Business Law Chapter 5 Notes

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True
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True or False: Under the doctrine of strict liability, liability for injuries is imposed for reasons other than fault.
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d. Invasion of privacy
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Theories of product liability may normally be based on all of these theories except: a. Negligence b. Misrepresentation c. Strict liability d. Invasion of privacy
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True
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True or False: Privity of contract refers to the relationship that exists between the parties to a contract.
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False
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True or False: Under privity of contract, a contractual relationship between the manufacturer and the injured plaintiff must exist before the plaintiff can sue the manufacturer in court.
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d. Using adequate test marketing.
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What is the one area listed in which manufacturers do NOT have to use due care? a. Designing the product. b. Selecting the materials. c. Using the appropriate production process. d. Using adequate test marketing. e. Assembling and testing the product. f. Placing adequate warnings on the label to inform the user of dangers of which an ordinary person might not be aware.
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True
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True or False: When a user or customer is injured because of fraudulent misrepresentation, the basis of liability may be the tort of fraud.
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c. Greenman v. Yuba Power Products, Inc.
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The landmark case in strict product liability was: a. Gibbons v. Ogden b. Marbury v. Madison c. Greenman v. Yuba Power Products, Inc.
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f. advertising agencies
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The doctrine of strict product liability does NOT apply to which of the following? a. assemblers b. packagers c. bottlers d. manufacturers e. processors f. advertising agencies g. wholesalers h. retailers i. distributors
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True
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True or False: In a strict product liability lawsuit, the product must be in a defective condition when the defendant sells it.
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False
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True or False: In a strict product liability lawsuit, the plaintiff has to show why or in what manner the product became defective.
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c. unreasonably dangerous
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Because many products cannot be made 100 percent safe for all uses, sellers are only liable for products that are: a. dangerous after a few years b. dangerous when used incorrectly c. unreasonably dangerous d. reasonably dangerous
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d. nonconformity with design specifications
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All of the following are an example of a manufacturing defect except: a. physically flawed product b. damaged product c. incorrectly assembled product d. nonconformity with design specifications
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False
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True or False: When a manufacturer argues that it engaged in reasonable quality control efforts, that argument will act as a sufficient defense in a strict product liability lawsuit.
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d. Risk-utility analysis
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____________ occurs when courts look at the risk of harm from a product as designed compared to the utility to the user and to the public. a. Gross benefits analysis b. Net cost c. Unweighted benefits analysis d. Risk-utility analysis e. Reasonable use analysis
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True
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True or False: Haslo, Inc., manufactures outdoor games for children ages ten to twelve. Any warnings placed on the games should be in bright, bold lettering and presented on simple labels.
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b. No, because everyone knows that glass doors can be run into, and therefore the manufacturer does not have to provide such a warning.
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Gunter installs a large glass door in his house and then runs into it, breaking his nose. Gunter sues the manufacturer because he was not warned about the possibility of such an injury. Will Gunter prevail in his lawsuit? a. Yes, because manufacturers must provide adequate warnings. b. No, because everyone knows that glass doors can be run into, and therefore the manufacturer does not have to provide such a warning. c. Yes, because sellers of large glass doors are held to strict liability standards.
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False
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True or False: Market-share liability is a theory used to require that an injury was caused by a specific defendant.
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True
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True or False: If a defective product injures a bystander, the bystander can sue the manufacturer for strict liability.
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True
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True and False: The doctrine of strict product liability applies to suppliers of component parts.
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a. the goods were altered after they were sold
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One good defense against strict product liability is that: a. the goods were altered after they were sold b. the goods were sold at a heavily discounted price c. the goods were advertised on TV d. the goods were meant for children, not adults
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d. preemption
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Halogenics, Inc., manufactures a medical device that is heavily regulated by the government and has to undergo a rigorous pre-market approval process. Halogenics can use the following defense if it is sued: a. exemption b. \”didn’t know\” exemption c. no-knowledge exemption d. preemption e. causation f. full basis
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True
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True or False: Assumption of the risk is a viable defense in a product liability action.
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c. assumption of risk
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Monsanto mails registered letters, sends e-mails, and places ads in local newspapers where it sold a defective weed killer. Huntington knows of the recall but ignores it, applies the weed killer to his crops, and suffers damages. Which defense can Monsanto use at trial? a. preemption b. causation c. assumption of risk
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False
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True or False: Product misuse obviously occurs when a product is used for a purpose other than what it was intended for. The courts recognize this defense in almost all lawsuits today.
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False
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True or False: When the defense of comparative negligence is successful at trial, it completely absolves the defendant of liability.
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True
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True or False: If a defendant can succeed in convincing the court that a plaintiff’s injury resulted from a commonly known danger, the defendant normally will not be liable.
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b. Because there is a commonly known danger of cutting oneself when using a knife.
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Why can’t you sue the manufacturer when a sharp knife cuts you? a. Because you implicitly signed an agreement against such lawsuits when you bought the knife. b. Because there is a commonly known danger of cutting oneself when using a knife. c. Because knife manufacturers are subject to market-share liability.
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True
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True or False: Individuals who frequently buy and consume supersized portions of food will not succeed in lawsuits against the manufacturers if they become overweight.
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False
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True or False: Statutes of repose often allow for unlimited liability for manufacturers of defective products, no matter how far in the past.
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c. state law
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In product liability suits, statutes of limitations normally are set by: a. federal law b. municipal law c. state law
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d. showing the absence of privity of contract between it and the consumer.
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Mack is injured by a tractor manufactured by WestCo. In order to defend against a negligence claim based upon the product, WestCo may show that it exercised due care by all of the following except: a. using the appropriate production process. b. placing adequate warnings on the label to inform the user of dangers to which an ordinary person might not be aware. c. inspecting and testing any purchased components used in the final product. d. showing the absence of privity of contract between it and the consumer.
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d. Ginger cannot be sued under the theory of product liability.
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Ginger is a retired school teacher that who makes baked goods in her spare time. She occasionally delivers a batch of her cookies to the neighborhood restaurant to be sold at the cash register. One of her batches of cookies causes more than 20 people to become extremely sick with food poisoning. Which of the following statements is applicable? a. Ginger can be sued under the negligence theory of product liability. b. Ginger can be sued under the strict product liability theory of product liability. c. Ginger can be sued under the manufacturing defect theory of product liability. d. Ginger cannot be sued under the theory of product liability.
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a. fail because John did not incur physical harm to self or property.
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John purchases a blender from JuiceMart. A crack in the plastic casing causes the blade to swing out of control and nearly injure John’s arm. John is shaken up by the incident but otherwise uninjured. John’s strict product liability suit will most likely: a. fail because John did not incur physical harm to self or property. b. fail because the blender was not in a defective condition. c. succeed because JuiceMart was in the business of selling that product. d. succeed because the blender was not substantially changed from the time the product was sold to the time the injury was sustained.
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b. had a reasonable alternative design available, which it failed to use.
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Carl sues Goldman Manufacturing, alleging he suffered injuries as a result of a design defect in Goldman’s food processor. To prevail in this lawsuit, Carl must show that Goldman: a. failed to adequately warn him of the danger of harm. b. had a reasonable alternative design available, which it failed to use. c. met his consumer expectations and that his injury was unintended. d. met the relevant statute of limitations or repose.
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a. Design defect.
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United Tires uses a faulty design in designing its tires that causes them to blow out after 50,000 miles. Jessa is injured when her right-rear tire incurs a blowout. She can sue United Tires under which of the following theories of strict liability? a. Design defect. b. Manufacturing defect. c. Unreasonably dangerous product. d. Market-share liability.
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b. Toyosan’s air bag was defective because of the consumer-expectations test.
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Emily, while driving a car manufactured by Toyosan, suffered a side impact collision from another driver. When Toyosan’s air bag deployed, it caused damage to Emily’s face and teeth as she hit her head against the steering wheel. If Emily sued Toyosan for strict product liability, the court would likely conclude that: a. Toyosan’s air bag did not have a defective product design. b. Toyosan’s air bag was defective because of the consumer-expectations test. c. Emily misused the product in driving the car. d. Emily was comparatively negligent for her own injuries.
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d. foreseeable risks of harm could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller.
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Fred sued Document Security Company, alleging he had suffered injuries to his hands as a result of attempting to fix a jam in one of Document Security’s paper shredders. Fred alleged the shredder was defective because it failed to contain warnings regarding the dangers to fingers and hands while attempting to fix jams. In order to succeed, Fred will have to show: a. all risk of harm could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller. b. paper shredders are inherently dangerous products. c. the injuries would not have occurred but for the absence of the warnings. d. foreseeable risks of harm could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller.
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c. there is no duty to warn about risks that are obvious or commonly known, such as the risk of lightning occurring during a rainstorm.
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Martha is walking from her office building to her car in a torrential downpour with an umbrella manufactured by Umbrellas USA, Inc. She is struck by lightning and files suit claiming the manufacturer failed to include a warning. A court would likely find that: a. the umbrella should have included a warning label against using an umbrella in a lightning storm. b. the seller should have provided a warning because of the foreseeable misuse of an umbrella in a rainstorm with lightning. c. there is no duty to warn about risks that are obvious or commonly known, such as the risk of lightning occurring during a rainstorm. d. the plaintiff was partially at fault under the doctrine of comparative negligence.
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d. not be dismissed against any manufacturer because of market-share liability.
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Harry discovers that a chemical compound has had an adverse impact on his land. The chemical compound is manufactured by five companies. Harry cannot identify which manufacturer’s chemical caused the adverse impact to his land. Harry files a product liability lawsuit against all five companies. Harry’s case will: a. be dismissed because he cannot identify which company contaminated his land. b. be dismissed because he cannot apportion liability amongst the five companies. c. not be dismissed because Harry can show harm to his land. d. not be dismissed against any manufacturer because of market-share liability.
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b. not liable, because David assumed the risks of sledding.
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David, a ten-year-old, purchased a plastic snow sled from Kmart. He went sledding, lost control, hit a tree, and was injured. David’s parents filed a negligence lawsuit in a state court against Kmart, alleging that the store should not have sold this type of sled because it was difficult to steer and had no brakes, making it unreasonably dangerous. Kmart contended that sledding is an inherently dangerous activity and that David assumed the risks involved when he went sledding. The court probably found that Kmart was: a. not liable, because David’s injuries were unforeseeable. b. not liable, because David assumed the risks of sledding. c. liable, because David did not know the risks of sledding. d. liable, because sledding is unreasonable.
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c. Comparative negligence
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Harvey is driving while intoxicated in his new truck when his tire blows out. He loses control of the truck and crashes into a tree, causing injury to himself and to his vehicle. The tire is determined to be defective. Which of the following defenses would be the most viable to be raised by the tire manufacturer in a product liability cause of action? a. Product misuse b. Preemption c. Comparative negligence d. Assumption of the risk
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d. the knowledgeable user.
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A fast-food chain restaurant would not be liable for the failure to disclose the adverse health effects of eating its food based on the defense of: a. preemption. b. assumption of the risk. c. a commonly known danger. d. the knowledgeable user.
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b. statute of repose.
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David’s family purchased a trampoline in 2000. They sold the trampoline at a garage sale in 2010 to Zac’s family. In 2012, Zac is injured while jumping on the trampoline when it collapses. If Zac’s family sues the trampoline manufacturer in 2013, their lawsuit will likely be dismissed based on the: a. statute of limitations. b. statute of repose. c. no privity of contract. d. product misuse.

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