LWC1 Chapt 21 Flashcards.txt

Card Set Information

LWC1 Chapt 21 Flashcards.txt
2012-09-24 16:39:07

Chapt 21
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  1. Product Liability
    Refers to goods that have caused an injury, can be Physical or Economic
  2. remedies for product liability
    • Warranty
    • Negligence
    • Strict Liability
  3. Warranty
    • A warranty is a contractual assurance that goods will meet certain standards
    • -can be express, implied warranty
  4. Express Warranty
    • -seller creates a warranty with words or actions
    • -May be created by an affirmation of fact, a promise, a description of goods, a sample
    • -Must have been the basis of the bargain
  5. Affirmation of fact
    • An affirmation of fact is simply a statement about the nature or quality of the goods
    • -Can create an express warranty
  6. Basis of Bargain
    To prove an express warranty, a buyer must demonstrate that the two parties included the statements or acts in their bargain.
  7. Implied warranties
    • -Those created by the Code itself, not by any act or statement of the seller.
    • -the law imposes the liability on the seller
    • - that the goods shall be merchantable, or the goods are fit for the ordinary purposes for which they are used.
  8. Implied Warranty of Merchantability
    • -Unless excluded or modified, a warranty that the goods shall be merchantable is implied in a con-tract for their sale, if the seller is a merchant with respect to goods of that kind.
    • -Code Implies that the goods are fit for their ordinary use
    • -Seller may disclaim this warranty only if a conspicuous disclaimer includes the word "merchantability"
  9. Implied warranty of Fitness
    • -The code implies that the goods are fit for their ordinary use
    • -Seller may disclaim this warranty with conspicuous writing, but some states will disregard a disclaimer of any implied warranty in a consumer sale
  10. Implied Warranty of Title
    • -The code implies that seller has good title free of any interests and claims of patent, copyright, or trademark
    • -Buyer is not protected against any security interest that she knows about
  11. Title
    the seller of goods warrants that her title is valid and that the goods are free of any security interest that the buyer knows nothing about, unless the seller has clearly excluded or modified this warranty.
  12. Infringement
    Unless otherwise agreed, a seller who is a merchant warrants that the goods are free of any rightful claim of copyright, patent, or trademark infringement.
  13. Negligence (Tort common Law)
    • -refers to unreasonable conduct by defendant
    • -Seller is liable if she fails to show level of conduct that a reasonable person would use
    • -No duty to warn if the danger is obvious.
  14. Negligent design claim
    The buyer claims that the product injured her because the manufacturer designed it poorly.
  15. Negligent Manufacturer claim
    The buyer claims that the design was adequate but that failure to inspect or some other sloppy conduct caused a dangerous product to leave the plant.
  16. Failure to warn
    • liable for failing to warn the purchaser or users about the dangers of normal use and also foreseeable misuse.
    • -there is no duty to warn about obvious dangers, a point evidently lost on some manufacturers.
  17. Consumer sales
    Many states prohibit a seller from disclaiming implied warranties in the sale of consumer goods.
  18. Disclaimers
    a statement that a particular warranty does not apply
  19. Oral Express Warranty
    Under the Code, a seller may disclaim an oral express warranty.
  20. Written Express Warranty
    • difficult or impossible to disclaim. If a seller includes an express warranty in the sales contract, any disclaimer is invalid.
    • -disclaimer is void if it would unfairly surprise the buyer.
    • -The Code will not permit a seller to take contradictory positions in one document. The goal is simply to be fair.
  21. General disclaimer
    Code permits a seller to disclaim all implied warranties by conspicuously stating that the goods are sold as is or with all faults.
  22. Limitation of remedy clause
    • the parties may limit or exclude the normal remedies permitted under the Code. These important rights are entirely distinct from disclaimers.
    • -remedy limitation, by contrast, states that if a party does breach its warranty, the injured party will not get all of the damages the Code normally allows.
  23. Consequential damages
    • losses stemming from the particular requirements of the buyer. The buyer might have entered into dozens of contracts in reliance on the goods it expects from the seller. The seller will have no way of knowing how great the consequential damages could be.
    • -major limitation on these clauses: an exclusion of consquential damages is void if it is unconscionable. Unconscionable means that a remedy restriction is shockingly one-sided and fundamentally unfair.
  24. Privity
    • When two parties contract, they are in privity.
    • -contract law, a plaintiff injured by a breach of contract could only sue a defendant with whom he had privity.
    • -disappearing as a defense
  25. Personal Injury
    Where a product causes a personal injury, most states permit a warranty suit even with-out privity.
  26. Economic Loss
    If the buyer suffers only economic loss, privity may still be required to bring a suit for breach of warranty. If the buyer is a business, the majority of states require privity.
  27. Breach of Warranty
    • The UCC requires that a buyer notify the seller of defects within a reasonable time.
    • -The circumstances will determine what is a reasonable amount of time.
  28. Strict Liability (Tort-Reinstatement S402A Common Law)
    • -prohibits defective products whether defendant acted reasonably or not contract.
    • -Seller liable if the product leaves in a dangerous defective condition
    • -Injured need not prove negligence but must prove that the product was defective
  29. Consumer expectation test
    court finds the manufacturer liable for defective design if the product is less safe than a reasonable consumer would expect.
  30. Risk Utility
    • Many states have moved away from Consumer expectations test, and now use a risk-utility test.
    • -a court must weigh the benefits for society against the dangers that the product poses.
  31. Principal factors in Risk Utility test
    • -The value of the product
    • -The gravity of the danger ( how bad will the harm be)
    • -The likelihood that such danger will occur ( the odds)
    • -The mechanical feasibility of a safer alternative design
    • -The adverse consequences of an alternative design (greater cost, different risks created).
  32. Restatement (Third) of Torts
    • drafted by American Law Institute because of the conflicting court decisions
    • -Product Liability, in an attempt to harmonize judicial opinions about product liability generally and design defects in particular.
    • -The new Restatement treats manufacturing cases differently from those involving design defects and failure to warn.
  33. Manufacturing cases
    a product is defective whenever it departs from its intended design, regardless of how much care was taken.
  34. design and warnings cases
    a product is defective only when the foreseeable risks of harm could have been reduced by using a reasonable alternative design or warning. So- called strict liability in these cases is beginning to resemble plain old negligence.
  35. Statute of limitations in Tort
    • states have a different statute of limitations for tort claims. Many states set a 3 limit
    • -key element is this: the statute of limitations runs from the time the defect was discovered. Even though the three-year period is shorter, the time for filing a suit may be much longer because a defect may not appear for many years.
  36. economic loss doctrine
    when an injury is purely economic, and arises from a contract made by two businesses, the injured party may only sue under the UCC. (Warranty) v tort
  37. statute of repose
    places an absolute limit on when a lawsuit may be filed, regardless of when the defect is discovered.
  38. lemon laws
    which entitle the buyer to receive a refund if the car has defects that substantially impair its value and safety.
  39. consumer protection law
    focus on a merchants bad faith or deceit. Consumers can use these statutes, which are discussed in Chapter 40, to recover for defective goods or inadequate service.
  40. Magnuson- Moss
    • -requires the seller to indicate whether a warranty is full or limited, and to describe clearly what is and is not warranted. -sets certain minimum standards for an express warranty, requiring
    • ----at the very least a seller agree to repair or replace a defective item
    • -generally forbids a seller who has chosen to give an express warranty to disclaim implied warranties such as the Codes warranties of merchantability and fitness.