Business Law - Chapter 10 Product Liability

A product may be found defective if a manufacturer fails to provide adequate warnings about potential dangers associated with the product. 
TRUE

A product may be defective if a manufacturer fails to provide adequate warnings about potential dangers associated with the product.

No duty to warn exists for dangers arising from either unforeseeable misuses of the product or from obvious dangers. 
TRUE

No duty to warn exists for dangers arising either from unforeseeable misuses of a product or from obvious dangers. A producer of razor blades, for example, need not give a warning that a razor blade may cut someone.

Arbitration committees are the preferred forum for settling product liability suits in Japan. 
TRUE

Arbitration committees are the preferred forum for settling a product liability dispute in Japan.

In German product liability cases, consumers do not have a right to recover damages for pain and suffering or for emotional distress. 
TRUE

In German product liability cases, consumers do not have a right to recover damages for pain and suffering or for emotional distress.

The lack of a feasible way to make a safer product always precludes product liability. 
FALSE

The state of scientific knowledge at the time of production, and the lack of a feasible way to make a safer product, does not always preclude liability. The court may find that the defendant's conduct was still unreasonable because even in its technologically safest form, the risks posed by the defect in the design so outweighed the benefits of the product that the reasonable person would not have produced a product of that design.

The statute of limitations is the same thing as the statute of repose. 
FALSE

Statutes of limitations limit the time within which all types of civil actions may be brought. Statutes of repose provide an additional statutory defense by barring actions arising more than a specified number of years after the product was purchased.

In order to proceed in a products liability action, a plaintiff must establish to a certainty that the product was not damaged after its purchase. 
FALSE

According to the court in Welge v. Planters Lifesaves Co., "The plaintiff in a product liability suit is not required to exclude every possibility, however fantastic or remote, that the defect which led to the accident was caused by someone other than one of the defendants."

A bystander can never invoke the doctrine of strict-liability in a lawsuit. 
FALSE

According to the court in James A. Peterson, Adm'r of the Estate of Maradean Peterson et al. v. Lou Backrodt Chevrolet Co., quoting, Elmore v. American Motors Corp., "If anything, bystanders should be entitled to greater protection than the consumer or user where injury to bystanders from the defect is reasonably foreseeable."

The state-of-the-art defense is not available in all states in strict liability cases. 
TRUE

One defense that may not be available in all states is the state-of-the-art defense. Courts have rejected the use of this defense in most strict-liability cases, reasoning that the issue in such cases is not what the producers knew at the time the products were produced but whether the product was defective and whether the defect caused it to be unreasonably dangerous.

Under the market share theory, a plaintiff may be able to recover in a products liability action even if the plaintiff cannot trace the harmful product to a particular manufacturer. 
TRUE

In Sindell v.Abbott Laboratories, which created the market share liability theory, the judge apportioned liability among the defendant-manufacturers on the basis of the share of the market they had held at the time that the drug had been produced.

Upon which type of law is product liability law primarily based? 
A. Contract law.
B. Tort law.
C. Administrative law.
D. Legislative law.
E. Executive law.

Product liability law is based primarily on tort law. There are three commonly used theories of recovery in product liability cases: negligence, strict product liability, and breach of warranty.

Which of the following are commonly used theories of recovery in product liability cases? 
A. Negligence, negligence per se, and breach of warranty.
B. Strict product liability, negligence per se, and breach of warranty.
C. Breach of warranty, negligence, and negligence per se.
D. Negligence, strict product liability, and breach of warranty.
E. Civil, criminal, and administrative.

There are three commonly used theories of recovery in product liability cases: negligence, strict product liability, and breach of warranty.

Which of the following must a plaintiff generally show in order to recover in a product liability lawsuit? 
A. That the product is defective.
B. That the defect should have been discovered and fixed prior to sale.
C. That the defendant was negligent.
D. That the product is defective and also that the defect existed when the product left the defendant's control.
E. That the product is defective, that the defect existed when the product left the defendant's control and also that the defendant was negligent.

While a plaintiff must establish different elements under the product liability theories, the plaintiff must generally show two common elements: (1) that the product is defective, and (2) that the defect existed when the product left the defendant's control.

When an individual product has a defect making it more dangerous than identical products, that individual product is said to have which of the following defects? 
A. Design.
B. Warning.
C. Primary.
D. Exclusionary.
E. Manufacturing.

When an individual product has a defect making it more dangerous than other identical products (the 200 other Diet Coke bottles at the grocery store), this individual product has a manufacturing defect.

When all products of a particular design are defective and dangerous, those products have which of the following type of defects? 
A. Design.
B. Warning.
C. Primary.
D. Exclusionary.
E. Manufacturing.

When all products of a particular design are defective and dangerous, these products have a design defect.

Which of the following was true prior to the landmark 1916 case of MacPherson v. Buick Motor Company? 
A. Negligence was rarely used as a theory of recovery for an injury caused by a defective product because of the difficulty of establishing the element of duty.
B. Negligence was rarely used as a theory of recovery for an injury caused by a defective product because of the difficulty of establishing causation.
C. Negligence was often used as a theory of recovery because of the ease in establishing privity of contract.
D. Causes of actions against manufacturers of products were barred federal law.
E. Causes of actions against manufacturers of products were barred by an amendment to the U.S. Constitution that has since been repealed.

Prior to the landmark 1916 case of MacPherson v. Buick Motor Co., negligence was rarely used as a theory of recovery for an injury caused by a defective product because of the difficulty of establishing the element of duty. Until that case, the courts said that a plaintiff who was not the purchaser of the defective product could not establish a duty of care, because one could not owe a duty to someone with whom one was not "in privity of contract." Following MacPherson, any foreseeable plaintiff can sue a manufacturer for its breach of duty of care.

Which of the following is a reference to being a party to a contract? 
A. Being in privity of contract.
B. Being in association with contract.
C. Being in connect to contract.
D. Being in affiliation with contract.
E. Being connected by contract.

Being in privity of contract means being a party to a contract.

Following the case of MacPherson v. Buick Motor Company, any ______ plaintiff can sue a manufacturer for its breach of duty of care. 
A. contracting
B. adult
C. unforeseeable
D. foreseeable
E. believable

Following MacPherson, any foreseeable plaintiff can sue a manufacturer for its breach of duty of care.

Which of the following may be sued in product liability actions? 
A. Retailers, wholesalers, and manufacturers.
B. Retailers and wholesalers but not manufacturers.
C. Wholesalers and manufacturers but not retailers.
D. Retailers and manufacturers but not wholesalers.
E. None of the above.

Foreseeable plaintiffs can bring a case against retailers, wholesalers, and manufacturers.

Which of the following are considered foreseeable plaintiffs in product liability cases? 
A. Users and consumers but not bystanders.
B. Users, consumers and bystanders.
C. Users but not consumers or bystanders.
D. The purchaser only.
E. The purchaser and the purchaser's immediate family only.

Foreseeable plaintiffs include users, consumers, and bystanders.

Which of the following do courts often consider in determining whether a manufacturer was negligent in failing to warn? 
A. The likelihood of the injury only.
B. The seriousness of the injury only.
C. The ease of warning only.
D. The likelihood of the injury and the seriousness of the injury but not the ease of warning.
E. The likelihood of the injury, the seriousness of the injury and the ease of warning.

Courts often consider the likelihood of the injury, the seriousness of the injury, and the ease of warning when deciding whether a manufacturer was negligent in failing to warn.

As of the date of text publication, what was the status of the lawsuit Pelman v. McDonald's, the case in which the plaintiffs asserted that McDonald's engaged in a scheme of deceptive advertising that in effect created the impression that McDonald's food products were nutritionally beneficial and part of a healthy lifestyle? 
A. The case was dismissed and plaintiffs are appealing.
B. The case settled.
C. The judge had refused to dismiss the plaintiffs' claims, and the case is moving forward.
D. The judge ruled that only minor plaintiffs could sue.
E. The judge ruled that only plaintiffs who could prove that they had eaten a sufficient amount of food at McDonald's could sue.

The judge refused to dismiss the plaintiffs' claims, and the case was moving forward as a class action.

Which of the following is true regarding the application of negligence per se in product liability cases based on negligence? 
A. The doctrine of negligence per se is also applicable to product liability cases based on negligence.
B. The doctrine of negligence per se is applicable to product liability cases only if they are based on failure to warn.
C. The doctrine of negligence per se is applicable to product liability cases only if the cases are based on design defect.
D. The doctrine of negligence per se is applicable to product liability cases only if the cases are based on manufacturing defect.
E. The doctrine of negligence per se is never available in product liability cases.

Negligence per se is applicable to product liability cases based on negligence. When a law establishes labeling, design, or content requirements for products, the manufacturer has a duty to meet these requirements.

Which of the following is true regarding damages that may be recovered in negligence-based product liability cases if proven? 
A. Only compensatory damages may be recovered.
B. Only punitive damages may be recovered.
C. Both compensatory damages and punitive damages may be recovered.
D. Compensatory damages, punitive damages, and administrative damages may be recovered.
E. Compensatory damages, punitive damages, administrative damages, and manufacturing damages may be recovered.

Damages that are recoverable in negligence-based product liability cases are the same as those in any action based on negligence: compensatory damages and punitive damages.

Which of the following is true regarding punitive damages in product liability cases? 
A. They are not available in product liability actions.
B. The amount of the punitive-damage award is determined by the wealth of the defendant only.
C. The amount of the punitive-damage award is determined by the maliciousness of the action only.
D. The amount of the punitive-damage award is determined by the wealth of the defendant and also by the maliciousness of the action.
E. Punitive damages are meant to compensate the plaintiff for injury and to make the plaintiff whole.

Punitive damages are meant to punish the defendant for extremely harmful conduct. The amount of the punitive-damage award is determined by the wealth of the defendant and the maliciousness of the action.

Which of the following is true regarding defenses to negligence-based product liability actions? 
A. A defendant may only rely upon contributory negligence.
B. A defendant may only rely upon comparative negligence.
C. A defendant may only rely upon modified comparative negligence.
D. A defendant may rely upon the defense of contributory, comparative, or modified comparative negligence, depending upon which defense is accepted by the state where the case arose.
E. A defendant may not rely upon contributory, comparative, or modified comparative negligence because no defenses are available in such a lawsuit. The only issue will be the amount of damage.

A common defense is that the plaintiff's own failure to act reasonably contributed to the plaintiff's own harm. This negligence on the part of the plaintiff allows the defendant to raise the defense of contributory, comparative, or modified comparative negligence, depending on which defense is accepted by the state where the case arose.

Which of the following arises when a consumer knows that a defect exists but still proceeds unreasonably to make use of the product, creating a situation where the consumer has voluntarily assumed the risk of injury from the defect and thus cannot recover? 
A. Assumption of the risk.
B. Pure comparative fault.
C. Contributory negligence.
D. Last-clear-chance.
E. Strict behavior.

Assumption of the risk arises when a consumer knows that a defect exists but still proceeds unreasonably to make use of the product, creating a situation in which the consumer has voluntarily assumed the risk of injury from the defect and thus cannot recover.

Which of the following defenses is an argument that harm was caused not by the defendant's negligence but by the plaintiff's failure to properly use the product? 
A. Assumption of the risk.
B. Product misuse.
C. Pure comparative fault.
D. Last-clear-chance.
E. Misapplication.

When a defendant raises the defense of product misuse, the defendant is really arguing that the harm was caused not by the defendant's negligence but by the plaintiff's failure to properly use the product.

Which of the following is a defense used by a defendant to demonstrate that his alleged negligent behavior was reasonable, given the available scientific knowledge existing at the time of the product was sold or produced? 
A. Assumption of the risk.
B. Scientific knowledge doctrine.
C. State of the art defense.
D. Reasonable behavior defense.
E. Reasonable manufacturer defense.

The state-of-the-art defense is used by a defendant to demonstrate that his alleged negligent behavior was reasonable, given the available scientific knowledge existing at the time the product was sold or produced.

Compliance with federal laws may lead to the defense that use of state tort law is ______________ by a federal statute designed to ensure the safety of a particular class of products. 
A. Preempted
B. Complimented
C. Refuted
D. Extinguished
E. Upheld

A defendant may attempt to argue that compliance with federal laws is a defense to state tort law because the state tort law is preempted by a federal statute designed to ensure the safety of a particular class of products.

Section 402A of the Restatement (Second) of Torts applies to which of the following? 
A. Negligence.
B. Breach of warranty.
C. Strict product liability.
D. Assumption of the risk.
E. Preemption.

The requirements for proving strict product liability can be found in Section 402A of the Restatement (Second) of Torts.

Under a strict product liability theory, who may be held liable to an injured party? 
A. Manufacturers only.
B. Distributors only.
C. Retailers only.
D. Manufacturers and distributors but not retailers.
E. Manufacturers, distributors, and retailers.

Under strict product liability, courts may hold liable the manufacturer, distributor, or retailer to any reasonably foreseeable injured party.

Under a strict product liability theory, who is considered a reasonably foreseeable party who may recover if injury is sustained? 
A. The buyer only.
B. Only the buyer and the buyer's family.
C. Only the buyer, the buyer's family, and the buyer's guests.
D. Only the buyer and any one present in the buyer's home when injury is sustained.
E. The buyer, the buyer's family, the buyer's guests, and foreseeable bystanders.

Under strict product liability, courts may hold liable the manufacturer, distributor, or retailer to any reasonably foreseeable injured party. Any reasonably foreseeable injured party includes the buyer; the buyer's family, guests, and friends; and foreseeable bystanders.

Which of the following do courts focus on when a strict product liability action is involved? 
A. Whether the product was in a defective condition and unreasonably dangerous when sold.
B. Whether the manufacturer was negligent.
C. Whether the seller exercised all possible care in the preparation and sale of the product.
D. Whether the consumer had a contractual relationship with the seller.
E. Whether the manufacturer knew of a problem with the product.

With strict products liability, the actions of the manufacturer or seller are not relevant; rather, strict product liability focuses on the product. Thus, duty is irrelevant. Courts focus on whether the product was in a "defective condition, unreasonably dangerous" when sold.

How do plaintiffs usually prove that a defect exists in a product? 
A. Only though expert testimony.
B. Only through evidence of circumstances surrounding the accident that would lead the jury to infer that the accident must have been caused by a defect in the product.
C. Only through testimony of a purchaser of the product.
D. Only through testimony of an injured party.
E. Through expert testimony and/or evidence of the circumstances surrounding the accident that would lead the jury to infer that the accident must have been caused by a defect in the product.

Plaintiffs usually prove that a defect exists by means of (1) experts who testify as to the type of flaw in the product that led to the plaintiff's injury and/or (2) evidence of the circumstances surrounding the accident that would lead the jury to infer that the accident must have been caused by a defect in the product.

What was the ruling of the court in the case of Welge v. Planters Lifesavers Co., the case in which the plaintiff injured his hand when a jar containing peanuts broke? 
A. That the case would be dismissed because the plaintiff could not establish that the jar was maintained in a pristine condition after its purchase.
B. That the plaintiff was unable to recover because negligence in manufacture of the jar could not be established.
C. That the plaintiff was unable to recover because he was not the actual purchaser of the jar of peanuts.
D. That the plaintiff would be allowed to proceed because negligence was established.
E. That the plaintiff would be allowed to proceed with the lawsuit because of a lack of evidence that the jar had been damaged after its purchase.

According to the court, "Here we know to a virtual certainty (always assuming that the plaintiff's evidence is believed, which is a matter for the jury) that the accident was not due to mishandling after purchase, but to a defect that had been introduced earlier."

Which of the following is true regarding proof of design defect? 
A. States are not in agreement as to how to establish a design defect.
B. State law across the country is generally uniform regarding how to establish a design defect.
C. State law is irrelevant because federal law dictates how to establish a design defect.
D. Each local county in each state determines how a design defect will be established.
E. Because of the amount of international trade, there are international treaties establishing for each U.S. state how design defects will be established.

It is sometimes difficult to prove that a design is defective. States are not in agreement as to how to establish a design defect.

Which of the following is set out in the Restatement (Second) of Torts as a method by which to prove a design defect? 
A. The risk-utility test.
B. The consumer expectations test.
C. The feasible alternatives test.
D. The design defect test.
E. The consumer propensity test.

Two different tests have evolved to determine when a product is so defective as to be unreasonably dangerous. The first test, set out in the Restatement (Second) of Torts, is the consumer expectations test: Did the product meet the standards that would be expected by the reasonable consumer?

Which test for determining design defect is also referred to as the risk-utility test? 
A. The consumer expectations test.
B. The retailer expectations test.
C. The feasible alternatives test.
D. The design defects test.
E. None of the above.

Two different tests have evolved to determine when a product is so defective as to be unreasonably dangerous. The second is the feasible alternatives test, sometimes referred to as the risk-utility test. In applying this test, the court focuses on the usefulness and safety of the design and compares it to an alternative design.

As recognized by the court in Sperry-New Holland v. John Paul Prestage and Pam Prestage, which of the following is true regarding the consumer expectations test for product defect? 
A. If the plaintiff, applying the knowledge of an ordinary consumer, sees the danger and can appreciate that danger, then he cannot recover for any injury resulting from that appreciated danger.
B. That a plaintiff cannot recover if a reasonable person would conclude that the danger in fact of the product, whether foreseeable or not, outweighs the utility of the product.
C. That a plaintiff may only recover if the plaintiff was the purchaser of the product causing injury.
D. That a plaintiff may only recover if consumer oriented household goods are involved.
E. That a plaintiff may only recover if the plaintiff reasonably expected the manufacturer to have insurance.

According to the court in Sperry-New Holland v. John Paul Prestage and Pam Prestage, under the consumer expectations analysis, "for a plaintiff to recover, the defect in a product which causes his injuries must not be one which the plaintiff, as an ordinary consumer, would know to be unreasonably dangerous to him. In other words, if the plaintiff, applying the knowledge of an ordinary consumer, sees a danger and can appreciate that danger, then he cannot recover for any injury resulting from that appreciated danger."

As recognized by the court in Sperry-New Holland v. John Paul Prestage and Pam Prestage, which of the following is true under the risk-utility analysis of product liability? 
A. If the plaintiff, applying the knowledge of an ordinary consumer, sees a danger and can appreciate that danger, then he cannot recover for any injury resulting from that appreciated danger.
B. That a plaintiff must show that a retailer failed to do a proper risk-utility analysis before the plaintiff can recover against the retailer.
C. That a plaintiff must show that a manufacturer failed to do a proper risk-utility analysis before the plaintiff can recover against the manufacturer.
D. That a product is unreasonably dangerous if a reasonable person would conclude that the danger-in-fact, whether foreseeable or not, outweighs the utility of product.
E. That a reasonable person must conclude that the use-in-fact of a product outweighs the risk-utility of the product.

According to the court in Sperry-New Holland v. John Paul Prestage and Pam Prestage, "In a "risk-utility" analysis, a product is "unreasonably dangerous" if a reasonable person would conclude that the danger-in-fact, whether foreseeable or not, outweighs the utility of the product. Thus, even if a plaintiff appreciates the danger of a product, he can still recover for any injury resulting from the danger, provided that the utility of the product is outweighed by the danger that the product creates."

Under the Restatement (Third) of Torts, which of the following results in strict-liability? 
A. A manufacturing defect.
B. A design defect.
C. A failure to warn.
D. Both a manufacturing defect and a design defect.
E. A manufacturing defect, a design defect, and a failure to warn.

Under the Restatement (Third) of Torts, it is only a manufacturing defect that results in strict liability.

When did the American Law Institute adopt the Restatement of the Law (3^rd) Torts: Product Liability? 
A. 2004.
B. 2002.
C. 2000.
D. 1998.
E. 1960.

In 1998 criticisms led the American Law Institute to adopt the "Restatement of the Law (Third), Torts: Product Liability."

Which of the following are factors the trial court may find helpful when balancing a product's utility against the risk the product creates? 
A. The usefulness and desirability of the product.
B. The safety aspects of the product.
C. The availability of a substitute product that would meet the same need and would not be as unsafe.
D. The manufacturer's ability to eliminate the unsafe character of the product without impairing its usefulness or making it too expensive to maintain its utility.
E. All of the above.

There are several factors a trial court may find helpful when balancing a product's utility against the risk the product creates including the usefulness and desirability of the product; the safety aspects of the product; the availability of a substitute product that would meet the same need and not be as unsafe; and the manufacturer's ability to eliminate the unsafe character of the product without impairing its usefulness or making it too expensive to maintain its utility.

Which of the following causes of action stem from contract theory? 
A. Breach of warranty.
B. Negligence.
C. Strict-liability in tort.
D. Failure to warn.
E. Failure to warn and breach of warranty.

Unlike negligence and strict-liability theories, breach of warranty stems from contract theory rather than tort theory.

Under which of the following is the breach of warranty theory of liability established? 
A. The Uniform Commercial Code.
B. The Federal Contract Guide.
C. The Federal Commercial Code.
D. The Restatement (Second) of Torts.
E. The Restatement (Third) of Torts.

Unlike negligence and strict-liability theories, breach of warranty stems from contract theory rather than tort theory. This theory of liability is established through the Uniform Commercial Code (UCC).

Under which of the following theories may a plaintiff be able to proceed even if the plaintiff cannot trace an injury caused by a product to any particular manufacturer? 
A. The shared liability theory.
B. The market share theory.
C. The trade theory.
D. The shared market liability theory.
E. The shared production theory.

Sometimes, however, some plaintiffs may not learn of their injuries until years after the injury occurs. By this time, plaintiffs cannot trace the product to any particular manufacturer. Recovery may be possible because of the market share theory.

Courts using the market share theory generally require that the plaintiff prove which of the following? 
A. All defendants are tortfeasors.
B. The allegedly harmful products are identical and share the same defective qualities.
C. The plaintiff is unable to identify which defendant caused her injury, through no fault of her own.
D. The manufacturers who sold substantially all the defective products in the relevant area and during the relevant time are named as defendants.
E. All of the above.

Courts using the market share theory generally require that the plaintiff prove that (1) all defendants are tortfeasors; (2) the allegedly harmful products are identical and share the same defective qualities; (3) the plaintiff is unable to identify which defendant caused her injury, through no fault of her own; and (4) the manufacturers of substantially all the defective products in the relevant area and during the relevant time are named as defendants.

What was the result in the case opener involving the lawsuit against the sperm bank for providing sperm with a genetic defect? 
A. The lawsuit was dismissed because of the court's decision that sperm is not a product.
B. The lawsuit was dismissed because of the court's decision that the plaintiffs had suffered no damages.
C. The lawsuit was dismissed because of the court's decision that the sperm was not defective.
D. The lawsuit was not dismissed, and the court ruled that a sperm bank could be sued under product liability laws.
E. The lawsuit was not dismissed, and the court awarded damages to the plaintiff based upon the costs of raising the child at issue.

The case was the first decision to hold that a sperm bank could be sued under product liability theories for the sperm it provides.

What was the result in Wyeth v. Levine, the case in which the plaintiff sued the defending drug company claiming the defendant improperly labeled a drug regarding intravenous injection? 
A. That the case should be dismissed because the defendant could not be subjected to both federal and state law.
B. That the case should be dismissed because state law was preempted by federal law.
C. Both that the case should be dismissed because the defendant could not be subjected to both federal and state law, and that the case should be dismissed because state law was preempted by federal law.
D. That the jury verdict would be upheld because the defendant could comply with its state and federal law obligations.
E. That the jury verdict would be upheld because Wyeth failed to submit evidence that the plaintiff was guilty of comparative negligence.

According to the Supreme Court, "it is not impossible for Wyeth to comply with its state and federal law obligations and that Levine's common-law claims do not stand as an obstacle to the accomplishment of Congress' purposes in the FDCA [Food, Drug, and Cosmetic Act]."

Under which of the following theories of product liability can a plaintiff recover solely for economic damage? 
A. Product responsibility
B. Strict liability
C. Breach of warranty
D. All the above
E. Strict liability and breach of warranty, but not product responsibility

Japanese law fails to recognize fault of the part of the consumer in product liability cases, and manufacturers must bear the full burden when a product is found to be defective.

FALSE

Which of the following was the result in Radford v. Wells Fargo Bank, the case in the text in which the plaintiff sued claiming that a mortgage loan was a defective product?

Recognizing that product liability focuses on tangible items, the court ruled that a loan is not a product for purposes of product liability law.