Business Law Study Set 14

Business

Quiz 22 :

Warranties and Product Liability

Quiz 22 :

Warranties and Product Liability

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VIDEO QUESTION: Warranties. Go to this text's Web site at www.cengage.com/blaw/darkson and select "Chapter 22." Click on "Video Questions" and view the video titled Matilda. Then answer the following questions. (a) What warranties of title arise in the sales of used cars by dealers (b) In the video, a father (Danny DeVito) uses a tool to turn back the numbers on a vehicle's odometer. When he sells this car, if he tells the buyer the mileage is only 60,000 knowing that it is really 120,000, has he breached an express warranty What if the seller did not make any oral statements about the car's mileage, could the buyer claim an express warranty existed Explain. (c) What would a person who buys the car in the video have to show to prove that the seller breached the implied warranty of merchantability
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a) In the sale of a used car, several warranties can be at issue. For instance, there may be express warranties on the car or parts. There may also be implied warranties, including the implied warranty of merchantability, which means that the car is "reasonably fit for the ordinary purposes for which such goods are used." In this case, it means that the car will drive without major issues and works as a car should.
b) In this case, the father is selling the car with an odometer that reads half the miles that the car actually has on it. The number of miles on a car is an indicator of how long the car will last and is visible to the seller before they purchase it. Arguably, the promise of how many miles is on the car is an express warranty.
c) The buyer would have to show that the car does not perform to the reasonable expectations of how a car should perform. For instance, if it does not start, if suddenly stops working, etc. Those factors would indicate that the car is not merchantable because it does not perform as a car should.

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A QUESTION OF ETHICS: Dangerous Products. Susan Calles lived with her four daughters, Amanda, age eleven, Victoria, age five, and Jenna and Jillian, age three. In March 1998, Calles bought an Aim N Flame utility lighter, which she stored on the top shelf of her kitchen cabinet. A trigger can ignite the Aim N Flame after an "ON/OFF" switch is slid to the "on" position. On the night of March 31, Calles and Victoria left to get videos. Jenna and Jillian were in bed, and Amanda was watching television. Calles returned to find fire trucks and emergency vehicles around her home. Robert. Finn, a fire investigator determined that Jenna had started a fire using the lighter. Jillian suffered smoke inhalation, was hospitalized, and dial on April 21. Calles filed a suit in an Illinois state court against Scripto-Tokai Corp., which distributed the Aim N Flame, and others. In her suit, which was grounded, in part, in strict liability claims, Calles alleged that the lighter was an "unreasonably dangerous product." Scripto filed a motion for summary judgment. [ Calles v. Scripto-Tokai Corp., 224 Ill.2d 247 864 N.E.2d 249, 309 Ill.Dec. 383 (2007)] (a) A product is unreasonably dangerous when it is dangerous beyond the expectation of the ordinary consumer. Whose expectation-Calles's or Jenna's-applies Does the lighter pass this test Explain. (b) Calles presented evidence as to the likelihood and seriousness of injury from lighters that do not have child-safety devices. Scripto argued that the Aim N Flame is an alternative source of fire and is safer than a match. Calles admitted that she knew the dangers presented by fighters in the hands of children. Scripto admitted that it had been a defendant in several suits for injuries under similar circumstances. How should the court rule Why
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a) The expectation is for an ordinary consumer. A child would not be an ordinary user of a utility lighter. Thus, the mother's expectations would be used in measuring the dangerousness of the product.
b) In this case, the court should not dismiss the case. C acted reasonably by trying to keep the lighter from her child by placing it on a top shelf. Although this may be deemed to be a faulty way of keeping the lighter out of her chid's hands, there were reasonable efforts. As far as the manufacturer, the previous cases indicate they had knowledge the device had caused similar injuries to children. They were put on notice of this possible design defect but did not take measures to make it safer. They could be held to a negligence standard because of this fact.

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Defenses to Product Liability Baxter manufactures electric hair dryers. Julie purchases a Baxter dryer from her local Ace Drugstore. Cox, a friend and guest in Julie's home, has taken a shower and wants to dry her hair. Julie tells Cox to use the new Baxter hair dryer that she has just purchased. As Cox plugs in the dryer, sparks fly out from the motor, and sparks continue to fly as she operates it. Despite this, Cox begins drying her hair. Suddenly, the entire dryer ignites into flames, severely burning Cox's scalp. Cox sues Baxter on the basis of negligence and strict liability in tort. Baxter admits that the dryer was defective but denies liability, particularly because Cox was not the person who purchased the dryer. In other words, Cox had no contractual relationship with Baxter. Discuss the validity of Baxter's defense. Are there any other defenses that Baxter might assert to avoid liability Discuss fully.
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Unfortunately for B, despite the lack of contractual relationship with the injured C, product manufacturers are liable for any foreseeable users of their product, even the ones that did not purchase the product directly.
B could argue that C assumed the risk because a) C knew about the the sparks flying and it was foreseeable she could get hurt and b) C voluntarily assumed this risk by continuing to blow dry her hair.

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Why would the enforcement of the exculpatory clause in this case conflict with the rationale underlying strict product liability
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What did the court mean when it stated that strict product liability laws are "not fully congruent" with classical tort law
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Implied Warranties Moon, a farmer, needs to install a two-thousand-pound piece of equipment in his barn. This will require lifting the equipment thirty feet up into a hayloft. Moon goes to Davidson Hardware and tells Davidson that he needs some heavy-duty rope to be used on his farm. Davidson recommends a one-inch-thick nylon rope, and Moon purchases two hundred feet of it. Moon ties the rope around the piece of equipment; puts the rope through a pulley; and, with a tractor, lifts the equipment off the ground. Suddenly, the rope breaks. The equipment crashes to the ground and is severely damaged. Moon files a suit against Davidson for breach of the implied warranty of fitness for a particular purpose. Discuss how successful Moon will be in his suit.
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CASE PROBLEM WITH SAMPLE ANSWER: Product Liability. Bret D'Auguste was an experienced skier when he rented equipment to ski at Hunter Mountain Ski Bowl, Inc., owned by Shanty Hollow Corp., in New York. The adjustable retention/release value for the bindings on the rented equipment was set at a level that, according to skiing industry standards, was too low - meaning that the skis would be released too easily-given D'Auguste's height, weight, and ability. When D'Auguste entered a "double black diamond," or extremely difficult, trail, he noticed immediately that, the surface consisted of ice and almost no snow. He tried to exit the steeply declining trail by making a sharp right turn, but in the attempt, his left ski snapped off. D'Auguste lost his balance, fell, and slid down the mountain, striking his face and head against a fence along the trail. According to a report by a rental shop employee, one of the bindings on D'Auguste's skis had a "cracked heel housing." D'Auguste filed a suit in a New York state court against Shanty Hollow and others, including the bindings' manufacturer, on a theory of strict product liability. The manufacturer filed a motion for summary judgment. On what basis might the court grant the motion On what basis might the court deny the motion How should the court rule Explain. [ D'Auguste v. Shanty Hollow Corp., 26 A.D.3d 403, 809 N.Y.S.2d 555 (2 Dept. 2006)]
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Express Warranties Videotape is recorded magnetically. The magnetic particles that constitute the recorded image are bound to the tape's polyester base. The binder that holds the particles to the base breaks down over time. This breakdown, which is called sticky shed syndrome, causes the image to deteriorate. The Walt Disney Co. made many of its movies available on tape. Buena Vista Home Entertainment, Inc., sold the tapes, which it described as part of a "Gold Collection" or "Masterpiece Collection." The advertising included such statements as "Give Your Children the Memories of a Lifetime- Collect Each Timeless Masterpiece!" and "Available for a Limited Time Only!" Charmaine Schreib and others who bought the tapes filed a suit in an Illinois state court against Disney and Buena Vista, alleging, among other things, breach of warranty. The plaintiffs claimed that the defendants' marketing promised the tapes would last for generations. In reality, the tapes were as subject to sticky shed syndrome as other tapes. Did the ads create an express warranty In whose favor should the court rule on this issue Explain. [ Schreib v. The Walt Disney Co., __ N.E.2d __ (Ill.App. 1 Dist. 2006)]
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QUESTION WITH SAMPLE ANSWER: Product Liability. Jason Clark, an experienced hunter, bought a paintball gun. Clark practiced with the gun and knew how to screw in the carbon dioxide cartridge, pump the gun, and use its safety and trigger. Although Clark was aware that he could purchase protective eyewear, he chose not to buy it. Clark had taken gun safety courses and understood that it was "common sense" not to shoot anyone in the face. Clark's friend, Chris Wright, also owned a paintball gun and was similarly familiar with the gun's use and its risks. Clark, Wright, and their friends played a game that involved shooting paint-balls at cars whose occupants also had the guns. One night, while Clark and Wright were cruising with their guns, Wright shot at Clark's car, but hit Clark in the eye. Clark filed a product liability lawsuit against the manufacturer of Wright's paintball gun to recover for the injury. Clark claimed that the gun was defectively designed. During the trial, Wright testified that his gun "never malfunctioned." In whose favor should the court rule Why
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Implied Warranties Peter and Tanya Rothing operated Diamond R Stables near Belgrade, Montana, where they bred, trained, and sold horses. Arnold Kallestad owned a ranch in Gallatin County, Montana, where he grew hay and grain, and raised Red Angus cattle. For more than twenty years, Kallestad had sold between three hundred and one thousand tons of hay annually, sometimes advertising it for sale in the Bozeman Daily Chronicle. In 2001, the Rothings bought hay from Kallestad for $90 a ton. They received delivery on April 23. In less than two weeks, at least nine of the Rothings' horses exhibited symptoms of poisoning that was diagnosed as botulism. Before the outbreak was over, nineteen animals had died. Robert Whitlock, associate professor of medicine and the director of the Botulism Laboratory at the University of Pennsylvania, concluded that Kallestad's hay was the source. The Rothings filed a suit in a Montana state court against Kallestad, claiming, in part, breach of the implied warranty of merchantability. Kallestad asked the court to dismiss this claim on the ground that, if botulism had been present, it had been in no way foreseeable. Should the court grant this request Why or why not [ Rothing v. Kallestad, 337 Mont. 193, 159 P.3d 222 (2007)]
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Product Liability Yun Tung Chow tried to unclog a floor drain in the kitchen of the restaurant where he worked. He used a drain cleaner called Lewis Red Devil Lye that contained crystalline sodium hydroxide. The product label said to wear eye protection, to put one tablespoon of lye directly into the drain, and to keep one's face away from the drain because there could be dangerous backsplash. Without eye protection, Chow mixed three tablespoons of lye in a can and poured that mixture down the drain while bending over it. Liquid splashed back into his face, causing injury. He brought a product liability suit based on inadequate warnings and design defect. The trial court granted summary judgment to the manufacturer, and Chow appealed. An expert for Chow stated that the product was defective because it had a tendency to backsplash. Is that a convincing argument Why or why not [ Yun Tung Chow v. Reckitt Coleman, Inc., 69 A.D.3d 413, 891 N.Y.S.2d 402 (N.Y.A.D. 1 Dept. 2010)]
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