C H A P T E R 1 0
Product Liability
TRUE-FALSE QUESTIONS
1. To recover for a defective product, an injured person must be in a contractual relationship with the
seller.
2. Most states in the United States have adopted strict product liability whereby an injured person may
recover damages by showing that a defendant was negligent.
3. In regard to a product liability action, a disclaimer of liability is generally effective.
4. Strict liability in tort applies only to products, not to services.
5. The doctrine of strict product liability in tort is grounded in the common law and was transported to
this country from England in the 1800’s.
6. An unusual use that is reasonably foreseeable may be considered a normal use of a product.
7. A court is not bound by the Restatement’s formulation of product liability law.
8. A design defect may result from the manufacturer’s choice of the product’s materials.
9. Under federal law, manufacturers, but not sellers, may be held strictly liable for a defective product.
10. A seller should enter into a contract of indemnity with a manufacturer giving the seller a right to
reimbursement if found liable for a defect caused by the manufacturer.
11. Because other countries have applied principles of assumption of risk, the U.S. is the only country
where the tobacco industry faces legal problems.
12. If the use of a product carries an obvious risk, the manufacturer will not be held liable for injuries
that result from ignoring the risk.
13. The Restatement (Third) requires that any claim of design defect be supported by a showing of a
reasonable alternative design.
14. If the use of a product carries an obvious risk, the manufacturer of the product will not be held liable
for injuries that result from ignoring the risk
15. Under federal law a retailer who had no role in the manufacture of a defective good may not be held
liable to a consumer injured by the good.
16. For a defendant to be held strictly liable, the plaintiff must prove that the defect existed at the time
the product left the defendant.
17. The assumption of risk doctrine makes the manufacturer liable for a resulting injury.
18. A statute of repose cuts off the right to assert a product liability action.
19. Under the preemption defense, certain federal laws and regulations that set minimum safety
standards are held to preempt state-law product liability claims.
20. The European Union applies strict liability to services.
MULTIPLE-CHOICE QUESTIONS
1. Which of the following is not a rationale of strict product liability?
A. Manufacturers should not escape liability simply because they typically do not sign a formal
contract with the end-user.
B. The law should protect consumers against unsafe products.
C. Manufacturers should not escape liability simply because they acted negligently as opposed to
intentionally.
D. Manufacturers and sellers of products are in the best position to bear the costs of injuries caused
by their products.
2. Which of the following is true under the UCC regarding the requirement of privity in regard to a
breach of warranty action?
A. The UCC limits liability to those in privity with the seller who are injured by the goods.
B. The UCC extends protection to those in privity with the seller who are injured by the goods and
also to those in the buyer’s household reasonably expected to use, consume, or be affected by the
goods and who are injured by the goods.
C. The UCC extends protection not only to those in privity with the seller, but also to any person
who may reasonably be expected to use, consume or be affected by the goods and who is injured by
the goods.
D. The UCC has alternate provisions regarding the need for privity from which adopting states may
choose.
3. Which of the following allows the filing of a lawsuit previously barred by the running of the statute
of limitations?
A. A statute of repose
B. A recommence statute
C. A revival statute
D. None of the above because any such law would be unconstitutional.
4. A product that was sold without a component part properly fastened to the product is an example of
a ________ defect.
A. design
B. manufacturing
C. non-liability forming
D. design and manufacturing
5. Following several injuries, a manufacturer of a chain saw installed an additional safety guard.
In a lawsuit based on products liability, which of the following is the company’s best position in
opposition to a plaintiff’s efforts to introduce evidence of the modification?
A. That the modification was just recently designed.
B. That the modification involved a subsequent remedial measure.
C. That the company was not negligent.
D. There is no best position because it is well established that the evidence would be admitted.
6. If a product valuable to society is unavoidably unsafe, the ________ determines whether the
dangerous product is also defective.
A. adequacy of the warning label
CHAPTER 10 PRODUCT LIABILITY 145
B. obviousness of the risk
C. care in design and manufacture
D. extent of the danger
7. Which of the following is false regarding product liability in the European Union according to the
European Union product liability directive?
A. Both a statute of limitations and a statute of repose are available.
B. A manufacturer will not be liable if the defect was due to compliance of the product with
mandatory regulations.
C. The directive applies to services as well as products.
D. A supplier or wholesales is not strictly liable unless the injured party is unable to identify the
manufacturer.
8. Which of the following is true regarding causation in a failure–to-warn claim?
A. Causation is not an issue so long as the plaintiff can prove that the defendant intentionally
refused to warn of known dangers.
B. Causation is not an issue so long as the plaintiff can prove that the defendant either intentionally
refused to warn of known dangers or negligently failed to warn of known dangers.
C. Cause in fact, but not proximate cause, is required in a failure–to–warn claim.
D. In an extreme case, a judge may set aside a jury verdict on causation grounds.
9. Under the doctrine of _________, when a person voluntarily and unreasonably assumes the risk of a
known danger, the manufacturer is not liable for any resulting injury.
A. assumption of risk
B. comparative negligence
C. contributory negligence
D. assumption of harm
10. Under the doctrine of _________, the plaintiff’s damages in a strict liability action may be reduced
by the degree to which his or her own negligence contributed to the injury.
A. comparative fault
B. contributory negligence
C. assumption of risk
D. both comparative fault and contributory negligence
146 MANAGERS AND THE LEGAL ENVIRONMENT
11. Which of the following products has traditionally been viewed as “unavoidably unsafe” by the
courts?
A. Medical services
B. Outdoor consumer goods
C. Some vaccines
D. Automobiles
12. Which state court was the first to adopt the doctrine of strict product liability?
A. New York.
B. Michigan.
C. California.
D. Pennsylvania.
13. A ________ cuts off the right to assert a cause of action after a specified period of time from the
delivery of the product or the completion of the work.
A. statute of limitations
B. statute of repose
C. revival statute
D. statute of resolution
14. In regard to strict liability in tort, which of the following is true in the case of a seller of used goods?
A. Sellers of used goods are not usually held strictly liable for goods sold.
B. A seller of used goods is strictly liable for defective repairs made by the seller.
C. A seller of used goods is usually held strictly liable only for inherently dangerous items such as
power tools.
D. A seller of used goods is usually held strictly liable only for inherently dangerous items such as
power tools or for defective repairs made by the seller.
15. To prove ________ in a product liability case, the injured party must show that the defendant did not
use reasonable care in the design or manufacture of its product.
A. negligence
B. strict liability
C. breach of warranty
CHAPTER 10 PRODUCT LIABILITY 147
D. defect
16. The preemption defense involves certain ________, which set minimum safety standards for
products.
A. federal laws
B. court decisions
C. state laws
D. private guidelines
17. A statute of ________ prevents recovery for product injuries by limiting the time period for recovery
from the date when the injury occurred.
A. limitations
B. repose
C. recovery
D. discovery
18. Which of the following is not a theory on which a product liability claim can be based?
A. Negligence.
B. Breach of warranty.
C. Ultrahazardous activity.
D. Strict liability.
19. In regard to successor liability, courts applying the ______ look for constancy between the buyer and
seller to determine whether the successor company is essentially a mere continuation or
reincarnation of the predecessor entity.
A. market-share approach
B. product-line theory
C. traditional successor liability rule
D. continuity-of-enterprise approach
20. On a failure to warn claim, adequate warnings and instructions for a product’s safe use can shield a
manufacturer from liability for a
148 MANAGERS AND THE LEGAL ENVIRONMENT
A. properly manufactured and designed product.
B. defectively designed product.
C. defectively manufactured product.
D. properly manufactured and designed product or defectively designed product
21. Under the ______ defense, a manufacturer is not liable to a sophisticated user of its product for
failure to wan of a risk harm, or danger if the sophisticated user knew or should have known of the
risk, harm, or danger.
A. excused warning
B. unnecessary warning
C. sophisticated user
D. absolute user
22. A ________ defect occurs when, even though the product is manufactured according to
specifications, it is unreasonably dangerous to users.
A. design
B. contractor’s
C. manufacturing
D. state of the art
23. In Ramirez v. Plough, Inc., the case in the text involving the provision of warnings for non-English-
speaking Hispanics, the California Supreme Court held that a manufacturer of nonprescription drugs
has a duty to warn purchasers about the dangers of its products in ______.
A. English only.
B. English and Spanish.
C. English, Spanish, and Chinese.
D. All spoken languages in California.
24. If the societal value of an inherently dangerous product outweighs the risk of harm from its use, it is
known as a(n) ________ product.
A. state-of-the-art
B. unavoidably unsafe
C. obvious risk
D. abnormal
25. Which of the following members of the chain of distribution cannot be strictly liable in a products
lawsuit?
A. The manufacturer.
B. The wholesaler.
C. The retailer.
D. The occasional seller.
26. Which of the following provides some protection to defendants in that they establish a rebuttable
presumption about how long consumers can continue to safely use a product?
A. Discovery–of-injury statutes
B. Statutes of limitation
C. Useful life statutes
D. Statutes of repose
27. What was the result in James v. Meow Media Inc., the case in the text addressing whether a video
game manufacturer was strictly liable for a teenager’s shooting spree?
A. That the shooting was so aberrant as to be unforeseeable by the video game producer.
B. That the products were defective.
C. That the video game manufacturer was liable for the shooting.
D. That the shooting was so aberrant as to be unforeseeable by the video game producer but also
that the products at issue were defective.
28. Which of the following was the result in Pliva, Inc. v. Mensing, the case in the text before the U.S.
Supreme Court involving the issue of whether the federal law requirement that generic drugs must
bear the same FDA-approved labels as their brand-name counterparts preempts state law claims for
failure to warn?
A. That federal law did not preempt state law claims for failure to warn.
B. That federal law preempted state law claims for failure to warn.
C. That federal law preempted state law claims for failure to warn based on strict liability but that
failure to warn claims based on negligence could proceed.
D. That federal law preempted state law claims for failure to warn based on negligence but that
failure to warn claims based on strict liability could proceed.
29. Sam wants to sue a book publisher based on strict product liability in tort because he became ill
after eating food he prepared based on a book containing information regarding herbs that were
safe for consumption. Which of the following is the publisher’s best defense?
A. That the information in the book was akin to a specialized instrument and, therefore, not subject
to strict liability.
B. That the information contained in the book was not a good subject to strict liability.
C. That the injury stemmed from food which is not considered subject to strict liability.
D. There is no good defense, and the publisher should settle.
30. Which of the following is true regarding computer software is considered a product subject to state
product liability law?
A. Courts examining the issue have ruled that computer software is a product subject to state
product liability law.
B. Courts examining the issue have ruled that computer software is not a product subject to state
product liability law.
C. Courts examining the issue have reached varying results regarding whether computer software is
a product subject to state product liability law.
D. Courts examining the issue have found that computer software is a product subject to state
product liability law only if the software is marketed to children.
31. Sally purchased a used toaster at a yard sale. The seller told Sally that although the toaster was over
ten years old, she had not had any problems with it. Sally takes the toaster home and uses if for a
few months. One day, however, as Sally was using the toaster, it malfunctioned and caused a small
fire in Sally’s kitchen along with significant smoke damage. Sally decides that she wants to sue the
manufacturer of the toaster and that she is going to do so within one month of the fire. What would
likely be the manufacturer’s best defense in a strict liability in tort action brought by Sally?
A. The statute of limitations
B. The statute of repose
C. The fact that Sally bought the toaster at a yard sale, not from a recognized retailer
D. There would be no viable defense.
Fact Pattern 10-1 (Questions 32-33 apply)
Polly buys a new iron and uses it for a few months without incident. She was surprised, however,
when one day the iron gave her a significant shock. She suffered no lasting damages, but did have
some pain from the incident. A few weeks later she read in the newspaper that the manufacturer had
known for over a year about the iron’s propensity to shock users, but had refused to take recall
measures. She also read that some users had been severely shocked. Polly was outraged but
wondered if she could sue because she really did not have significant injuries.
32. Refer to fact pattern 10-1. What type of damages would likely give Polly the most significant
recovery?
A. Punitive
B. Compensatory
C. Nominal
D. Benefit of the bargain
33. Refer to fact pattern 10-1. Which of the following would be an advantageous type of action with
which Polly should become associated?
A. A unified action
B. A class action
C. A remedial action
D. A compensatory action
34. Scuba manufacturer designs and sells the best scuba gear on the market. All industry and
governmental standards are met, and there is no better technologically feasible design than that used
by the manufacturer. There had been no previous problems with the gear, but on one unfortunate
day, the breathing apparatus on a unit malfunctioned resulting in a diver needing medical care.
Assuming recognition in the jurisdiction involved, which of the following is the best defense to a
lawsuit alleging a design defect brought by the diver?
A. Comparative fault
B. Assumption of the risk
C. State-of-the-art
D. Ultrahazardous activity
35. ABC Company manufactures a contraption meant to enable a rider to fly behind a ski boat. After a
few months, ABC begins to hear of injuries when riders crash into water or boats. In hopes of
escaping liability, the president of ABC Company decides to discontinue business and sell all assets
to XYZ Company. The president of XYZ Company is excited to purchase the assets at a bargain
price and help ABC avoid liability based upon the assertion of the president of ABC that XYZ
cannot legally be held liable for the flying accidents. Which of the following is true in a majority of
states applying the traditional successor liability rule?
A. XYZ Company will not be held liable for the accidents so long as there is no contractual
agreement by which it agrees to accept liability.
B. XYZ Company will only be held liable if it continues to manufacture the same product lines as
ABC.
C. XYZ Company will only be held liable if it keeps the same tax number as ABC Company.
D. XYZ Company will likely be held liable for the accidents based upon the transaction being
entered into wrongfully in order for ABC Company to escape liability.
152 MANAGERS AND THE LEGAL ENVIRONMENT
36. A few years ago Bernice purchased some medication through her veterinarian for her aging pet
iguana, Scales, who had a skin disease. Scales died a few months after beginning the medication.
At the time of the death, Bernice thought that Scales had died of natural causes. She just read in the
newspaper, however, that a number of reptilian type animals had been harmed by the drug Scales
ingested. Bernice immediately talked to her veterinarian who told her that while she now believes
the medication was harmful to Scales, it was manufactured by a number of different manufacturers,
and there is no way to determine the exact manufacturer of the medication given to Scales. Which
of the following is Bernice’s best chance at recovery?
A. Market-share liability
B. Joint and several liability
C. Product-line theory
D. Continuity theory
ESSAY QUESTIONS
1. Under what circumstances will a successor corporation be held liable in a product liability action
under the traditional successor liability rule?
2. Paula recently went to see her doctor for severe glaucoma. He told her that her vision is in danger
and prescribed Seerite made by Drugco. Seerite was the newest and most promising treatment for
glaucoma that exists. The product literature stated, “When used as directed, Seerite is 100% safe and
effective for glaucoma.” After Paula read this she put the literature in the trash. She overlooked a
small statement on the back reading “Warning: in 2% of the population this product may produce
uncontrollable weight gain.” Three weeks after using Seerite, Paula had gained 50 pounds and
continued to gain weight rapidly. Paula has stopped using Seerite, but she cannot lose the weight and
this condition is now a separate health risk. Is Seerite a defectively designed drug? What defenses
would be available to Drugco against this claim? Is there any other theory under strict product
liability law that Paula may use to recover against Drugco? Discuss fully.
3. Set forth what a manufacturer of products under contract to the government must show in order to
avoid product liability based on the government-contractor defense along with the rationale for the
government-contractor defense.
4. What are the four basic parts of the rationale for strict product liability?
5. Set forth the elements of a strict liability claim.