a

truck manufacturer. The truck manufacturer places the defective tire on one of its

new-model trucks. The truck is sold to a retail car dealership. Ultimately, the car

dealership sells the truck to a buyer. The defective tire causes an accident in which

the buyer is injured. All the parties in the tire’s chain of distribution can be sued by

the injured party; in this case, the liable parties are the subcomponent manufacturer,

the truck manufacturer, and the car dealership.

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Exhibit 19.1 compares the doctrines of negligence and strict liability.

Figure 19.1 Negligence and Strict Liability Compared

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Parties Who Can Recover for Strict Liability

Because strict liability is a tort doctrine, privity of contract between the plaintiff and the

defendant is not required. In other words, the doctrine applies even if the injured party

had no contractual relations with the defendant. Thus, manufacturers, distributors, sellers,

and lessors of a defective product are liable to the consumer who purchased the product

and any user of the product. Users include the purchaser or lessee, family members,

guests,

employees, customers, and persons who passively enjoy the benefits of the product (e.g.,

passengers in automobiles).

“Nobody has a more sacred obligation to obey the law than those who make

the law.”

Sophocles

The manufacturer, distributor, seller, and lessor of a defective product are also liable to

third-party bystanders injured by the defective product. The courts have stated that

bystanders who are injured by a defective product should be entitled to the same

protection as consumers or users. Bystanders and non-users do not have the opportunity

to inspect products for defects that have caused their injury.

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Damages Recoverable for Strict Liability

The damages recoverable in a strict liability action vary by jurisdiction. Damages for

personal injuries are recoverable in all jurisdictions that have adopted the doctrine of strict

liability, although some jurisdictions limit the dollar amount of the award. Property damage

is recoverable in most jurisdictions, but economic loss (e.g., lost income) is recoverable in

only a few jurisdictions.

In product liability cases, a court can award punitive damages if it finds that the

defendant’s conduct was committed with intent or with reckless disregard for human life.

Punitive damages are meant to punish the defendant and to send a message to the

defendant (and other companies) that such behavior will not be tolerated.

punitive damages

Monetary damages that are awarded to punish a defendant who either

intentionally or recklessly injured the plaintiff.

Example

An automobile manufacturer realizes that one of its models of vehicles has a defect in

the braking mechanism. If the automobile manufacturer does not notify the owners of

this type of vehicle of the defect and someone is injured because of

the defect, the manufacturer will be liable for compensatory damages for the injuries

caused to the injured party. The automobile manufacturer will most likely be assessed

punitive damages for its callous disregard for the safety of the public.

Critical Legal Thinking

What are punitive damages? Why are they assessed? Do they serve a

public purpose?

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Product Defects

To recover for strict liability, the injured party must show that the product that caused the

injury was somehow defective. (Remember that the injured party does not have to prove

who caused the product to become defective.) Plaintiffs can allege multiple product

defects in one lawsuit. A product can be found to be defective in many ways. The

most common types of defects are:

product defect

Something wrong, inadequate, or improper in the manufacture, design,

packaging, warning, or instructions about a product.

Defect in manufacture

Defect in design

Failure to warn

Defect in packaging

Failure to provide adequate instructions

These defects are discussed in the following paragraphs.

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Defect in Manufacture

A defect in manufacture occurs when the manufacturer fails to (1) properly assemble a

product, (2) properly test a product, or (3) adequately check the quality of a product.

defect in manufacture

A defect that occurs when a manufacturer fails to (1) properly assemble a

product, (2) properly test a product, or (3) adequately check the quality of

the product.

Example

American Ladder Company designs, manufactures, and sells ladders. While

manufacturing a ladder, a worker at the company fails to insert one of the screws that

would support one of the steps of the ladder. The ladder is sold to Weingard

Distributor, a wholesaler, which sells it to Reynolds Hardware Store, which sells the

ladder to Heather, a consumer. When Heather is on the ladder painting her house,

the step of the ladder breaks because of the missing screw, and Heather falls and is

injured. The missing screw is an example of a defect in manufacture. Under the

doctrine of strict liability, American Ladder Company, Weingard Distributor, and

Reynolds Hardware Store are liable to Heather.

The following case is a classic example involving a defect in manufacture.

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Case 19.2 State Court Case Defect in Manufacture

Shoshone Coca-Cola Bottling Company v. Dolinski

82 Nev. 439, 420 P.2d 855, Web 1966 Nev. Lexis 260

Supreme Court of Nevada

“In the case at hand, Shoshone contends that insufficient proof was offered

to establish that the mouse was in the bottle of ‘Squirt’ when it left

Shoshone’s possession.”

—Thompson, Justice

Facts

Leo Dolinski purchased a bottle of Squirt, a soft drink, from a vending machine at a Sea

and Ski plant, his place of employment. Dolinski opened the bottle and consumed part of

its contents. He immediately became ill. Upon examination, it was found that the bottle

contained the decomposed body of a mouse, mouse hair, and mouse feces. Dolinski

suffered physical and mental distress from consuming the decomposed mouse and

thereafter possessed an aversion to soft drinks. The Shoshone Coca-Cola Bottling

Company (Shoshone) had manufactured and distributed the Squirt bottle. Dolinski sued

Shoshone, basing his lawsuit on the doctrine of strict liability. The trial court adopted the

doctrine of strict liability, and the jury returned a verdict in favor of the plaintiff. Shoshone

appealed.

Issue

Was there a defect in the manufacture of the Squirt bottle that caused the plaintiff’s

injuries?

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Language of the Court

In our view, public policy demands that one who places upon the market a bottled

beverage in a condition dangerous for use must be held strictly liable to the ultimate

user for injuries resulting from such use, although the seller has exercised all

reasonable care. The plaintiff offered the expert testimony of a toxicologist who

examined the bottle and contents on the day the plaintiff drank from it. It was his

opinion that the mouse “had been dead for a long time” and that the dark stains

(mouse feces) that he found on the bottom of the bottle must have been there before

the liquid was added.

Decision

The Supreme Court of Nevada adopted the doctrine of strict liability and held that the

evidence supported the trial court’s finding that there was a defect in manufacture. The

supreme court affirmed the trial court’s decision in favor of plaintiff Dolinski.

Ethics Questions

Was it ethical for Shoshone to argue that it was not liable to Dolinski? Could this case

have been “faked”?

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Defect in Design

A defect in design can support a strict liability action. A defect in design occurs when

a product is designed incorrectly. In this case, not just one item has a defect but all of the

products are defectively designed and can cause injury.

defect in design

A defect that occurs when a product is improperly designed.

Examples

Design defects that have supported strict liability awards include toys designed with

removable parts that could be swallowed by children, machines and appliances

designed without proper safeguards, and trucks and other vehicles designed with

defective parts.

In evaluating the adequacy of a product’s design, a court may apply a risk–utility

analysis. This requires the court to consider the gravity of the danger posed by the

design, the likelihood that injury will occur, the availability and cost of producing a safer

alternative design, the social utility of the product, and other factors. Some courts apply a

consumer expectation test, which requires a showing that the product is more

dangerous than the ordinary consumer would expect.

Example

An action figure doll for children is designed, manufactured, and sold to consumers,

but the toys are defective because they contain lead paint, which can cause injury.

This is a design defect because all of the toys are improperly designed using lead

paint. Children who are injured by the lead paint can recover damages for their

injuries. Here, all of the parties in the chain of distribution—the manufacturer of the

defective toy, and the distributors, wholesalers, and retailers who sold the toy—are

strictly liable.

The following critical legal thinking case discusses a case involving a design defect.

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Critical Legal Thinking Case Strict Liability

Domingue v. Cameco Industries, Inc.

“Evidence of the blind spot was clear and showed that a person of the

decedent’s height could not be seen by the driver until he was more than

sixteen feet in front of the truck.”

—Decuir, Judge

Russel Domingue, Charles Judice, and Brent Gonsoulin, who were employed by M. Matt

Durand, Inc. (MMD), were stockpiling barite ore at a mine site. Judice and Gonsoulin

were operating Cameco 405-B articulating dump trucks (ADTs) that were manufactured

by

Cameco Industries, Inc. Each of the trucks weighed over 25 tons and could carry a load

of more than 20 metric tons. Judice and Gonsoulin were offloading ore from a barge and

transporting and dumping it at a site where Domingue was using a bulldozer to push the

barite onto a growing pile of ore. The two ADTs would make trips, passing each other on

the way to and from the barge.

Gonsoulin, who was new to the job, had trouble dumping a large load of barite. Domingue,

who was an experienced ADT operator, got off the bulldozer and walked to Gonsoulin’s

ADT to give his coworker advice on how to dump a heavy load. Meanwhile, Judice made

another trip to dump ore and turned his ADT around to return to the barge. At the same

time, Domingue was walking back to his bulldozer. Judice testified that he then saw “a

pair of sunglasses and cigarettes fly.” Judice immediately stopped his ADT and

discovered Domingue’s body, which he had run over. Domingue died from the accident.

Domingue’s widow, on behalf of herself and her children, filed suit against Cameco,

alleging that there was design defect in the ADT that caused a forward “blind spot” for

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anyone operating an ADT. Cameco could have spent $5,000 to greatly reduce or

eliminate the blind spot.

The trial court found that the forward blind spot on Cameco’s 405-B dump truck was a

design defect and held Cameco responsible for causing Domingue’s death. Damages

were set at $1,101,050. Cameco appealed. The court of appeals upheld the trial court

judgment. The court of appeals stated, “Evidence of the blind spot was clear and showed

that a person of the decedent’s height could not be seen by the driver until he was more

than sixteen feet in front of the truck. He could not be seen from head to toe until he was

standing over fifty-two feet in front of the truck.” Domingue v. Cameco Industries, Inc.,

936 So.2d 282, Web 2006 La. App. Lexis 1593 (Court of Appeal of Louisiana)

Critical Legal Thinking Questions

What public policies are served by the doctrine of strict liability? Should Cameco have

spent the extra $5,000 to greatly reduce or eliminate the blind spot?

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Crashworthiness Doctrine

Often, when an automobile is involved in an accident, the driver or passengers are not

injured by the blow itself. Instead, they are injured when their bodies strike something

inside their own automobile (e.g., the dashboard, the steering wheel). This is commonly

referred to as the “second collision.” The courts have held that automobile manufacturers

are under a duty to design automobiles to take into account the possibility of this second

collision. This is called the crashworthiness doctrine .

crashworthiness doctrine

A doctrine that says automobile manufacturers are under a duty to design

automobiles so they take into account the possibility of harm from a

person’s body striking something inside the automobile in the case of a car

accident.

Example

Failure of an automobile manufacturer to design an automobile to protect occupants

from foreseeable dangers caused by a second collision when the automobile is

involved in an accident subjects the manufacturer and car dealer who sold the vehicle

to strict liability.

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Failure to Warn

Certain products are inherently dangerous and cannot be made any safer and still

accomplish the purpose for which they are designed. Many such products have risks and

side effects caused by their use. Manufacturers and sellers owe a duty to warn

consumers and users about the dangers of using these products. A proper and

conspicuous warning placed on the product insulates the manufacturer and others in the

chain of distribution from strict liability. Failure to warn of these dangerous

propensities is a defect that will support a strict liability action.

failure to warn

A 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.

Example

Prescription medicine must contain warnings of its side effects. That way, a person

can make an informed decision whether to use the medicine or not. If a manufacturer

produces a prescription medicine but fails to warn about its known side effects, any

person who uses the medicine and suffers from the unwarned-against side effects

can sue and recover damages based on failure to warn.

The following case involves the issue of failure to warn.

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Case 19.3 State Court Case Failure to Warn

Patch v. Hillerich & Bradsby Company

257 P.3d 383 (2011)

Supreme Court of M ontana

“The risk of harm accompanying the bat’s use extends beyond the player

who holds the bat in his or her hands.”

—Selley, Justice

Facts

While pitching in an American Legion baseball game, 18-year-old Brandon Patch was

struck in the head by a batted ball hit by a batter using a model CB-13 aluminum bat

manufactured by Hillerich & Bradsby Company (H&B). Brandon died from his injuries. A

baseball hit by an aluminum bat travels at a higher velocity than a ball hit by a traditional

wooden baseball bat, thus increasing an infielder’s required reaction time.

Brandon’s parents, individually and as representatives of Brandon’s estate, sued H&B for

strict liability, asserting that H&B failed to warn Brandon of the alleged defect in the

aluminum bat, that is, the increased speed of a ball hit by H&B’s bat. In defense, H&B first

alleged that there was no defect of failure to warn, and second it did not have a duty to

warn a nonuser of the bat. The jury found failure to warn and awarded the plaintiffs

$850,000 against H&B. H&B appealed.

Issue

Did H&B fail to warn Brandon of the increased risk of injury caused by its aluminum bat?

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Language of the Court

The bat is an indispensable part of the game. The risk of harm accompanying the

bat’s use extends beyond the player who holds the bat in his or her hands. A warning

of the bat’s risks to only the batter standing at the plate inadequately communicates

the potential risk of harm posed by the bat’s increased exit speed. H&B is subject to

liability to all players in the game, including Brandon, for the physical harm caused by

its bat’s increased exit speed.

Decision

The Supreme Court of Montana upheld the jury’s finding of failure to warn by H&B and

affirmed the award of $850,000 damages.

Ethics Questions

Do you think that H&B should have been found liable in this case? Do baseball leagues

and teams owe an ethical duty to ban the use of aluminum bats?

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Defect in Packaging

Manufacturers owe a duty to design and provide safe packages for their products. This

duty requires manufacturers to provide packages and containers that are tamperproof or

that clearly indicate whether they have been tampered with. Certain manufacturers, such

as drug manufacturers, owe a duty to place their products in containers that cannot be

opened by children. A manufacturer’s failure to meet this duty—a defect in

packaging —subjects the manufacturer and others in the chain of distribution of the

product to strict liability.

defect in packaging

A defect that occurs when a product has been placed in packaging that is

insufficiently tamperproof.

Example

A manufacturer of salad dressing fails to put tamperproof seals on its salad dressings

(i.e., caps that have seals that show whether they have been opened). A person

purchases several bottles of the salad dressing from a grocery store, opens the caps,

places the poison cyanide in the dressings, replaces the caps, and places the bottles

back on the grocery store shelves. Consumers who purchase and use the salad

dressing suffer injuries and death. Here, the salad dressing manufacturer would be

strictly liable for failing to place a tamperproof seal on its products.

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Other Defects

Sellers are responsible for providing adequate instructions for the safe assembly and use

of the products they sell. Failure to provide adequate instructions for the safe

assembly and use of a product is a defect that subjects the manufacturer and others in

the chain of distribution to strict liability.

failure to provide adequate instructions

A defect that occurs when a manufacturer does not provide detailed

directions for safe assembly and use of a product.

Example

Mother goes to a retailer and buys her 4-year-old daughter Lia a tricycle that has

been manufactured by Bicycle Corporation. The tricycle comes in a box with many

parts that need to be assembled. The instructions for assembly are vague and hard to

follow. Mother puts together the tricycle, using these instructions. The first time Lia

uses the tricycle, a pedal becomes loose, and Lia’s tricycle goes into the street,

where she is hit and injured by an automobile. In this case, Mother could sue Bicycle

Corporation and the retailer on behalf of Lia for strict liability to recover damages for

failing to provide adequate instructions.

Other defects that support a finding of product liability based on strict liability include

inadequate testing of products, inadequate selection of component parts or materials, and

improper certification of the safety of a product. The concept of “defect” is an expanding

area of the law.

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Defenses to Product Liability

Defendant manufacturers and sellers in negligence and strict liability actions may raise

certain defenses to the imposition of liability. Some of the most common defenses are:

Generally known danger. Certain products are inherently dangerous and are known

to the general population to be so. Manufacturers and sellers are not strictly liable for

failing to warn of generally known dangers .

generally known dangers

A defense that acknowledges that certain products are inherently

dangerous and are known to the general population to be so.

Example

Because it is a known fact that guns shoot bullets, manufacturers and sellers of

guns do not have to place a warning on the barrel of a gun warning of this

generally known danger.

Government contractor defense. Defense and other contractors that manufacture

products to government specifications are not usually liable if such a product causes

injury. This is called the government contractor defense .

government contractor defense

A defense that provides that contractors that manufacture products to

government specifications are not usually liable if such a product

causes injury.

Example

A manufacturer that produces a weapon to U.S. Army specifications is not liable if

the weapon is defective and causes injury.

Abnormal misuse of a product. A manufacturer or seller is relieved of product

liability if the plaintiff has abnormally misused the product.

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abnormal misuse

A defense that relieves a seller of product liability if the user abnormally

misused a product.

Example

A manufacturer or seller of a power lawn mower is not liable if a consumer lifts a

power lawn mower on its side to cut hedge and is injured when the lawn mower

falls and cuts him.

Supervening event. The manufacturer or seller is not liable if a product is materially

altered or modified after it leaves the seller’s possession and the alteration or

modification causes an injury. Such alteration or modification is called a supervening

event .

supervening event

An alteration or a modification of a product by a party in the chain of

distribution that absolves all prior sellers from strict liability.

Example

A seller is not liable if a consumer purchases a truck and then replaces the tires

with large off-road tires that cause the truck to roll over, injuring the driver or

another person.

Assumption of the risk. The doctrine of assumption of the risk can be asserted as

a defense to a product liability action. For this defense to apply, the defendant must

prove that (1) the plaintiff knew and appreciated the risk and (2) the plaintiff voluntarily

assumed the risk.

Example

A prescription drug manufacturer warns of the dangerous side effects of taking a

prescription drug. A user is injured by a disclosed side effect. The user assumed

the disclosed risk and therefore the manufacturer is not liable for product liability.

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Case 19.4 Federal Court Case Generally Known Danger

Thompson v. Sunbeam Products, Inc.

2012 U.S. App. Lexis 22530 (2011)

United States Court of Appeals for the Sixth Circuit

“There is obviously a risk of harm involved in placing body parts in close

proximity to rapidly turning beaters.”

—Batchelder, Chief Judge

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Facts

Barbara K. Thompson purchased a Sunbean brand food hand mixer. The mixer was

made by Simatelex, a company located in Hong Kong, China, marketed in the United

States by Sunbeam Products, Inc., and purchased by Thompson at a Walmart store.

Thompson was familiar with electric hand mixers and had owned previous mixers for

about twenty years before purchasing the Sunbeam mixer. The box for the Sunbeam

mixer included an instruction booklet, which included the heading “IMPORTANT

SAFEGUARDS” in enlarged capital letters. Under this section the booklet stated, “Unplug

from outlet while not in use, before putting on or taking off parts and before cleaning.”

Under the section entitled in enlarged capital letters “INSTALLING ATTACHMENTS” the

manual stated, “Make sure the speed control is in the ‘OFF’ position and unplugged from

an electrical outlet. Insert attachments one at a time by placing stem end into the opening

on the bottom of the mixer.” Under the section entitled in enlarged capital letters

“EJECTING BEATERS” the manual stated, “Make sure the speed control is in the ‘OFF’

position and unplugged from an electrical outlet prior to ejecting beaters.”

Thompson took the mixer out of the box, inserted the beaters, and turned on the mixer.

When she thought one of the beaters was loose, Thompson held the mixer in one hand

and tried to push the beater back into place with her other hand while the mixer was still

on. One of Thompson’s fingers was pulled into the two moving beaters. She called her

husband for assistance, was taken to the hospital, and had her finger amputated.

Thompson sued Simatelex, Sunbeam, and Walmart for strict liability. The defendants

made motions for summary judgment, alleging that they were not liable because they had

given proper warnings and asserted the defense of a generally known danger. The U.S.

district court granted the defendants’ motion for summary judgment. The plaintiff’s

appealed to the U.S. court of appeals.

Language of the Court

There is obviously a risk of harm involved in placing body parts in close proximity to

rapidly turning beaters. However, the risk posed by placing body parts, clothing or

other objects near the beaters would be obvious to the user of the mixer, particularly

experienced users such as Mrs. Thompson, based on general knowledge and the

instructions which accompanied the mixer.

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Decision

The U.S. court of appeals affirmed the U.S. district’s court’s opinion.

Ethics Questions

Was it ethical for Mrs. Thompson to sue the defendants for her injury? Should a generally

known danger be a defense to a product liability lawsuit?

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Statute of Limitations and Statute of Repose

Most states have statutes of limitations that require an injured person to bring an

action within a certain number of years from the time that he or she was injured by a

defective product. If the plaintiff does not bring the lawsuit in the allotted time, he loses the

right to sue.

statute of limitations

A statute that requires an injured person to bring an action within a certain

number of years from the time that he or she was injured by a defective

product.

Example

Assume that a state statute of limitations for strict liability is two years. The plaintiff is

injured by a defective product on May 1, 2015. The plaintiff must sue the defendant

by May 1, 2017. However, after that date, the plaintiff loses his right to sue the

defendant.

Some states have enacted statutes of repose , which limit a manufacturer’s and

seller’s liability to a certain number of years from the date when the product was first sold.

The period of repose varies from state to state.

statute of repose

A statute that limits the seller’s liability to a certain number of years from the

date when the product was first sold.

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Example

Assume that a state statute of repose for strict liability is seven years. If a purchaser

purchases a product on May 1, 2015, the statute of repose expires May 1, 2022.

If the product is defective but does not cause injury until after that date, the

manufacturer and sellers are relieved of liability.

Concept Summary

Statute of Limitation and Statute of Repose

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Plaintiff Partially at Fault

Sometimes a person who is injured by a defective product is negligent and contributes to

his or her own injuries. States have adopted either of the following two defenses where a

plaintiff is partially at fault:

1. Contributory negligence. Under the defense of contributory negligence , a

party who is partially at fault for causing her own injuries is barred from recovering

damages from the defendant in a product liability action.

contributory negligence

A defense that says a person who is injured by a defective product

but has been negligent and has contributed to his or her own injuries

cannot recover from the defendant.

Example

An automobile manufacturer produces a car with a hidden defect, and a

consumer purchases the car from an automobile dealer. The consumer is

injured in an automobile accident in which the defect is found to be 75 percent

responsible for the accident, and the consumer’s reckless driving is found to

be 25 percent responsible. Under the doctrine of contributory negligence, the

plaintiff cannot recover damages from the defendant.

2. Comparative fault. Many states apply the doctrine of comparative fault , also

known as comparative negligence, to product liability actions. Under this

doctrine, where a plaintiff has been partially responsible for causing his own

injuries, liability is assessed proportionately to the degree of fault of each party. In

other words, the damages are apportioned proportionally between the plaintiff and

the defendant.

comparative negligence (comparative fault)

A doctrine which applies to strict liability actions that says a plaintiff

who is contributorily negligent for his or her injuries is responsible

for a proportional share of the damages.

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Example

An automobile manufacturer produces a car with a hidden defect, and a

consumer purchases the car from an automobile dealer. The consumer is

injured in an automobile accident in which the defect is found to be 75 percent

responsible for the accident, and the consumer’s reckless driving is found to

be 25 percent responsible. The plaintiff suffers $1 million worth of injuries.

Under the doctrine of comparative negligence, the plaintiff would recover

$750,000 from the defendants (75 percent of $1 million).

Concept Summary

Contributory Negligence and Comparative Fault

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