chapter 7 business torts and product liability. business torts and product liability key points...
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CHAPTER 7
Business Torts and
Product Liability
BUSINESS TORTS AND PRODUCT LIABILITY
Key Points• Identify the principal intentional business torts and available defenses• Understand intentional torts• Understand product liability• Understand strict liability
CRIMES
A CRIME IS A PUBLIC WRONG WHEN ONE BREACHES A DUTY OWED TO SOCIETY
TORT
A TORT IS A CIVIL WRONG, OTHER THAN A BREACH OF
CONTRACT, FOR WHICH THE COURT WILL PROVIDE A REMEDY NORMALLY IN THE FORM OF DAMAGES
3 GENERAL TORT
CATEGORIES
Intentional
Product Liability
Strict Liability
INTENTIONAL TORTS
FOUR ELEMENTS
1. DUTY
2. BREACH OF DUTY
3. CAUSATION
4. INJURY
FAULT
An element in most torts except for:
Products liability Strict liability
INTENTIONAL TORTS AGAINST PERSONS
Assault
INTENTIONAL TORTS AGAINST PERSONS
Battery
INTENTIONAL TORTS AGAINST PERSONS
False imprisonment
INTENTIONAL TORTS AGAINST PERSONS
Fraud
INTENTIONAL TORTS AGAINST PERSONS
Defamation:
slander
libel
INTENTIONAL TORTS AGAINST PERSONS
Invasion of privacy:Appropriation of a person’s name or
likenessIntrusionPublic disclosure of private factsFalse light
INTENTIONAL TORTS AGAINST PERSONS
Intentional infliction of emotional distress
INTENTIONAL TORTS AGAINST PERSONS
Personal injury
INTENTIONAL TORTS AGAINST PERSONS
Malpractice
(Medical, legal, accounting, etc.)
INTENTIONAL TORTS AGAINST PERSONS
Wrongful death
INTENTIONAL TORTS AGAINST PROPERTY
Trespass to real property
INTENTIONAL TORTS AGAINST PROPERTY
Trespass to personal property
INTENTIONAL TORTS AGAINST PROPERTY
Conversion
INTENTIONAL TORTS AGAINST PROPERTY
Nuisance
INTENTIONAL TORTS AGAINST PROPERTY
Injurious falsehood
BUSINESS TORTS
Patent Infringement
BUSINESS TORTS
Copyright infringement
BUSINESS TORTS
Trademark infringement
BUSINESS TORTS
Unfair competition
INTENTIONAL TORT DEFENSES
Consent Mistake Necessity Self-defense
PRODUCT LIABILITY
PRODUCT LIABILITY CLAIMS
Causes of action against manufacturer, distributor and/or sellers for injury from a defective product to the person or property of purchaser, consumer and/or
bystander
POSSIBLE TORT AND/OR CONTRACT CLAIMS
Negligence
Breach of warranty
Strict liability
NEGLIGENCE
NEGLIGENCE
Failure to do what a reasonable person would do or doing what a reasonable person would
not do
PLAINTIFF MUST PROVE EACH OF THE FOLLOWING
ELEMENTS:
– Duty– Breach of duty– Causation:
• Actual cause• Proximate cause
– Injury
MANUFACTURING DEFECTS
Improper manufacturing of goods gives rise to tort
claim
DESIGN DEFECTS
Negligence law requires that manufacturers designing products to anticipate and avoid consumer injury
Two tests:
Risk/utility test:
Consumer expectations test:
INADEQUATE WARNINGS
Failure to warn of a danger associated with its product creates manufacture and maybe seller liability!!!!
INADEQUATE WARNINGIssues include:
– Whether the supplier knew or should have known that the product could be dangerous in a foreseeable use
– The feasibility of an effective warning
– The probable seriousness of the injury
NEGLIGENCE DEFENSES
Comparative Negligence
Contributory Negligence
Assumption of Risk
WARRANTIES AND BREACH OF WARRANTIES
EXPRESS WARRANTIES
Express warranty is when a seller of goods states a fact or makes a promise regarding the character or quality of the goods
EXPRESS WARRANTIES
Created by:– Any affirmation of fact or
promise
– Any description of the goods
– Any sample or model
– Advertisement
EXPRESS WARRANTIES
Sales talk or puffing does not create an express warranty
EXPRESS WARRANTIES
An “expert’s” opinion may create an express warranty
DISCLAIMERS – EXPRESS WARRANTIES
May be disclaimed or modified only with great difficulty
IMPLIED WARRANTIES
An implied warranty automatically attaches to the sale of goods
by operation of law
TWO TYPES
1. Merchantability
2. Fitness for a Particular Purpose
DISCLAIMERS-IMPLIED WARRANTIES
May be excluded or modified as follows:
– Any disclaimer of merchantability must mention merchantability and, in the case of a writing, must be conspicuous
– Any disclaimer of fitness for a particular purpose must be by a writing and conspicuous
STRICT LIABILITY
RES IPSA LOQUITUR
• The thing speaks for itself
• In rare cases, plaintiff need not prove manufacturer’s negligence
• Injury caused by an instrumentality under control of defendant·
STRICT LIABILITY—PART IDefinition: One who sells any product in a defective condition, unreasonably dangerous to user or consumer, is liable for harm caused if:
· The seller is engaged in the business of selling such a product and
· The product is expected to and does reach user without substantial change in the condition in which it is sold
STRICT LIABILITY—PART II
• Coverage: The rule applies— – Even though seller has exercised all
possible care– Even where the user has not bought the
product from seller– To all those in the distribution chain,
from manufacturer through ultimate retailer
STRICT LIABILITY—PART III
Policy:
To place the burden and cost of injury on the chain of distribution (which can both insure for and spread the cost), rather than imposing the entire burden on the injured user
Defenses:
• Assumption of risk
• Product misuse
• Normally not assumption of risk
TORT REFORM? PRO
• Tort costs are about 2.2% of America’s GDP• Tort costs are higher in the U.S. than in other countries• Too much of tort awards get paid to the attorneys rather than the victims
TORT REFORM? CONLawsuits are less than 2% pf
spending and product liability suits are only a fraction of that.
Insurance costs don’t drop when tort damages awards are capped
Only 3 % of tort cases go to trialPunitive damages are only
awarded in 3.3% of tort cases
See You in Court? Maybe Not
States have been cracking down on the types of suits that can be filed and how much can be recovered. Here’s a look at some of the restrictions.
McGraw-Hill/Irwin ©2007 by the McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin ©2007 by the McGraw-Hill Companies, Inc. All rights reserved.
See You in Court? Maybe NotStates have been cracking down on the types of suits that can be filed and how much can be recovered. Here’s a look at some of the restrictions.
Class-action restrictionsLegislatures in nine states have made it harder to combine large numbers of claimants in a single
lawsuit
Medical- malpractice maximums
Limits on damages, including pain and suffering, and similar measures have been approved
by 23 states
Punitive-damages limitsCeilings on the amount of punitive
damages have been passed in 32 states
Barring out-of-state plaintiffsEight states, once meccas for out-of-state
plaintiffs, now curtail suits by people with no connection to the jurisdiction
Appeal-bond reformNearly three dozen states have limited the size of the bond needed to appeal a verdict, removing a
huge burden for companies
GunsSome 33 states have passed laws protecting firearms
makers from certain suits filed by gun victims
Obesity/junk foodLaws in 23 states keep you from suing the likes
of McDonald’s for making you fat
DrugsA number of states have made it harder to
win claims against pharmaceutical companies if their products have been approved by the
U.S. Food & Drug Administration
Class-action restrictionsLegislatures in nine states have made it harder to combine large numbers of claimants in a single
lawsuit
Medical- malpractice maximums
Limits on damages, including pain and suffering, and similar measures have been approved
by 23 states
Punitive-damages limitsCeilings on the amount of punitive
damages have been passed in 32 states
Barring out-of-state plaintiffsEight states, once meccas for out-of-state
plaintiffs, now curtail suits by people with no connection to the jurisdiction
Appeal-bond reformNearly three dozen states have limited the size of the bond needed to appeal a verdict, removing a
huge burden for companies
GunsSome 33 states have passed laws protecting firearms
makers from certain suits filed by gun victims
Obesity/junk foodLaws in 23 states keep you from suing the likes
of McDonald’s for making you fat
DrugsA number of states have made it harder to
win claims against pharmaceutical companies if their products have been approved by the
U.S. Food & Drug Administration