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Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

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Page 1: Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

Essentials Of Business Law

Chapter 29

Product Liability

McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Page 2: Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

Essentials of Business Law Chapter 29-2

Product Liability

The liability of a manufacturer or seller for injury to purchasers, users, and third parties

Plaintiffs must prove four elements in order to be successful in a product liability lawsuit Duty Breach Proximate cause Damages

Page 3: Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

Essentials of Business Law Chapter 29-3

Product Liability Injury And Claims

Product flaw Abnormality or condition in a single unit of the product that was

not intended Makes a product more dangerous than it would have been had it

been as intended

Failure to warn Dereliction of duty manufacturers and sellers have to advise

purchasers and users of dangers inherent in a product

Design defect Fault in a product that creates a hazardous condition that causes

injury Exists throughout an entire product line

Page 4: Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

Essentials of Business Law Chapter 29-4

Strict Liability

Liability without the necessity of proving fault

Application from state to state varies greatly

Fewer new or innovative products are released due to the fear of liability lawsuits

Page 5: Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

Essentials of Business Law Chapter 29-5

Drugs

Food and Drug Administration Federal agency responsible for ensuring all drugs sold in the

U.S. be tested to for both safety and effectiveness

Phase I: A small number of people are tested to determine safety and dosage, and to identify side effects Phase II: Effectiveness is measured, comparing subjects who receive the drug to those who receive a placebo Phase III: Safety and effectiveness of the drug is evaluated in trials involving a great number of peoplePhase IV: Continued testing occurs subsequent to FDA approval of the drug

Page 6: Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

Essentials of Business Law Chapter 29-6

Drugs

Costs a pharmaceutical company approximately $700 million for each drug approved

Takes about 12 years

One of 5,000 chemicals tested ultimately is approved for sale as a drug

One-third of approved drugs become profitable

One-fifth of all drugs that are approved have alleged safety problems

Page 7: Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

Essentials of Business Law Chapter 29-7

Consumer Products

Consumer Product Safety Commission The federal agency responsible for the safety of

consumer products sold in the U.S Tests products to determine dangers Order manufacturer’s to recall dangerous products

Wool products, fur products, and textile fiber products Must be properly labeled and identified

Flammable products Must incorporate flame retardant materials

Page 8: Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

Essentials of Business Law Chapter 29-8

Consumer Products

Hazardous substances, toxic, corrosive, irritant, or flammable Must be properly labeled with appropriate warnings

Children’s toys May not contain electrical, thermal, or mechanical

hazards

Paint Generally may not contain lead

Radiation emitting products Must contain appropriate safeguards

Page 9: Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

Essentials of Business Law Chapter 29-9

Tobacco

Federal and state statutes strictly regulate tobacco products Cannot be advertised on television or radio Tar and nicotine levels on cigarette packages

must be disclosed Cigarettes must contain the Surgeon General

warning regarding the dangers of smoking

Page 10: Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

Essentials of Business Law Chapter 29-10

Tobacco

Master Settlement Agreement Tobacco companies agreed not to engage in certain

advertising strategies• Not to advertise using cartoon characters• Not to place advertising on billboards or stadium signs• Not to pay for product inclusion in films and television shows• Not to provide free caps, t-shirts, etc• Not to distribute free samples of cigarettes• Not to target youth markets by sponsoring concerts, athletic

events, etc Support a foundation that provides education

regarding the dangers of tobacco products

Page 11: Essentials Of Business Law Chapter 29 Product Liability McGraw-Hill/Irwin Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved

Essentials of Business Law Chapter 29-11

Automobiles

National Highway Traffic Safety Administration The federal agency responsible for the safety

of automobiles sold in the U.S. Requires that automobiles contain appropriate

safety features• Airbags, seat belts, antilock brakes


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Irwin/McGraw Hill The McGraw-Hill Companies, Inc., 2000 · Slides by Matthew Will Chapter 2 Irwin/McGraw Hill ©The McGraw-Hill Companies, Inc., 2000. Irwin/McGraw Hill ... " Tools

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