Chapter 22 Products Liability: Warranties and Strict Liability

warranty

obligation of the seller concerning title, quality, characteristics, or condition of goods

warranty of title

obligation to convey the right of ownership without any lien

express warranty

affirmation of fact or promise about the goods, which may consist of a description or a sample, which becomes part of the basis of the bargain

basis of the bargain

part of the buyer’s assumption underlying the sale

implied warranty

contractual obligation arising out of certain circumstances of the sale

merchantability

warranty by a merchant seller that the goods are fit for their ordinary purpose

fitness for a particular purpose

warranty that goods are fit for a stated purpose, provided the seller selects the product knowing the buyer’s intended use and the buyer is relying on the seller’s judgment

disclaimer

negation of a warranty

express warranty

not usually possible to disclaim

warranty of title

may be excluded or modified by specific language or by certain circumstances, including judicial sale or a sale by a sheriff, executor, or foreclosing lienor

implied warranty of merchantability

the disclaimer must mention “merchantability” and, in the case of a writing, must be conspicuous (in a lease the disclaimer must be in writing and conspicuous)

Other disclaimers of implied warranties

the implied warranties of merchantability and fitness for a particular purpose may also be disclaimed (1) by expressions like “as is,” “with all faults,” or other similar language; (2) by course of dealing, course of performance, or usage of trade; or (3) as to defects an examination ought to have revealed in cases in which the buyer has examined the goods or in which the buyer has refused to examine the goods

implied warranty of fitness for the particular purpose

the disclaimer must be in writing and conspicuous

Federal legislation relating to warranties of consumer goods

the Magnuson-Moss Warranty Act protects purchasers of consumer goods by providing that warranty information be clear and useful and that a seller who makes a written warranty cannot disclaim any implied warranty

consumer goods

goods normally used for personal, family, or household purposes

Limitation or modification of warranties

permitted as long as it is not unconscionable

privity

contractual relationship

Horizontal privity

determines who benefits from a warranty and therefore may bring a cause of action

Vertical privity

determines who is liable for breach of warranty

Notice of breach of warranty

if the buyer fails to notify the seller of any breach within a reasonable time, she is barred from any remedy against the seller

contributory negligence

is not a defense in the majority of states

voluntary assumption of the risk

is a defense

Section 402A

imposes strict liability in tort

strict liability in tort

merchant seller is liable for selling a product in a defective condition, unreasonably dangerous to the user

manufacturing defect

Not produced according to specifications

design defect

plans or specifications inadequate to ensure the product’s safety

state of the art

the state of technology current at the time the product is made

Failure to warn

failure to provide adequate warning of possible danger or to provide appropriate directions for use of a product

unreasonably dangerous

contains a danger beyond that which would be contemplated by the ordinary consumer

Contributory negligence

not a defense in the majority of states

comparative negligence

most states have applied the rule of comparative negligence to strict liability in tort

voluntary assumption of the risk

express assumption of risk is a defense to an action based upon strict liability; some states apply implied assumption of risk to strict liability cases

Subsequent alteration

liability exists only if the product reaches the user or consumer without substantial change in the condition in which it is sold

Statute of repose

limits the time period for which a manufacturer is liable for injury caused by its product