1

Chapter 4 Products Liability

Warranties of Quality

Negligence

Misrepresentation

2

Definition

The liability of manufacturers, sellers, and others for the injuries caused by defective products.

3

Warranties of Quality

Seller’s or lessor’s assurance to buyer or lessee that the goods meet certain standards of quality.

Warranties may be expressed or implied.

4

Express Warranties

A warranty which is created when a seller or lessor affirms that the goods he or she is selling or leasing meet certain standards of quality, description, performance, or condition.

They may be either written, oral, or inferred from the sellor’s conduct.

5

Express Warranties (Continued)

Express Warranties are created when the seller or lessor indicates that the goods will conform to:

a. All affirmations of fact or promise made about them

b. Any description of them c. Any model or sample of them.

6

Daughtrey V. Ashe 413 S.E.2d 336 (1992)

Supreme Court of Virginia

7

1. In October 1985, W.Hayes Daughtrey consulted Sidney Ashe, a jeweler, about the purchase of a diamond bracelet ... Ashe showed Daughtrey a diamond bracelet that he had for sale for $15,000. When Daughtrey decided to purchase the bracelet, Ashe completed and signed an appraisal form that stated that the diamonds were “H color and v.v.s. quality. ”

8

2.After being paid for the bracelet, Ashe put the bracelet and the appraisal form in a box. Daughtrey gave the bracelet to his wife …. In 1987, when another jeweler looked at the bracelet, Daughtrey discovered that the diamonds were of substantially lower grade than v.v.s.

9

3. Daughtrey filed a specific performance suit against Ashe to compel him to replace

the bracelet with one mounted ( 宝石等 ) 镶嵌好的

with v.v.s. diamonds or pay appropriate damages. The trial court denied relief for breach of warranty. He appealed.

10

Was an express warranty made by Ashe regarding the quality of the diamonds in the bracelet?

11

1. Any description of the goods that is made a basis of the bargain creates an express warranty that the goods shall conform to the description. …found that Ashe’s description of the diamonds created an express warranty that became a part of the basis of the bargain between Ashe and Daughtrey.

2. …noted that it was not necessary for Ashe to have used the word warrant or guarantee to create an express warranty.

12

The appellate court held that an express warranty had been created. The trial court’s decision was reversed and the case was remanded ( 将案件 ) 发还 ( 下级法院 ) 复审： for determination of appropriate damages to be awarded to Daughtrey.

13

Implied Warranty of Merchantability

Unless properly disclosed, a warranty is implied when sold or leased goods are fit for the ordinary purpose for which they are sold or leased, and other assurances.

14

Implied Warranty of Merchantability (Continued)

Implied that the goods:

a. fit for the ordinary purposes for which they are used.

b. adequately contained, packaged, and labeled.

c. be of an even kind, quality, and quantity within each unit.

d. Conform to any promise or affirmation of fact made on the container or label.

e. Pass without objection in trade.

f. Meet a fair average or middle range of quality.

15

Implied Warranty of Fitness for Human Consumption

A special warranty that applies to food or drink consumed on or off the premises of restaurants, grocery stores, fast-food outlets, and vending machines

16

Implied Warranty of Fitness for a Particular Purpose

A warranty that arises when a seller or lessor warrants that the goods will meet the buyer’s or lessee’s expressed needs.

17

Damages Recoverable for Breach of Warranty

1. Compensatory damages 补偿性赔偿金 2.Consequential damages 间接损害赔偿

金

18

Compensatory Damages

Damages that are generally equal to the difference between the difference between the value of the goods as warranted and actual value of the goods accepted at the time and place of acceptance.

19

Consequential Damages

Foreseeable damages that arise from circumstances outside the contract. To be liable for these damages, the breaching party must know or have reason to know that the breach will cause special damages to the other party.

20

Tort Liability Based on Fault

1.Negligence

2.Misrepresentation

21

Negligence

Negligence refers to the neglect or omission of reasonable precaution or care. It is a more likely basis for imposing liability.

22

Negligence (Continued)

To prove negligence in a products case, the injured party must prove:

• the existence of a defect,• the defect was the result of the defendant’s

conduct,• the plaintiff suffered an injury,• the injury was caused by the defect, and• the defendant breached a duty of care to the

plaintiff.

23

MACPHERSON v. BUICK MOTOR

CO.

24

1. MacPherson purchased a new Buick car with wooden wheels from a Buick Motor Company dealer. He was injured when the car ran into a ditch. The accident was caused by the collapse of one of the car’s wheels because the spokes were made from defective wood. The wheel had been made by another manufacturer.

25

2. MacPherson sued Buick Motor Company directly. He proved that Buick could have discovered the defects by reasonable inspection, and that such an inspection had not been conducted. After the trial court found in favor of MacPherson, Buick appealed. Buick argued that MacPherson could not sue Buick because there was no contract between Buick and MacPherson. The sale contract was between the dealer and MacPherson.

26

Can a consumer who purchases a product from a retailer sue the manufacturer for negligent manufacture of the product?

27

The New York Court of Appeals held that Buick could be held liable for negligence. As a manufacturer, it owed a duty to any person who could foreseeably be injured as a result of a defect in an automobile it manufactured. Since the action was one in tort for negligence, no contract between the plaintiff and the defendant was required.

28

This case established the rule, still applicable today, that a manufacturer can be liable for failure to exercise reasonable care in the manufacture of a product where such failure involves an unreasonable risk of bodily harm to users of the product. This rule is embodied in section 395 of the Restatement (Second) of Torts in United States.

Landmark Law

29

Misrepresentation

Intentional misrepresentation occurs where a seller or lessor either

(1) affirmatively misrepresents the quality of a product or

(2) conceals a defect in it.

30

Benedi V. McNeil-P.P.C.,

Incorporated （ McNeil ）

United States Court of Appeals, Fourth Circuit

31

1.Antonio Benedi consumed three to four glasses of wine a night during the week and sometimes more on the weekend. On February 5, 1993, Benedi began taking extra-Strength Tylenol 加强型泰诺 in normal doses for flu-like aches. On February 10, 1993, Benedi was admitted to the hospital in a coma and near death due to liver and kidney failure . On the night of February 12, 1993, Benedi underwent an emergency liver transplant. Because of the transplant, Benedi will have to undergo kidney dialysis in the future.

32

2. Blood tests performed shortly after Benedi’s admission to the hospital revealed that the suffered from acetaminophen (Tylenol) toxicity, which is caused by a combination of Tylenol and too much alcohol. The bottle from which Benedi took the Tylenol did not contain a warning of the dangers of the combination of Tylenol and excessive alcohol consumption. Benedi sued McNeil, the manufacturer of Tylenol, for negligent failure to warn. The jury found McNeil negligent and awarded Benedi $7,850,000 in compensatory damages. McNeil appealed.

33

Is McNeil liable for negligent failure to warn?

34

35

1. At trial, Benedi called two liver disease specialists… testified that a warning of the possible danger to heavy drinkers from combining alcohol and acetaminophen 扑热息痛（一种替代阿司匹林的解热镇痛药，常见品牌有泰诺（ Tylenol ）… placed on the Tylenol label since the mid-1980s. These experts described exactly how the alcohol-acetaminophen mixture can become a toxin 毒素 in the liver. The cited numerous treatises and articles published in medical journals prior to 1993 that describe the increased risk of liver injury when acetaminophen is combined with alcohol.

36

2. One of the plaintiff’s experts referred to 60 reports that McNeil had received by the end of 1992 documenting cases of liver injury associated with combining therapeutic 治疗的doses 剂量 of Tylenol with alcohol. The court of appeals stated it was the jury’s role to assess the weight and credibility of the evidence, and the jury found that Benedi proved causation 因果关系 . The court …ample evidence existed from which a reasonable jury could find for Benedi.

37

The court of appeals affirmed the jury’s verdict awarding plaintiff Benedi $7,850,000 against McNeil for negligent failure to warn.Note: In the summer of 1993 (after Benedi’s injury), McNeil included a warning on Tyleol that persons who regularly consume three or more alcoholic drinks a day should consult a physician before using Tylenol.

38

What elements are necessary to prove negligence?Do you think that McNeil was negligent in this case? Do you think jurors are sophisticated enough to evaluate and judge scientific evidence?

39

What will be the implication of this case to manufacturers of pain-killing drugs?

Will consumers be better off because of

this decision?

Contemporary Business