Products Liability and Warranties – Business Law (2024)

Express Warranties

An express warranty is a statement by the seller relating to the goods, which statement is part of the basis of the bargain. This means that the buyer has purchased the goods on the reasonable assumption that they were as stated by the seller. Thus, a statement by the seller with respect to the quality, capacity, or other characteristic of the goods is an express warranty. For example, “This shirt is 100% cotton.”

No particular form of words is necessary to constitute an express warranty. A sale does not need to state that a warranty is being made or that one is intended. It is sufficient that the seller assert a fact that becomes a part or term of the bargain or transaction between the parties. An express warranty may even be demonstrated by conduct. If the buyer asks to purchase a light blue shirt that is 100% cotton, and the seller hands over a light blue shirt, the seller’s conduct expresses a warranty that the shirt is 100% cotton. The words on the label of a can for Florida orange juice is an express warranty that the orange juice comes from Florida.

“Sales talk” or “puffery” by a seller such as “this is the best used car money can buy” cannot ordinarily treat as a warranty. However, if the buyer has reason to believe that the seller has expert knowledge of the conditions of the market and the buyer requests the seller’s opinion as an expert, the buyer would be entitled to accept as a fact the seller’s statement as to whether a given article was the best obtainable, The statement could be reasonably regarded as forming part of the basis of the bargain.

When the contract is based in part on the understanding that the seller will supply goods according to a particular description or that the goods will be the same as the sample or a model, the seller is bound by an express warranty that the goods shall conform to the description, sample, or model.

If the express warranty is false, there is a breach of the warranty. The warrantor is then liable just as though the truth of the warranty had been guaranteed. It is no defense that the defendant honestly believed that the warranty was true, had exercised due care in manufacturing or handling the product, or had no reason to believe that the warranty was false.

Implied Warranties

An implied warranty is one that was not made by the seller but is implied by law. In certain instances, the law implies or reads a warranty into a sale, although the seller did not make it. That is, the implied warranty arises automatically from the fact that a sale has been made.

Express warranties arise because they form part of the basis on which the sale has been made. The fact that express warranties are made does not exclude implied warranties. When both express and implied warranties exist, they should be construed as being consistent with each other and cumulative if such a construction is reasonable. In case it is unreasonable to construe them as consistent and cumulative, an express warranty prevails over an implied warranty as to the subject matter of the sale, except in the case of an implied warranty of fitness for a particular purpose.

A distinction is made between a merchant seller and the casual seller with regard to implied warranties.

Warranty of Title

Every seller, by the mere act of selling, makes a warranty that the seller’s title is good and that the transfer is lawful as to passage of title. A warranty of title may be specifically excluded, or the circ*mstances may be such as to prevent the warranty from arising. The latter situation is found when the buyer has reason to know that the seller does not claim to hold the title or that the seller is purporting to sell only such right or title as the seller or a third person may have. For example, no warranty of title arises when the seller makes the sale in a representative capacity, such as a sheriff, an auctioneer, or an administrator of a decedent’s estate.

Warranty Against Encumbrances

Every seller, by the mere act of selling, makes a warranty that the goods shall be delivered free from any lien of which the buyer at the time of the sales transaction had no knowledge.

Warranty of fitness for a particular purpose.

A buyer may intend to use the goods for a particular or unusual purpose, compared to the ordinary use for which the goods are customarily sold. If so, the seller makes an implied warranty that the goods will be fit for that purpose when:

• the buyer relies on the seller ‘s skill or judgment to select or furnish suitable goods, and
• when the seller at the time of contracting knows or has reason to know the
• buyer’s particular purpose and of the buyer’s reliance on the seller’s judgment.

When the buyer makes the purchase without relying on the seller’s skill and judgment, no warranty of fitness for a particular purpose arises.

Additional implied warranties of merchant seller.

• Warranty against infringement. Unless otherwise agreed, every merchant seller warrants that the goods will be delivered free of the rightful claim of any third person by way of patent infringement, trademark infringement, or any other intellectual property law infringement.
• Warranty of fitness for normal use. A merchant seller makes an implied warranty of the merchantability of the goods sold. This warranty is in fact a group of warranties, the most important of which is that the goods are fit for the ordinary purposes for which they are sold.

Warranties in Particular Sales

• Sale on Buyer’s Specifications. When the buyer furnishes the seller with exact specifications for the preparation or manufacture of goods, the same warranties arise as in the case of any other sale of such goods by the particular seller. However, no warranty of fitness for a particular purpose can arise since it s clear that the buyer is purchasing on the basis of the buyer’s own decision and is not relying on the seller’s skill and judgment.
• Sale of Secondhand or Used Goods. As far as the UCC is concerned, there is no difference between the warranties arising in the sale of used goods and those arising in the sale of new goods. With respect to used goods, what is “fit for normal use” will be a lower standard for used than for new goods.
• Sale of Food or Drink. The sale of food or drink, whether to be consumed or off the seller’s premises, is a sale. When made by a merchant, a sale of food or drink carries the implied warranty that the food is fit for its ordinary purpose, i.e., human consumption.

Necessity of Defect

To impose liability for breach of the implied warranty of merchantability, it is ordinarily necessary to show that there was a defect in the product and that this defect made the product not fit for its normal use and that this caused the plaintiff’s harm. A product may be defective because there is:

• a manufacturing defect,
• a design defect,
• inadequate instruction on how to use the product, or
• inadequate warning against dangers involved in using the product.

If the manufacturer’s blueprint shows that there should be two bolts at a particular place on the property and the factory puts in only one bolt, there is a manufacturing defect. If the two bolts are put in but the product breaks because four bolts are required to provide sufficient strength, there is no manufacturing defect, but there is a design defect. A product that is properly designed and properly manufactured may be dangerous because the user is not given sufficient instructions on how to use the product. Also, a product is defective if there is a danger that is not obvious and there is no warning at all or a warning that does not describe the full danger.

Frequently Asked Questions

Is there any basic warranty coverage that automatically comes with a consumer product?

Customers will almost always receive the basic protection of the implied warranty of merchantability and the implied warranty of fitness for a particular purpose. Most states prohibit anyone who offers a written warranty from disclaiming or modifying implied warranties.

What is a full warranty?

A warranty is a “full” warranty when:

• There is not a limit the duration of implied warranties
• Coverage is not limit to first purchasers
• Warranty service is free of charge, including such costs as returning the product or removing and reinstalling the product when necessary
• At the consumer’s choice, either a replacement or a full refund if, after a reasonable number of tries, the product can’t be repaired
• Consumers aren’t required to perform any duty as a precondition for receiving service, except notice that service is needed

Is a warranty a contract the manufacturer must honor?

Yes, a warranty is a contract that commits the manufacturer to stand behind the product.

If a product doesn’t perform as anticipated, is it covered by any type of warranty?

A merchant seller makes an implied warranty of the merchantability of the goods he sells. This warranty is in fact a group of warranties, the most important of which is that the goods are fit for the ordinary purposes for which they are sold. The law says that merchants make this promise automatically every time they sell a product they are in business to sell.

I bought a washer because of what the salesperson said it would do. It does not do what he said. Do I have any legal recourse?

A buyer may intend to use the goods for a particular or unusual purpose, compared to the ordinary use for which the goods are customarily sold. If so, the seller makes an implied warranty that the goods will be fit for that purpose when:

• the buyer relies on the seller ‘s skill or judgment to select or furnish suitable goods, and
• when the seller at the time of contracting knows or has reason to know the buyer’s particular purpose and of the buyer’s reliance on the seller’s judgment.

When the buyer makes the purchase without relying on the seller’s skill and judgment, no warranty of fitness for a particular purpose arises.

I feel the product I purchased is wearing out prematurely. Isn’t this covered under my warranty?Implied warranties are promises about the condition of products at the time they are sold, but they do not assure that a product will last for any specific length of time. Everything that can possibly go wrong with a product does not fall within the scope of implied warranties. For example, implied warranties do not cover problems such as those caused by:

• Abuse;
• Misuse;
• Ordinary wear;
• Failure to follow directions; and
• Improper maintenance.

What is the statue of limitations claim for breach of warranty issue?

State statutes of limitation for breach of either an express or an implied warranty are generally four years from date of purchase. This means that buyers have four years in which to discover and seek a remedy for problems that were present in the product at the time it was sold. This does not mean that the product must last for four years. It means only that the product must be of normal durability, considering its nature and price.

Is there any type of warranty for a product I bought from a second-hand store?

As far as the UCC is concerned, there is no difference between the warranties arising in the sale of used goods and those arising in the sale of new goods. With respect to used goods, what is “fit for normal use” will be a lower standard for used than for new goods.

What is an express warranty?

Express warranties, unlike implied warranties, are not “read into” a sales contract by state law. An express warranty is a statement by the seller relating to the goods, which statement is part of the basis of the bargain. This means that the buyer has purchased the goods on the reasonable assumption that they were as stated by the seller. Thus, a statement by the seller with respect to the quality, capacity, or other characteristic of the goods is an express warranty. For example, “This shirt is 100% cotton.”

Product Liability

Products liability refers to the liability of any or all parties along the chain of manufacture of any product for damage caused by that product. This includes the manufacturer of component parts, an assembling manufacturer, the wholesaler, and the retail store owner. Product liability suits may be brought by the consumer or someone to whom the product was loaned. While products are generally thought of as tangible personal property, products liability law has stretched that definition to include intangibles (gas), naturals (pets), real estate (house), and writings (navigational charts).

Products liability claims can be based on negligence, strict liability, or breach of warranty of fitness depending on the jurisdiction within which the claim is based. In a strict liability theory of liability, the degree of care exercised by the manufacturer is irrelevant. As long as the product is proven to be defective, the manufacturer will be held liable for the harm resulting from the defect.

Claims may be based on the common law of the states or on the Uniform Commercial Code (UCC). Article 2 of the UCC deals with the sales of goods and it has been adopted by most states. The most important products liability sections are the implied and express warranties of merchantability in the sales of goods.

In order to prevail on a product liability claim, the product complained of must be shown to be defective. There are three types of product defects that incur liability in manufacturers and suppliers: design defects, manufacturing defects, and defects in marketing. Design defects are inherent; they exist before the product is manufactured. While the item might serve its intended use, it can be unreasonably dangerous to use due to a design flaw. Manufacturing defects occur during the construction or production of the item. Only a few out of many products of the same type are flawed in this case. Defects in marketing deal with improper instructions and failures to warn consumers of latent or hidden dangers in the product.

Negligence — Due Care Must Be Exercised

Due care must be exercised in de­signing products, in selecting materials, in producing and test­ing products, and in placing warnings on labels informing users of dangers of which an ordinary person might not be aware. The duty of care extends to inspecting and testing products that a manufacturer buys for use in the final product.

Privity of Contract Not Required — Can a manufacturer be held liable to any person who suffers an injury proximately caused by the manufacturer’s negligently made product? The doctrine ofprivity in contract law provides that acontractcannot confer rights or impose obligations arising under it on any person or agent except the parties to it. The premise is that only parties to contracts should be able to sue to enforce their rights or claim damages as such.

A manufacturer who fails to use reasonable care in manufacturing its product may be liable for harm caused by the product to those whom the manufacturer should expect to be endangered by use of the product. Privity of contract is not required for recovery by an injured plaintiff on the ground of negligence in a product liability action. In other words, a manufac­turer is liable for its failure to exercise due care to any person who sustains an in­jury proximately caused by a negligently made product, regardless of whether the injured person is in privity with the manufacturer.

Misrepresentation

When fraudulent misrepresentation to a user or consumer results in injury, it may serve as a ba­sis of liability. A bad ad or label can show intent, but the injured party must have relied on it.

Strict Product Liability

The law has developed a doctrine known as “strict liability,” that allows a person injured by a defective or unexpectedly dangerous product to recover compensation from the maker or seller of the product, without showing that the manufacturer or seller was actuallynegligent.

Unreasonably dangerous. Strict Liability rule applies only where the defective con­di­tion of the product makes it unreasonably dangerous to the user or consumer. Many products can­not possibly be made entirely safe for all consumption, and any food or drug necessarily involves some risk of harm, if only from over-consumption. Ordinary sugar is a deadly poison to diabetics, and cas­tor oil found use under Mussolini as an instrument of torture. That is not what is meant by “unrea­sonably dangerous.” The article sold must be dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, with the ordinary knowl­edge common to the community as to its characteristics. Good whiskey is not unreasonably dangerous merely because it will make some people drunk, and is especially dangerous to alcoholics; but bad whiskey containing a dangerous amount of fuel oil, is unreasonably dangerous. Good butter is not unreasonably dan­gerous merely be­cause, if such be the case, it deposits cholesterol in the arteries and leads to heart at­tacks; but bad but­ter, contaminated with poisonous fish oil, is unreasonably dangerous.

Requirements for Strict Product Liability

For a cause of action in strict product liability against a manu­facturer:

• A product must be in a defective condition when the manufac­turer sells it. The manufacturer must be normally engaged in the business of selling it.
• The product must be unreasonably dangerous to a user or consumer because of its defec­tive condition (not required in all states).
• A plaintiff must incur physi­cal harm to self or property by use or consumption of the product.
• The defective condition must proximately cause the injury or damage.
• The product must not have been substantially changed from the time it was sold to the time of the injury.

Under Section 402A of the Restatement (Second) of Torts, the elements of an ac­tion for strict product liability are:

• the product must be in a defective condition when the defendant sells it;
• the defendant must normally be engaged in the business of selling (or distributing) that product;
• the product must be unrea­sonably dangerous to the user or consumer because of its defective condition (in most states);
• the plaintiff must incur physical harm to self or property by use or consumption of the product;
• the de­fective condition must be the proximate cause of the injury or damage; and
• the goods must not have been substan­tially changed from the time the product was sold to the time the injury was sustained.

Proving a Defective Condition

It need not be shown why or how a prod­uct became defective, but it must be shown that at the time of the injury, the product’s con­dition was essentially the same as it was in the hands of the manu­facturer or seller.

Unreasonably Dangerous Products

A product is reasonably dangerous if:

• It is dangerous beyond the reasonable expectations of the ordinary consumer.
• A less dangerous alternative was economically feasible but the manufacturer failed to produce it.

Product Defects

• Manufacturing Defects – A product “contains a manufacturing defect when the product departs from its intended de­sign even though all possible care was exercised in the preparation and marketing of the product.” This includes products that are physically flawed, damaged, or incorrectly assembled.
• Design Defects – A product “is defective in design when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the alternative design renders the product not reasonably safe.” To determine whether a product has a design defect, the focus is on its actual design and the rea­sonableness of that design. To succeed on this theory, a plaintiff has to show that there is a rea­sonable alternative design. A defendant is liable only when the harm was reasonably prevent­able.

Test for Design Defects

To determine whether a product has a design defect, the focus is on its actual design and the rea­sonableness of that design. To succeed on this theory, a plaintiff has to show that there is a rea­sonable alternative design. A defendant is liable only when the harm was reasonably prevent­able.

Bullock v. Philip Morris USA, Inc.[1]

Jodie Bullock smoked Philip Morris-branded cigarettes for forty-five years from 1956 until she was diagnosed with lung cancer in 2001. Despite proof as early as the 1950s that smoking caused cancer, Philip Morris contended in its ads, and its executives asserted in interviews, that there was no proof. Jodie Bullock sued Philip Morris on a product liability theory. At trial, the jury found that a defect in cigarettes’ design, attributable to negligence, and awarded Bullock $850,000 in compensatory damages and $28billion in punitive damages. Philip Morris appealed.

The California Court of Appeal for the Second District affirmed. Philip Morris failed to show any error with respect to its liability for products liability based on a design defect. “A product is defective in design for purposes of tort liability if the benefits of the design do not outweigh the risk of danger inherent in the design, or if the product, used in an intended or reasonably foreseeable manner, has failed to perform as safely as an ordinary consumer would expect.”

Under what circ*mstances, if any, could Philip Morris have justified its continuing campaign to discredit the scientific arguments that linked smoking with lung cancer?

If the science purporting to support a link between smoking and cancer were less solid, or if the accompanying statistics were less valid, Philip Morris might have been able to justify its claims to that effect. Also profiting from the sale of tobacco products was most likely the company’s motivation for denying the asserted link between smoking and bad health (and any connection between smoking and other adverse consequences, such as addiction). That profit would very likely have been reduced if customers and potential customers came to believe that smoking and ill effects were inextricably linked. In support of this motive, the company might have argued that it gave jobs to many people in diverse occupations, from farming to factory work, advertising and distribution to wholesale and retail sales.

Inadequate Warnings

A product “is defective because of inadequate instructions or warnings when the foreseeable risks of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the instructions or warnings renders the product not reasonably safe.” There is no duty to warn about risks that are obvious or commonly known. There is a duty to warn of harm that can result from foreseeable misuse.

Defenses to Product Liability

One defense is that there is no basis for the claim because the plaintiff has not proved its elements.

Assumption of Risk

In some states, the fol­low­ing elements must be shown: (i) the plaintiff voluntarily engaged in the risk while realizing the potential danger, (ii) the plaintiff knew and appreciated the risk created by the defect, and (iii) the plaintiff’s decision to undertake the known risk was unreasonable.

Product Misuse

If a party used a product for something for which it was not designed, the party may not be able to recover in strict liability (some courts hold, however, that if a misuse is reasonably foreseeable, a seller must take mea­sures to guard against it).

Comparative Negligence (Fault)

Most courts consider a plaintiff’s negligence in apportioning liability. Some courts will consider only a plaintiff’s intentional conduct, however.

Frequently Asked Questions

What is the difference between express warranties and puffing?

A seller’s statement about the value or worth of goods (“they’re priceless”) or a seller’s statement of opinion (“this is the best used car to come along in years”) is not an express warranty but puffing, which creates no warranty. A seller who is an expert can create a war­ranty by giving an opinion as an expert (an art dealer, for instance, who is an expert in twentieth-century paint­ings, who tells a buyer that a print is a Warhol warrants the accuracy of the opinion). What constitutes an ex­press warranty and what constitutes puffing is often controlled by the reasonableness of a buyer’s reliance (statements on which no reasonable person would rely are puffing). Whether a state­ment is made orally or in writing and its specificity can be relevant to reasonableness.

If warranties are inconsistent, what are the priorities?

If express and implied warranties are in­con­sistent: (i) express warranties displace implied warranties except implied warranties of fitness for a partic­u­lar purpose (an express warranty in a contract for a short-wave radio, for example, stating that the radio will receive signals from 4,000 miles away displaces an implied warranty of fitness that a short-wave radio will pick up signals from any distance, but telling a buyer that the radio will receive signals from 8,000 miles, for which reason the buyer buys the radio, may violate a warranty of fitness for a particular purpose, which pre­vails over express warranties); (ii) samples displace general descriptions; and (iii) technical specifications dis­place samples or general descriptions.

How can implied warranties of merchantability and fitness for a particular purpose be dis­claimed?

Unless circ*mstances indicate otherwise, implied warranties are generally disclaimed by expressions such as “as is,” “with all faults,” and other similar phrases that call buyers’ attention to the fact that there are no implied warranties. To disclaim an implied warranty of fitness for a particular purpose, a disclaimer (“there are no warranties extending beyond the description on the face hereof”) must be written and be conspicuous. A merchantability disclaimer must mention merchantability, but it need not be written; if it is in writing, the writing must be conspicuous (printed in larger or differently colored type or with a heading in capitals, for ex­ample).

What effect does a buyer’s examination of the goods before contracting have on implied war­ranties?

If a buyer examines goods or refuses to examine goods (or a sample or model) as much as he or she wants before contracting, there is no implied warranty with respect to defects that a reasonable examination will reveal (and the seller will not be liable for breach of warranty if the defects lead to an injury). A failure to examine goods available for inspection is not the same as a refusal to examine them; a refusal can occur only if a seller demands that a buyer examine the goods. A seller remains liable for latent (hidden) defects that a normal in­spection would not reveal. What an examination should reveal depends on a buyer’s skill and method of ex­amination (for example, an auto mechanic buying a car should discover defects that a nonexpert would not be expected to find).

When does a cause of action accrue for breach of warranty?

A cause of action accrues for breach of warranty when a seller tenders delivery, even if the non­breaching party is unaware that a cause has accrued. If a warranty extends to future performance, however, discovery of its breach must await the time of performance, and the statute of limitations does not be­gin to run until that time (for example, the statute would not begin to run until winter on a furnace installed in sum­mer).

To avoid liability on a negligence theory in a product liability suit, to what extent must a manufacturer exercise due care?

A manufacturer must exercise due care to make a product safe for its in­tended use. Due care must be exercised in designing products, in selecting materials, in producing and testing products, and in placing warnings on labels informing users of dangers of which an ordinary person might not be aware. The duty extends to inspecting and testing products that a manufacturer buys for use in the final product.

Under the Restatement (Second) of Torts, Section 402A, what are the requirements for a cause of action in strict liability in a product liability suit?

For a cause of action in strict liability in a product liability suit against a manufacturer, the requirements are: (1) the prod­uct must have been in a defective condition when the manufacturer sold it, (2) the manufacturer must be normally engaged in the business of selling the prod­uct, (3) the product must be unreasonably danger­ous to a user or consumer because of its defective condition (not required in all states), (4) a plaintiff must suffer physi­cal injury to self or property damage by use or con­sumption of the product, (5) the defective condition must proximately cause the injury or damage, and (6) the product must not have been substantially changed from the time it was sold to the time of the injury. It need not be shown why or how a product became defective, but it must be shown that at the time of the injury the product’s condition was essentially the same as it was when it left the manufacturer or seller

Can an injured bystander recover from a manufacturer or seller on a strict liability theory? Yes – all courts extend the strict liability of manufacturers and other sellers to injured bystanders (when the ex­plosion of an automobile motor in traffic released a cloud of steam that blocked the view of other drivers, for ex­ample, the automobile manufacturer was held liable for the resulting multiple collisions).

Other than imme­diate sellers and manufacturers, who may be subject to strict liability?

The strict lia­bility doctrine has been ex­panded to include suppliers of component parts. Strict liability for personal injuries caused by defective goods extends to lessors. (Some courts have held that a lease gives rise to a contractual implied warranty that the leased goods will be fit for the duration of the lease – for instance, if U-Haul leases a trailer that has been im­properly maintained, which causes an accident in which the lessee is injured, the lessee can sue U-Haul).

[1] 198 Cal.App.4th 543 (2011)