Warranties and Product Liability

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Warranties and Product Liability

• OBE 118, Section 3, Fall 2004
• Professor McKinsey

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Warranties

• A contractual theory of responsibility for
  sellers for how a good performs

• Often the UCC is involved

• Two Categories of warranties

3 ways to create
3 types
Statement of fact
Description of goods
Samples or models
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Express Warranties

• Opinions and Puffing are not warranty
• Statement of fact that a product will meet a
  standard or do a specific thing.
• Examples (yes or no?)
• This blade will last for over 100 hours
• Will kill any weed you spray it on
• I think this car is the best
• I think this car will last another 100,000 miles
  without any major maintenance
• This is the best product on the market

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Implied Warranties

• Title Warranties with nearly all sales of goods

• Implied Warranty of Merchantability only
  possible when merchant seller

• Implied Warranty of Fitness for a Particular
  Purpose certain circumstances

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Implied Title Warranties

• Three types

• Good Title sellers owns the goods

• No Liens good is free of claims by others

• No Infringements good is free from
  Intellectual Property(IP) claims

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Implied Warranty of Merchantability

• When a merchant sells a good, it is warranted to
  be fit for use in general purpose

• Goods must be reasonably fit for the ordinary
  purposes for which such goods are used, meet
  label expectations and be safe

• Victim must have harm caused by the breach of
  warranty

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Implied Warranty of Fitness for a Particular
Purpose

• Arises when any seller recommends goods to the
  buyer for a particular purpose

1) Seller aware of particular use
2) Buyer relies on sellers knowledge or skill
3) Seller aware of buyers reliance
4) Seller recommends goods for particular use
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Handling Warranties
A warranty creates terms in the contract
Warranty failure is a potential breach of contract
The act of ensuring no warranties is called
disclaiming
Warranty disclaimers often have to meet
requirements to be effective
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Disclaiming Warranties

• Merchantability
• Conspicuous disclaimer with
  in it
• Fitness for a Particular Purpose
• Use the words and
  

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Product Liability

• Contractual theory- using warranties (express and
  implied) within a contract
• Negligence theory- was product negligently made
  or sold?
• Strict liability theory does product fall under
  the strict liability doctrine

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Product Liability using Negligence

• To prove negligence the part must show a breach
  of the duty of care.
• Proximate cause may limit the number of people in
  the chain of commerce that can be held liable
• Key part is finding a smoking gun or other
  evidence showing fault.

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PL based on Strict Liability
1. D sold product in defective condition
2. D normally in business of selling product
3. Product unreasonably dangerous
4. P suffers physical harm through use of product
5. Defective condition is proximate cause
6. No substantial changes to product since sold
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PL using Strict Liability Theory

• Advantages lots of possible parties to sue, no
  need to show fault
• Disadvantages has to meet one of three types of
  defective products