Class Rreflection 2
ACC 150 The Legal Environment of Business
With Doreen Smith, Esquire
Chapter 24
Theories of Liability
Warranty
A warranty is a promise (express or implied) about the nature, quality or performance of goods
Covered under the Uniform Commercial Code
Contract law that governs the sale of goods-this is state statutory law.
Strict Liability
Protection of buyers that allow them to recover for injury and economic loss related to the purchase of a product.
Products liability
A general terms used for several different theories of liability related to injury and economic loss arising from a defective product.
Who are the parties?
Who can recover?
Anyone who is a buyer, employee of buyer, third party or bystander (it is not limited to those with a contractual relationship).
Who can sue?
Injured party can sue the seller, manufacturer or distributor.
Warranties
Warranties may be express or implied
An express warranty is a statement by the seller of goods that becomes a basis of the bargain. It can be oral (verbal) or written.
An implied warranty is not made by the seller but is implied under the law.
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Express Warranties
Under the UCC, a seller is liable for any express warranty that is a statement of fact that becomes the basis of the bargain.
There is no need for the statement to include the word warranty
Seller’s Opinion
A seller is not liable for the statement of an opinion.
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Implied Warranties
A seller makes a warranty of title (that the seller actually owns the item) unless such warranty is excluded.
Warranty of fitness for a particular purpose is enforceable if the seller knew of the buyer’s intended use.
Two requirements:
Buyer intends to use a good for a particular or unusual purpose and
Buyer relies on the seller’s skill or judgment.
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Implied Warranties
Implied Warranty of Merchantability
A merchant warrants that the goods are fit for their normal use (warranty of merchantability).
Seller must be a merchant (seller who deals in specific goods)
If the merchant does not specifically exclude or modify the implied warranty of merchantability, then it is included in every sale by a merchant
This warranty applies to the sale of foods in a grocery store and restaurant.
Foreign-natural test--If a item is found in food that causes harm, the court considers whether the item is natural. Such as a cherry pit in a cherry pie would be natural
Reasonably expected test- Court considers whether the buyer reasonably expected defect.
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Tort Law
A seller of a defective product can be liable under negligence law.
If an injured person can show that the defendant was negligent in the manufacture or design of a product, he or she may prevail in an action.
Negligence also includes the failure to provide adequate instructions for use or safety warnings.
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Tort Law
Strict liability in tort
Liability exists without regard to fault (no need to prove negligence)
A manufacturer, distributor or seller of a defective product is liable to anyone injured by the product – buyer, user, innocent bystander.
The plaintiff must show there was a defect in the product at the time it left the control of the defendant.
The defect in a good can be for its design, manufacture or instructions.
Contributory negligence is not a defense, but assumption of risk can be used as a defense.
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