Business Law I Bmgt 380 Week 3 Rafael Andrino Jd

Business Law I Bmgt 380week 3rafael Andrino Jdbusiness Law Iagenda

Business Law I (BMGT 380) Week 3 Rafael Andrino, JD Business Law I Agenda: Product Liability—What is it?—Warranty—Negligence—Strict Liability—Impact on Business—Video—Discussion—Wrap-up

Business Law I Product Liability arises when a product fails, resulting in loss or injury. Typically, this failure is due to a defect in design or manufacturing, and it occurs during the intended use of the product. There are three main types of product liability claims: warranty, negligence, and strict liability.

Product Liability - Warranty

Warranty liability is contractual and involves a relationship between the manufacturer or seller and the user. It is a strict liability, meaning the plaintiff only needs to demonstrate that the product failed to meet the terms of the warranty, not that the defendant was negligent or willful. There are two types of warranties: express warranties, which are explicitly written by the party issuing the warranty, and implied warranties, which arise by operation of law, as found in the Uniform Commercial Code (UCC) Article 2.

An express warranty typically involves the seller agreeing to repair or replace a defective product within a specified period and may also include compensation for foreseeable damages. The buyer must report failure promptly and return the defective product. Express warranties usually exclude damages caused by buyer’s modification, misuse, abuse, or normal wear and tear. Often, buyers waive the right to sue for product failure under warranty in exchange for this coverage. Express warranties require privity, meaning a contractual relationship between the plaintiff and the defendant, although some cases allow third-party claims.

The UN Convention on Contracts for the International Sale of Goods (CISG) aligns with UCC provisions but applies to international transactions, allowing buyers to require sellers to deliver substitute goods or repair non-conforming goods.

Implied Warranties — UCC - Sale of Goods (Art 2)

The UCC provides implied warranties for the sale of goods:

• Merchantability: Goods conform to the merchant’s description and meet reasonable expectations.
• Fitness for a Particular Purpose: If the seller knows the intended use, the goods will meet that purpose.

Both warranties can be waived explicitly if the waiver is conspicuous. Private sellers or non-merchants generally sell products 'as-is,' with no implied warranties.

Problems with Warranties

Legal action requires proof of the sale, privity, and the type of transaction (goods, not real estate or services). The claim must be brought within four years under UCC provisions unless an extended period is promised in the warranty.

Product Liability - Negligence

In negligence claims, the plaintiff must establish fault by proving:

• The defendant owed a duty of care;
• The duty was breached;
• The breach caused injury and was proximate to the harm;
• The plaintiff suffered damages.

Manufacturers’ failure to adhere to manufacturing standards or safety regulations can be deemed negligence per se. Proving negligence is often challenging; defenses include the absence of breach, causation issues, and comparative fault.

Defenses also include product misuse, alteration, or abuse. Resellers can be liable if they knew of a defect and sold or altered the product improperly.

Product Liability - Strict Liability

Strict liability does not require proof of fault; only that the injury resulted from a defective product used as intended. It is primarily a consumer action against manufacturers or sellers. Elements include:

• Product was defective upon sale;
• Defendant was in the business of selling the product;
• The product was unreasonably dangerous because of the defect;
• The plaintiff suffered harm due to the defect;
• The defect was the proximate cause, and the product remained unchanged from sale to injury.

Common defenses include assumption of risk, misuse, knowledge of the defect, or unforeseeable misuse. Cases such as Daniell v. Ford Motor Company and Liriano v. Hobart Corp illustrate these defenses.

Impact of Business Liability Laws

These laws significantly impact business operations, particularly in product design, manufacturing, and marketing. Companies must implement rigorous quality control measures and comply with safety standards to minimize liability risks. Additionally, understanding the nuances of warranties, negligence, and strict liability helps corporations develop better risk management policies. The legal framework incentivizes firms to produce safer products and provides consumers with avenues for redress, fostering a balance between innovation and consumer protection.

Moreover, international regimes like the CISG influence how companies engage in cross-border sales, emphasizing the importance of clarity in warranties and product standards.

Conclusion

Product liability law encompasses various legal theories aimed at protecting consumers from defective products. Recognizing the distinctions between warranty, negligence, and strict liability claims helps businesses understand their obligations and defenses. Implementing comprehensive safety protocols, clear warranties, and compliance with relevant statutes can mitigate risks and enhance consumer trust, ultimately benefiting both businesses and society.

References

• Daniell v. Ford Motor Company, 289 N.E.2d 137 (Ohio 1972).
• Liriano v. Hobart Corp., 92 N.Y.2d 232 (1998).
• Uniform Commercial Code (UCC) § 2-314, § 2-315.
• Restatement (Third) of Torts: Products Liability.
• Jane T. Schuck, "Product Liability," in Business Law Today, 2020.
• Michael J. Bonell, "Designing for Safety: The Role of Product Liability," Journal of Consumer Policy, 2019.
• International Sale of Goods: CISG, United Nations Convention.
• Schneiderman, G. (2017). "Legal Aspects of Product Liability." New York: Aspen Publishers.
• Statutes of limitations in product liability cases, UCC § 2-725.
• Heath J. Rusch, "Liability and Business Risks," Harvard Business Law Review, 2021.