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Chapter 24
PRODUCT LIABILITY: WARRANTIES AND TORTS
RESTATEMENT
Historically, sales of goods followed a caveat emptor theory wherein the buyer assumed all risk. However, the law
has evolved to the point where buyers can recover for defective products from sellers and manufacturers of products.
Further, the liability is extended to persons beyond the buyer as when a member of the buyer’s household uses the
goods.
Express warranties are basis for contractual product liability. Express warranties are statements of fact or promises
of performance that are a basis of the bargain between the buyer and the seller. An express warranty need not be a
formal warranty but can be a description, sample or model. Sales puffing or opinion does not constitute an express
warranty. There are some federal regulations of express warranties with respect to coverage of the warranty of its
label.
Implied warranties are not made by the seller but are rather created by law. All sellers make the implied warranty of
title unless it is disclaimed or the buyer should know that the sales circumstances are such that a warranty would not
be made.
The implied warranty of merchantability is given in every sale by a merchant unless it is disclaimed. The warranty of
merchantability provides that the goods are fit for ordinary purposes and normal use. This warranty applies to sales
of food and drink as well as goods.
The implied warranty of fitness for a particular purpose is a warranty given by experienced sellers to inexperienced
buyers who are relying on the seller’s expertise in making a buying decision. All of the implied warranties can be
disclaimed through the use of proper statutory language. The disclaimer must be conspicuous and it would be
unconscionable, for example, to limit liability in negligence to the purchase price. Sellers must be responsible for
personal injury caused by their products.
Product liability theories and warranty coverage are different in international transactions and can be disclaimed
easily under the CISG. Non-contract theories of product liability include negligence and strict tort liability which would
still be applicable despite disclaimers of contract warranties.
STUDENT LEARNING OUTCOMES
LO.1: List the theories of product liability.
LO.2: Identify who may sue and who may be sued when a defective product causes harm.
LO.3: Define and give examples of an express warranty.
LO.4: List and explain the types of implied warranties.
LO.5: Explain warranty protections under federal law.
LO.6: State what constitutes a breach of warranty.
LO.7: Describe the extent and manner in which implied warranties may be disclaimed under the UCC and the
CISG.
INSTRUCTOR’S INSIGHTS
Break the chapter down into five components – related Learning Outcomes are indicated in ( ):
1. What are the general principles of product liability?
List the theories of product liability (LO.1)
2. What are express warranties and the rights given by them?
Define express warranty (LO.3)
Discuss how and when an express warranty is given (LO.3)
3. What are implied warranties and the rights given by them?
Define and explain the types of implied warranties (LO.4)
4. How are warranties disclaimed? (LO.7)
5. What other theories of product liability exist?
Define and discuss negligence as a theory of product liability
CHAPTER OUTLINE
I. What are the General Principles of Product Liability?
A. Initially, a caveat emptor philosophy was followed
B. As direct contract between buyer and seller disappeared, theories of fraud and negligence became difficult
C. Theories of liability
1. Buyers need protection from defective products
2. Negligence
D. Nature of harm
1. Consider starting the chapter with a discussion of the potential harm that can be caused by a product. A
tire, a blender, and a can of tuna are easy products to use to get the students thinking about potential
damages and remedies. If you wish to be more dramatic, you might bring the tire, blender, or can of
tuna to class. You want to get the students thinking not only about potential damages, but also about
2. Discuss the nature of harm to person – personal injury
E. Who is liable and who can recover
1. The plaintiff
2. The defendant
a. Seller
b. Remote seller
3. Direct sales contact – not required
II. What are Express Warranties and the Rights Given by Them?
A. Definition of express warranty
1. Statement of fact or promise of performance that is a basis of the bargain
2. Have your students read UCC §§ 2-312, 2-313, 2-314, and 2-315. Go through these sections word for
word with the students, starting with § 2-313, “Express Warranties,” as it is the easiest for the students
to understand. In discussing § 2-313, use examples showing the difference between a fact and an
opinion (dealer sales talk or puffing). For example, discuss the difference between the statements “this
is a 3.5 H.P. motor” and “this is a great little motor.” Ask the students whether an express warranty is
created with an advertisement or a catalog. (Yes, it can be.) The implied warranty of merchantability in §
2-314 tends to be the hardest of the four sections for the students. Examples are essential when
discussing the six subsections of § 2-314. Consider using the following examples with § 2-314(2):
a. If the wheat is called “Sonora wheat,” it must be readily salable and usable as such within the
marketplace
b. Unless specified otherwise, the wheat must be of fair average quality
B. Form of express warranty
C. Seller’s opinion or statement of value
CASE BRIEF: Marty v. Anheuser-Busch Companies, LLC
43 F. Supp. 2d 1333 (S.D. Fla. 2014)
FACTS: Anheuser–Busch Companies, LLC (defendant or AB) is the brewer of Beck's beer. Beck's
originated and was brewed in Germany from 1873 until 2012 when the defendant began brewing
Beck's in St. Louis, Missouri.
The plaintiffs are consumers of Beck's who purchased Beck's “in reliance on representations
contained on [the] packaging and Beck's history of being an imported beer from Germany.”
However, AB argues that the label on the beer reads, “Product of USA, Brauerei Beck & Co., St.
appear on the bottom of the Beck’s Beer carton.
The plaintiffs argue that it is in a font that is too small and difficult to read, its illegibility is further
exacerbated by the fact that it is in metallic white print on a metallic silver background and it is
blocked by the carton.
AB moved to have the consumers’ complaint dismissed.
ISSUE: Had AB made express warranties about its Beck’s beer or was it simply puffery?
HOLDING: The court refused to dismiss the complaint because it found that there were claims being made that
REASONING: The court found that saying a beer is a “Product of the USA” is an important fact that should have
been disclosed by AB in marketing the beer as a German beer. The “Product of USA” disclaimer as
printed on the actual cans and bottles themselves is difficult to read. Depending on the angle from
which the viewer looks at the product, the “Product of USA” disclaimer can be obscured by
overhead lighting because the disclaimer is printed in a white font against a shiny, metallic silver
background. By contrast, the "Product of USA" disclaimer printed on the label appearing on the
Alcohol and Tobacco Tax and Trade Bureau ("TTB") certification is visible at any angle because the
words are printed on a gray, matte background. Also, the “Product of USA” disclaimer is blocked by
the carton. A consumer would have to either open the carton of twelve-pack bottles and
twelve-pack cans or lift the bottle from the six-pack carton in order to see the “Product of USA”
disclaimer. A reasonable consumer is not required to open a carton or remove a product from its
outer packaging in order to ascertain whether representations made on the face of the packaging
are misleading.
MO” may not be sufficiently descriptive to alert a reasonable consumer as to the location where
Beck's is brewed. Although this statement contains the words “St. Louis, Mo[.],” there is nothing in
BEER, ST. LOUIS, MO” is printed underneath the carton. A reasonable consumer may not
necessarily look at the underside of the carton in deciding whether to purchase a product.
The statement “Brewed under the German Purity Law of 1516” is false. The German Purity Law of
1516 allows only the inclusion of barley, hops and water in beer, and Beck's contains yeast and
other ingredients and additives. The reference to the German Purity Law is misleading. "German
Quality” is more than mere puffery. It must be considered in conjunction with: (1) other statements
on cartons of Beck's, (2) allegations of the defendant's overall marketing campaign and its efforts to
maintain Beck's brand identity as a German beer and (3) Beck's German heritage including its
139-year history of being brewed in Germany. The statement “German Quality” is not mere puffery.
The Court found that the allegations are sufficient to conclude that a reasonable consumer may be
misled to believe that Beck's is an imported beer brewed in Germany.
D. Warranty of conformity
E. Federal regulation of express warranties
1. Regulated by Magnusson-Moss Act or Federal Consumer Product Warranty Law
2. FTC enforces
3. Full warranty
4. Limited warranty
5. International product safety laws in the U.S.
F. Effect of breach of express warranty
CASE BRIEF: LaTrace v. Webster
17 So. 3d 1210 (Ala. Civ. App. 2008)
FACTS: Richard W. La Trace, attended an auction at B & B Antiques, Auction & Realty, a business owned
and operated by Ray Webster, Deborah Webster, Bo Webster, and Laura Webster (collectively 'the
Websters'). La Trace purchased five lamps that were identified at the auction as “Tiffany” lamps and
one lamp shade that was also identified at the auction as a “Tiffany” product. La Trace spent a total
of $56,200 on the lamps.
La Trace contacted Fontaine's Auction Gallery in Pittsfield, Massachusetts, to inquire about selling
the lamps in an auction. Fontaine's sent Dean Lowry, an expert in Tiffany products, to examine La
Trace's lamps and Lowry determined that the lamps were not authentic Tiffany products but were,
in fact, reproductions. La Trace filed suit against the Websters and B & B for fraudulent
suppression, fraudulent misrepresentation, breach of warranty, breach of contract, negligence, and
wantonness. B & B was dismissed from the case because it had not yet been properly formed as
an LLC. The Websters claimed they thought the lamps were authentic and that their auction
brochure contained the following:
Conditions of Sale:
1. All property is sold AS IS WHERE IS, and we make NO guarantees, warranties or
representations, expressed or implied, with respect to the property or the correctness of the
catalog or other description of authenticity of authorship, physical condition, size, quality, rarity,
importance, provenance, exhibitions, literature or historical relevance of the property or
otherwise. No statement anywhere, whether oral or written, shall be deemed such a
guarantee, warranty or representation.
On a motion for summary judgment, the court found for the Websters, indicating that La Trace
trusted blindly and should not have done so. La Trace appealed.
ISSUE: Was there an express warranty made by the description of the lamps as being "Tiffany Lamps"?
HOLDING: The court held that, despite the language of disclaimer, you cannot make an express warranty in
REASONING: The Websters' description of the lamps as "Tiffany" products became part of the basis of the
bargain because the representations took place during the auction and were not accompanied by
any qualifying statements indicating that the authenticity of the lamps was in doubt. Because it is
assumed under the UCC that the object of every UCC-regulated sale is describable, the core
description is nondisclaimable by a seller, being the basic foundation upon which every sales
contract is made. The lamps here were sold with the core description of Tiffany products. Although
disclaimers in a sales brochure and a "Conditions of Auction" document may have been effective to
prevent the formation of any express warranties that might otherwise have arisen in those
documents, nothing in the language indicated that the disclaimer in the documents was effective to
prevent a seller from making express warranties in the future. Judgment for La Trace.
DISCUSSION POINTS: Have the students discuss the breach of an express warranty using the LaTrace v.
Webster case.
III. What are Implied Warranties and the Rights Given by Them?
A. Definition of implied warranty
B. Implied warranties of sellers
1. Warranty of title
2. Warranty against encumbrances
3. Warranty of fitness for a particular purpose
C. Additional warranties of merchant sellers
1. Warranty against infringement
2. Warranty of merchantability or fitness for normal use
CASE BRIEF: Rothbaum v. Samsung Telecommunications America LLC
52 F. Supp. 3d 185 (D. Mass. 2014)
FACTS: Amy Rothbaum (plaintiff) and others brought suit against Samsung Telecommunications because
they alleged that Samsung knowingly sold its 4G phones with a design defect that causes the
