Product Liability and Legal Issues - Coursework Example

Marketing: Product liability Product liability basically means holding a seller or a manufacturer liable for making adefective product available into the hands of a consumer. The responsibility for a product that is defective and causes injury lies with all those who sell the product and are in the chain of distribution. The following are all potentially liable parties; a manufacturer of the component parts, manufacturer of the product, wholesaler and finally the retailer who sold the final product to the buyer.Generally,the requirement of the law is that a product should meet the basic expectations of the consumer. Product liability is a very serious and grave issue that businesses must put into consideration when designing, developing and placing their products on sale for the consumers to buy in the market. Products that are defective can result in serious and fatal injuries and even death. That’s why products should be properly designed, developed and thoroughly tested prior to being released to public for their final consumption. Apart from causing injuries and fatalities such as death, products lawsuits can cost respective firms a lot of resources and completely ruin their reputation as established brands. There is no particular federal law dealing with product liability. Typically, claims pertaining product liability are based on laws of state and are prosecuted under the theories of strict liability, misrepresentation, negligence or breach of warranty. This paper will explore the legal issues pertaining products liability and also look at the liability which an organization might have if it recalls a product after information that it could be injurious to consumers. The paper will also look at the problem of potential liability even after information of harm to consumers; the firm does not recall the product. Keywords: product liability, breach of warranty, negligence, misrepresentation The existing laws pertaining products liability refers back to the earliest medieval English laws that held sellers must take full responsibility for defective products they sold to the consumers. Finally the common law of buyer beware (caveat emptor) was developed. Over the years England and eventually American legislated statutes, related the responsibility of the manufacturer in selling of products that are defective. A product must have been sold in the marketplace for there to be product liability lawsuit. Historically, there existed contractual relationship between the product’s supplier and the harmed person. In most of the states today, such a requirement is non-existent and the harmed individual need not be the buyer of the product in order to get a recovery. This means therefore that any individual who foreseeably might have been harmed by a product that is defective can be compensated for his/her injuries, so long as this defective product was bought by someone at marketplace. Negligence Negligence is the failure to act with the level of care that an individual of ordinary prudence would have applied under similar circumstances. This behavior can be made up of actions, or can also include omissions when there is duty to action, (for instance a duty to assist the persons injured by one’s conduct previously).There are primary factors that are considered in ascertaining if an individual’s conduct lacked reasonable care. These include; the likelihood of foreseeing that an individual’s act could result in harm, the foreseeable grievousness of any injury that may result, and lastly the burden of safeguarding elimination or reduction of the risk of injury. There are five elements required for the establishment of prima facie negligent case; physical injury in form of genuine damages, existing legal duty of exercising logical or rational care, failure in exercising logical care, cause of physical injury by the act of negligence and lastly primary cause, a proof that the injury is within the range or extent of liability. Misrepresentation On the other hand misrepresentation occurs when a manufacturer advertises a product, labels, packages, or presents other product information to the buyers and consumers, misrepresenting material facts pertaining the use or quality of the product. The following are instances of how misrepresentation may lead to product liability; When a salesperson of the product makes an overstatement of what the product can perform what it can be utilized for, or the general safety of the product. For instance if a salesperson makes a statement that a container is micro-wave safe but later on the container explodes after being micro-waved for a length of time, the retailer or manufacturer in this case will be held liable for product liability misrepresentation. When the information about the product omits some ingredients in the product. For instance if candy manufacturer omits an ingredient in its packaging, this product will be subjected to liability for misrepresentation were it to injure a consumer due to consumption of the ingredient not included on the package. Lastly when the information in the product fails to warn the risks associated with the product. A very good illustration is an example of a motorcycle manufacturer depicting an individual riding the motorcycle without a helmet; the motorcycle manufacturer will be liable for misrepresentation if a person were injured while riding the motorcycle. In product liability, misrepresentation can either be intentional or negligent. Intentional misrepresentation takes place when the seller or manufacturer of the product misleads the consumer concerning the product’s quality, safety and effectiveness.Typically,its quite rare to find intentional misrepresentation since its difficult to prove seller’s or manufacturer’s intent. Negligent misrepresentation on the other hand takes place when the product’s manufacturer had no intention of misrepresenting the product. Strict liability Strict liability exists as part of both criminal law and tort law and is presented in a criminal suit when the defendant is faced with legal battle due to wrongful act done without mental state or intent. Thus in this particular law of tort, a plaintiff is strictly liable when engaged in perilous activities or if they are owners of specific animals. Products liability is a kind of tort law and under this specific class of law whereby there are strict statutes about product liability. In product liability, strict liability occurs if a defective product, for which the manufacturer (defendant) is responsible, harms a consumer (plaintiff). Breach of warranty There are basically two types of warranties that buyers rely on while ascertaining product’s quality; implied and express warranties. An implied warranty is more common and is mostly implied promises given by the seller to the consumer that the given product, if consumed or utilized as directed, will not cause any harm to the buyer or consumer. There are two implied warranties discussed by the uniform of commercial code (UCC), whose responsibility is governing the sale of goods; a) The warranty of merchantability and b) The warranty of fitness for a specific purpose. a) Warranty of merchantability This warranty states that for the products supplied by a seller dealing in goods of that type, there is an implied warranty that the products are of fairly good quality. For instance, Firestone is salesman of car tires. Winston purchases tires for his car from Firestone. Since, Firestone is a dealer of car tires, there is implied warranty, the tires Winston buys from him are of fairly good quality. However if these tires turn out to be unfit, then Firestone is liable for breaching implied merchantability warranty. b) The warranty of fitness for a specific purpose This warranty basically states that where an individual selling products is aware that the consumer is purchasing products for a specific purpose, there is an implied warranty that the products sold by the seller are fit for that purpose. For instance; Andrew a long distance athlete goes to a sports house to purchase running shoes. The seller, Billy, is aware that Andrew is purchasing shoes for racing long distances and that Andrew is depending on Billy’s judgment to give him the most appropriate shoes for long distance racing. Later on, it turns out that the shoes are not suitable for racing long distances. Billy in this case will be held liable since he has breached implied warranty. Whereas the sellers who constantly deal in the goods that cause harm are the ones liable for breach of implied warranties, the amateur salesperson is under no duty to commit to implied warranties. Opinions vary on the existence of laws on products liability. On one side; some experts in law have claimed that such laws are vital to the production of safe products to be used by consumers. This is true in certain industries whereby the quality of their products have significantly improved together with the safety of specific products. On the other side, there are those who believe that the advantages of products liability are outweighed by the costs incurred by such laws (Mitchell A, Polinsky S.M, 2010).With this clear, the real merits related with the law about products liability comes under scrutiny. Some argue that if these laws save a life, then it is worth the hassle, since the life of a person is valueless. In response to arguments by (Mitchell A, Polinsky S.M 2010), two other authors, (Goldberg R, Miller C.J, 2010) claim that the writers placed a lot of unfathomable trust in regulatory system and market incentives. However such trust seems irrational since consumers have been failed in the past by both of those safeguards. (Goldberg R, Miller C.J, 2010) objects to conclusions arrived by (Mitchell A, Polinsky S.M, 2010), since these conclusions do not acknowledge that the injured people have the right to any form of compensation from the makers of defective products. This is to say that their arguments focus solely on the interest of the business and does not take any consideration of the harmed person. This view is not realistic and is not demonstrative of solid understanding of the purpose of products liability or what it is. To cater for the issues brought about by lawsuits of products liability, several companies get insurance cover against products liability. In several ways this kind of insurance is similar to malpractice insurance taken by doctors. The main aim of such an insurance cover is to limit the adverse effects of a lawsuit, were the company to be sued. A company lacking such a cover may fail to pay legal fees or awards and may ultimately shut its doors. Product recalls Most firms at one point or another will be forced to do a product recall. If there is immediate recognition of the defective product, and the firm instantly does a product recall, thus leaving nobody harmed, the firm may escape lawsuits that usually result in case of death or harm. However if harm or death results due to product defect, the firm will be liable for the sale of a defective product, which resulted in harm or death. In such scenarios the affected firms prefer out of court settlements to avoid further damage of the firm’s brand. In some instances, some firms are genuinely interested in the harm or injury caused by their products to their consumers and will therefore try and assist them very effectively and quickly as is humanely possible. There are other cases where the settlement is done outside of the court and victims have been awarded hefty amounts. On the other side, there are those firms that refuse or hesitate to do a product recall even after being made aware of a problem in their product. In such a case, both criminal and civil charges are mounted. The case of auto maker, Toyota serves as an excellent example. Toyota was forced to do a recall of several of its cars which had a problem in acceleration. The recall took place after the auto maker received several complaints about this defect and after several motorists were injured and others killed. A lot of people believe that this issue should have been taken care of earlier and the cars should have been recalled the moment there was first indication that there was a defect. Apart from that, a condemning internal memo surfaced from the automaker while Senate was discussing Toyota’s response towards the defect in the vehicles. This memo proved that Toyota was all along aware of the acceleration defect but had also made an attempt to recall floor mats since it would be less costly than fixing of the real defect. In this memo, Toyota employees in Washington DC stated that the firm would have ensured that more than one hundred million dollars were saved if the firm could have convinced regulators to end an ongoing investigation dating back to 2007, if they could have blamed the defect on the floor mats, (Michael, K.I, 2011). Since Toyota failed to initiate a quick response it has and most certainly will find itself into legal issues. For instance one specific lawsuit (filed in February 2010) involved the three family members and relations of a California trooper helped in propelling the automaker’s speedy safety recall. Since this period, Toyota has been faced with numerous other lawsuits. Apart from lawsuits; Toyota has been closely scrutinized by the federal government of late. The firm has been the focus of Senate hearings as to why it responded so late with the recall. The government was greatly disappointed and showed a lot of disdain in Toyota since the firm was more interested in fending off court cases than recalling the cars and fixing the defect. Government scrutiny and court cases have impacted negatively on the brand name that is Toyota. For several years, Toyota’s automobiles have been associated with reliability and quality. However due to the recall consumers have begun questioning about the value of the firm’s automobiles. Apart from that consumers are wondering why Toyota took so long to recall the automobiles that were a danger not only to drivers of Toyota but also to other drivers in general. Thus the issues of product liability facing Toyota have greatly affected the firm’s bottom line (Michael, K.I, 2011) Apart from Toyota, firms such as BP have also been involved in lawsuits and criticism from consumers due to the oil spill of deep horizon. Many issues related with products liability would be prevented specifically if it concerns defects associated with product design. This is very true of BP and oil spill of Deep Horizon catastrophe which could be voided if the firm had taken precaution and designed the oil pumps properly. At times, mistakes are committed out of unguided sense of thriftness.For example; estimates have it that the executives in charge of drilling the unfortunate Deepwater Horizon had hoped they would save US $5 million by hurrying through some steps to make sure the well was sealed. The accident that occurred resulted in loss of untold damage in terms of billions of dollars. Companies must therefore make considerations not only on the legal implications and costs of products that are designed poorly, but also the effect of such defective products on the lives of the people. For instance in BP’s case several people who depend on the Gulf of Mexico could take so long to recover and others may never recover completely, due to contamination of particular fishing grounds. The tourism industry also suffered greatly because of the oil spill. This clearly shows that taking short cuts especially in product design may be beneficial for a short while but in the end, lives of people could be endangered and ultimately the firm will have to lose a lot of money paying huge amounts to fix the issues brought about by the defect. What however may come to consumers as a surprise is the fact that the people whose responsibility is to prevent occurrence of such defects are at times aware, yet do nothing about it. It’s actually unimaginable how anybody would cover a defect in a product and go ahead and market the same to the very consumers it’s going to harm and kill. But actually that is what takes place from time to time. The following example of Johnson and Johnson’s Propulsid best illustrates this; Stevens Scott and Gretchen Stewart of Munhall, Pennsylvania to their son Gage(three months) to Pittsburgh Children Hospital after failing to respond to the treatment of his pediatrician. Gage was apparently suffering from diarrhea and heartburn, cried and vomited frequently. A specialist at the hospital prescribed the anti-heartburn drug Propulsid. Six months on, Gage passed on from cardiac arrhythmia which is an anomaly of the heartbeat and a side effect of Propulsid and which its manufacturer, Johnson & Johnson was aware. Thus from the year 1993 to 1998,Johson &Johnson earned over $1 billion from the sale of Propulsid which is a prescription for heartburn medication, this happening even with the knowledge that hundreds of people were perishing from its deadly side effects. A short while after Propulsid was given the go ahead by the Food and Drug Administration (FDA) for treatment of in adults, doctors and regulators began seeing serious heart problems and deaths in patients receiving medication from this drug.FDA had received reports of about 18 patients whom had reported serious heart conditions after Propulsin prescription, by the early 1995.In the next eighteen months, this number had reached fifty seven. Children were specifically at risk and regulators from the federal government warned the company that they would no longer approve Propulsid for pediatric sales. This warning was however not made known to the public. Documents from court cases for the harmed patients against the firm indicated that Johnson & Johnson had not conducted any study recommendations by the regulators from the federal government and never made known other studies that could have warned doctors of possible dangers associated with Propulsid. While Johnson & Johnson complied not to do direct marketing of Propulsid for children due to their increased dangers of side effects, the pharmaceutical pushed for educational efforts, pushing the drug’s use in pediatric patients. As cases of serious heart conditions and infant deaths continued to increase, some executives from Johnson & Johnson questioned whether the firm should limit the drug’s use to pediatric only. The firm banned the sale of the drug to premature infants in several European countries. However the ban was overruled in the US by senior executives. In the August of 1997, FDA made proposals to change the drug’s warning label. The firm’s internal analysts approximated the proposals would cost Johnson & Johnson over $250 million per annum in lost sales and thus in June 1998,after a year,Johson disagreed all of them. Over a period of the next 3 years over 24 infants were harmed and at least 100 were injured. Over the next two years at 300 people died and over 16000 others were harmed by Propulsid. The FDA could no longer overlook the relationship between the heart conditions of the patients using it and Propulsid public meeting was called to discuss safety concerns about the drug. Three weeks however before the meeting was held, Johnson & Johnson announced formally that it would stop the sale of Propulsid. Products liability is thus a part of law of torts and its basis involves three kinds of defects; design, manufacturing and marketing According to laws of products liability, manufacturers are solely responsible for ascertaining that they offer defect-free products to their consumers. If the products are defective, then the manufacturer will be liable for harm or death that results due to the use of their products. References Goldberg R , Miller C. J(2010). Product Liability. New York: Oxford University Press. Michael, K. I. (2011). Principles of Products Liability. New York: Hornbook Series. Mitchell A, Polinsky S. M. (2010). The Uneasy Case of Product Liability. New York: National Bureau of Economic Research Inc. http://www.healylawfirm.com/News-Articles/Products-Liability-News/Misrepresentation-in-Product-Liability.shtml http://www.justice.org/clips/theyknewandfailedto.pdf http://www.law.cornell.edu/wex/negligence http://nationalparalegal.edu/public_documents/courseware_asp_files/torts2/ProductsLiability/BreachOfWarranty.asp Read More