Continental Airlines, Inc and McDonnell Douglas Corporation - Article Example

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This essay describes the case Continental Airlines, Inc. and McDonnell Douglas Corporation, where action was taken by plaintiff and respondent Continental Airlines allegedly against defendant and appellant McDonnell Douglas Corporation for negligence, strict liability and breach of contract…
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Continental Airlines, Inc and McDonnell Douglas Corporation
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Continental Airlines, Inc and McDonnell Douglas Corporation
This case appeared in the Los Angeles Superior Court between Continental Airlines, Inc. and McDonnell Douglas Corporation, where action was taken by plaintiff and respondent Continental Airlines on December 3, 1979, allegedly against defendant and appellant McDonnell Douglas Corporation for negligence, strict liability, deceit, breach of warranty and breach of contract.

One of Continental’s main theories of the case was pre-contract representations. It was unequivocally declared in the brochure that the landing gear breakaway design was taken as factual representations by Douglas to Continental of fulfilling the safety-oriented design. Douglas registered a complaint in 1980 in federal court, asking a declaration on the exonerative provision of Article 12 to be valid of the Purchase Agreement it had, barring Continental’s action. Continental counterclaimed by raising the same claims, presented in the state court lawsuit.

In 1985, the federal court judgment came in favor of Douglas, agreeing on the reasoning of the exculpatory clause but the federal court made no decision on the Continental’s claims for breach of the contract’s Warranty and its Service Life Policy. The trial in the superior court began on September 26, 1985 on Continental’s fraud claims. The case was submitted to the jury. On the basis of Continental’s theories of fraud, it was taken as evidence by the jury.
The pre-contract promotional material was the basis of Continental’s fraud claims. As per the

Supreme Court ruling Hauter v. Zogarts (1975), it was held that the promises of safety were not statements of “opinion” or just “puffing” but representations of facts. Thus, the four representations of brochure were not opinions but statements of facts.

Further, the statements made by McDonnell Douglas were material. There is substantial evidence that Douglas's statements regarding Landing Gear Breakaway were material and that Continental rightly trusted them in deciding to clinch the DC-10 deal. The court viewed the evidence in the light most well disposed to the judgment, taking all reasonable inferences and not taking conflicting evidence. There was evidence as quoted in section F that the landing gear were designed to break away from the wing without rupturing the wing fuel tank, which were material and rightfully trusted by Continental. It is further proved by Douglas's argument that Continental must prove that a clean landing gear breakaway was a condition of its decision to purchase the DC-10, rather than the L-1011, proving that Continental trusted the statements of McDonnell Douglas.

California law is quite clear about whether it constitutes fraud making reckless false representations without any consideration to truth. It states that “[s]ince direct proof of fraudulent intent is often impossible, the intent may be established by [in]ference [216 Cal.App.3d 412] from acts of the parties.' [Citation]” Another established law is that if evidence is applicable for any purpose it must be taken into consideration, even if it may not be proper for another purpose. Thus, it is equivalent to misrepresenting deliberately.

On January 30, 1986, the jury gave its verdict in favor of Continental awarding damages for $17 million on its claims for fraud by misrepresentation, fraud by nondisclosure of known facts and negligent misrepresentation.

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