Products Liability Outline

Products Liability Outline

Fall 2011

Professor Gavin

I. Warranty

A. Introduction

P can join claims of strict liability and breach of warranty. Warranty claims provides remedies not available under strict liability such as recovery of pure economic damages.

Common law recognizes three types of warranties: (1) implied warranty of merchantability (2) implied warranty of fitness for a particular purpose (3) express warranty.

Henningsen v Bloomfield Motors (1960) – gave a woman injured in automobile accident a cause of action for breach of implied warranty of merchantability against auto manufacturer even though she was not in privity of contract with the defendant.

Article 2 of the UCC – does not apply to services or real estate contracts.

B. Express Warranty

In interpreting an express warranty, the entire context of the transaction should be taken into account, including other dealings between the parties and trade practices.

UCC §2-313(1)(c) – indicates that an express warranty can be made by sample or model. An “affirmation of fact or promise” or a “description of goods” can be made by pictures or other forms of communication, as well as by words.

Express warranties are created under §2-313(1)(a) only for promises or affirmations of “fact”. §2-313(2) makes clear that opinions, especially of value, do not constitute express warranties.

Unlike implied warranty of merchantability, which applies only to sellers who are merchants, an express warranty is applicable to merchants and non-merchants alike. Additionally, an express warranty is applicable only to a seller who actually makes a representation.

Kolarik v. Cory International Corporation : Plaintiff bit down on olive pit and fractured tooth; Express warranties must be read in terms of their significance to the trade and relative to what would normally pass in the trade; Plaintiff provided no evidence that the contents of the jar, taken as a whole, did not live up to this warranty; More realistic to interpret the description as only warranting that a particular jar of olives contains pimento stuffed green olives that would pass merchantable

Under §2-313, comment [3], no particular reliance on the seller’s statements need be shown; can be argued for the basis of the bargain

Comment 7 to §2-313 provides that post-sale representations may be considered part of the bargain even if they are not supported by independent consideration.

An affirmation or promise made to one person who then supplies the product to another person who is unaware of the affirmation or promise can create an express warranty.

§2-313 does not require express warranties to be in writing. Express warranties are however subject to the statute of frauds in §2-201 and the parol evidence rule of §2-202.

Just because something is part of a product description, that doesn’t mean it can’t create a warranty too – descriptions and warranties are not mutually exclusive.

Implied Warranty of Merchantability (I.W.o.M.)

UCC §2-314 Implied Warranty: Merchantability; Usage of Trade – (1) Unless excluded or modified (§2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.

Note that a seller must be a merchant in order for there to be a valid cause of action for breach of this implied warranty.

In a merchantability lawsuit, a plaintiff must prove that the defendant deviated from the standard of merchantability and that this deviation caused the plaintiff’s injury both proximately and in fact

Defendant defenses =

i. Warranty disclaimed

ii. Notice of breach not timely

iii. Assumption of risk

iv. Statute of limitations expired

Look to the usage and trade

Maybank v. S.S. Kresge (1980):Flashcube exploded and injured plaintiff’s eye; Carton had warning risks that damaged cubes might shatter; No evidence of damage prior to uses’ Flashcube that causes this kind of harm is not merchantable; Must be of fair and average quality; Flashcube that might shatters might be merchantable but not one that explodes à not adequate warning

Merchantable

i. Pass without objection in the trade under the contract description and

1. In the case of fungible goods, are of fair average quality within the description; and

2. Are fit for the ordinary purposes for which such good are used

ii. Consumer expectation

Even if goods are not fit for their ordinary purpose they might still be merchantable. If a buyer inspects the goods and the defect is obvious, they are not unmerchantable.

§2-314(2)(c): “are not fit for the ordinary purpose for which such goods are used” – this is the provision most plaintiffs commonly rely upon.

The interplay between “defective” and “merchantable” is a big issue in IWoM claims; just because something is defective doesn’t necessarily make it unmerchantable.

Implied Warranty of Fitness for Particular Purpose (IWFPP)

UCC §2-315 Implied Warranty: Fitness for Particular Purpose – Where the seller at time of contracting has reason to know any particular purpose for which the goods a required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.

IWFPP applies to merchants and non-merchants alike.

An IWFPP does not automatically apply to all sellers in the chain of distribution. It applies only to sellers whose conduct creates the warranty.

A relevant consideration is the relative expertise of the parties.

There is no “basis of the bargain” language here, this provision speaks of reliance (by the buyer on seller’s skill), which is clearly required for there to be a claim.

E. Contractual Limitations on Responsibility (Disclaimers)

· Henningsen v. Bloomfield Motors, Inc. (1960):

i. Facts: Claus purchases a 1955 Plymouth Plaza 6 for Helen as a mother’s day gift. He signs the standard contract used by AMA members Ten days later,