Chapter 18:

Warranties and Product Liability

124
 WHAT THIS CHAPTER IS ABOUT
Warranties that impose duties on sellers cover most goods. A breach of a warranty is a breach of the seller’s 
promise. Manufacturers, processors, and sellers may also be liable to consumers, users, and bystanders for physical 
harm or property damage caused by defective goods. This is product liability.

CHAPTER OUTLINE
I. WARRANTIES
A. WARRANTIES OF TITLE

1. Good Title
Sellers warrant that they have good and valid title and that the transfer of title is rightful [UCC 2–
312(1)(a)].

2. No Liens
Sellers warrant that goods are free of a security interest of which the buyer has no knowledge [UCC 
2–312(1)(b)]. Lessors warrant no third party will interfere with the lessee’s use of the goods [UCC 
2A–211(1)].

3. No Infringements
Sellers warrant that the goods are free of any third person’s patent, trademark, or copyright claims 
[UCC 2–312(3)].

a. Sales Contract—If the Warranty Is Breached and the Buyer Is Sued
The buyer must notify the seller. If the seller agrees in writing to defend and bear all costs, the 
buyer must let the seller do it (or lose all rights against the seller) [UCC 2–607(3)(b), (5)(b)].

b. Lease—If the Warranty Is Breached and the Lessee Is Sued
Same as above, except that a consumer who fails to notify the lessor within a reasonable time 
does not lose any rights against the lessor [UCC 2A–516(3)(b), (4)(b)].

4. Disclaimer of Title Warranty
In a sales contract, a disclaimer can be made only by specific contractual language [UCC 2–312(2)]). 
In a lease, the disclaimer must be specific, in writing, and conspicuous [UCC 2A–214(4)].

B. EXPRESS WARRANTIES

1. When Express Warranties Arise
A seller or lessor warrants that goods will conform to affirmations or promises of fact, descriptions, 
samples or models [UCC 2–313, 2A–210].

2. Basis of the Bargain
An affirmation, promise, description, or sample must be part of the basis of the bargain: it must come 
at such a time that the buyer could have relied on it when agreeing to the contract [UCC 2–313, 2A–
210].

125
 3. Statements of Opinion

a. Opinions
A statement relating to the value of goods or a statement of opinion or recommendation about 
goods is  not  an express  warranty  [UCC  2–313(2), 2A–210(2)],  unless  the  seller  or lessor  who 
makes it is an expert and gives an opinion as an expert.

b. Puffing
Whether a statement is an express warranty or puffing is not easy to determine. Factors include 
the reasonableness of the buyer’s reliance on the statement and the specificity of the statement.

C. IMPLIED WARRANTIES
An  implied   warranty   is   derived  by   implication   or   inference   from  the   nature   of  a   transaction   or   the 
relative situations or circumstances of the parties.

1. Implied Warranty of Merchantability
A warranty automatically arises in every sale or lease of goods by a merchant who deals in such 
goods that the goods are merchantable [UCC 2–314, 2A–212].

a. Reasonably Fit for Ordinary Purposes
Goods that are merchantable are “reasonably fit for the ordinary purposes for which such goods 
are used.” Merchantable food is food that is fit to eat.

b. Characteristics of Merchantable Goods
Average, fair, or medium­grade quality; pass without objection in the market for goods of the 
same description; adequate package and label, as provided by the agreement; and conform to the 
promises or affirmations of fact made on the container or label.

2. Implied Warranty of Fitness for a Particular Purpose
Arises when seller or lessor (merchant or nonmerchant) knows or has reason to know the purpose for 
which buyer or lessee will use goods and knows he or she is relying on seller to select suitable goods 
[UCC 2–315, 2A–213]. Goods can be merchantable but unfit for a particular purpose.

3. Implied Warranty from Dealing, Performance, or Trade Usage
When the parties know a well­recognized trade custom, it is inferred that they intended it to apply to 
their contract [UCC 2–314, 2A–212].

D. OVERLAPPING WARRANTIES

1. When Warranties Are Consistent, They Are Cumulative

2. When Warranties Are Inconsistent—

a. Express   warranties   displace   inconsistent   implied   warranties   (except   fitness   for   a   particular 
purpose).

b. Samples take precedence over inconsistent general descriptions.

c. Technical specs displace inconsistent samples or descriptions.

E. WARRANTY DISCLAIMERS

1. Express Warranties
A seller can avoid making express warranties by not promising or affirming anything, describing the 
goods, or using of a sample or model.
127 UNIT THREE: SALES AND LEASE CONTRACTS

a. Oral Warranties
Oral warranties made during bargaining cannot be modified later.
 b. Negating or Limiting Express Warranties
A   written   disclaimer—clear   and   conspicuous—can   negate   all   warranties   not   in   the   written 
contract [UCC 2–316(1), 2A–214(1)].

2. Implied Warranties

a. General Language
Implied warranties can be disclaimed by the expression “as is” or a similar phrase [UCC 2–316(3)
(a), 2A–214(3)(a)].

b. Specific Language
Implied   warranty   of  fitness   for   a  particular   purpose:     disclaimer   must   be   in   writing   and   be 
conspicuous (the word  fitness  is not required). Implied warranty of merchantability: disclaimer 
must mention merchantability; if it is in writing, it must be conspicuous.

3. Buyer’s Inspection of the Goods
If a buyer examines the goods before entering a contract, there is no implied warranty with respect to 
defects that a reasonable examination would reveal [UCC 2–316(3)(b), 2A–214(2)(b)]. The same is true 
if the buyer refuses to examine over the seller or lessor’s demand.

4. Unconscionability
Courts view disclaimers with disfavor, especially when consumers are involved, and have sometimes 
held disclaimers unconscionable [UCC 2–302, 2A–108].

F. MAGNUSON–MOSS WARRANTY ACT
No seller is required to give a written warranty for consumer goods, but if a seller chooses to do so and 
the cost of the goods is more than $25, the warranty must be clearly labeled—

1. “Full” or “Limited”
A full warranty  requires free repair  or replacement  of defective  parts (there  is no time  limit). A 
limited warranty is any warranty that is not full.

2. Required Information
The   seller   must   state   (fully   and   conspicuously   in   a   single   document   in   “readily   understood 
language”) the seller’s name and address, what is warranted, procedures for enforcing the warranty, 
any limitations on relief, and that the buyer has legal rights.

II. LEMON LAWS
If a car under warranty has a defect that significantly affects the vehicle’s value or use, and it is not remedied 
by the seller within a specified number of opportunities, the buyer is entitled to a new car, replacement of 
defective parts, or return of all consideration paid.

III. PRODUCT LIABILITY
Product liability claims may be based on negligence, misrepresentation, strict liability, or warranty law.

A. NEGLIGENCE
If the failure to exercise reasonable care in the making or marketing of a product causes an injury, the 
basis of liability is negligence.

1. Manufacturer’s Duty of Care
Due  care  must   be  exercised  in  designing,  assembling,   and  testing  a  product;   selecting  materials; 
inspecting and testing products bought for use in the final product; and placing warnings on the 
label to inform users of dangers of which an ordinary person might not be aware.
129 UNIT THREE: SALES AND LEASE CONTRACTS

2. Privity of Contract between Plaintiff and Defendant Is Not Required
 B. MISREPRESENTATION
If a misrepresentation (such as intentionally concealing product defects) results in an injury, there may 
liability for fraud.

IV. STRICT PRODUCT LIABILITY
A defendant may be held liable for the result of his or her act regardless of intention or exercise of reasonable 
care (see Chapter 4).

A. STRICT PRODUCT LIABILITY AND PUBLIC POLICY
Public policy assumes that (1) consumers should be protected from unsafe products, (2) manufacturers 
and distributors should not escape liability solely for lack of privity, and (3) sellers and lessors are in a 
better position to bear the cost of injuries caused by their products.

B. THE REQUIREMENTS FOR STRICT PRODUCT LIABILITY
Under the Restatement (Second) of Torts, Section 402A—

1. Product Is in a Defective Condition When the Defendant Sells It

2. Defendant Is Normally in the Business of Selling the Product

3. Defect Makes the Product Unreasonably Dangerous
A product may be so defective if either—

a. Product Is Dangerous beyond the Ordinary Consumer’s Expectation
There may have been a flaw in the manufacturing process that led to some defective products 
being marketed, or a perfectly made product may not have had adequate warning on the label.

b. There Is a Less Dangerous, Economically Feasible Alternative That the Manufacturer Failed to 
Use
A manufacturer may have failed to design a safe product.

4. Plaintiff Incurs Harm to Self or Property by Use of the Product

5. Defect Is the Proximate Cause of the Harm

6. Product Was Not Substantially Changed after It Was Sold
Between the time the product was sold and the time of the injury.

C. PRODUCT DEFECTS
The Restatement (Third) of Torts: Products Liability categorizes defects as—

1. Manufacturing Defects
A manufacturing defect occurs when a product departs from its intended design even though all 
possible care was taken (strict liability).

2. Design Defects
A design defect exists when a foreseeable risk of harm posed by a product could have been reduced 
by use of a reasonable alternative design and the omission makes the product unreasonably unsafe. 
A court would consider such factors as consumer expectations and warnings.

3. Warning Defects (Inadequate Warnings)
A warning defect occurs when a reasonable warning could have reduced a product’s foreseeable risk 
of harm and the omission makes the product unreasonably unsafe. Factors include the content and 
comprehensibility of a warning, and the expected users.
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D. MARKET­SHARE LIABILITY
In some cases, some courts hold that all firms that manufactured and distributed a certain product during 
a certain period are liable for injuries in proportion to the firms’ respective shares of the market.

E. OTHER APPLICATIONS OF STRICT PRODUCT LIABILITY

1. Who May Be Liable
Suppliers of component parts may be liable for injuries caused by defective products.

2. Strict Liability Extends to Bystanders
All courts extend strict liability to cover injured bystanders (limited in some cases to those whose 
injuries are reasonably foreseeable).

F. STATUTES OF REPOSE
A statute of repose limits the time in which a suit can be filed.   It runs from an earlier date and for a 
longer time than a statute of limitations.

V. DEFENSES TO PRODUCT LIABILITY
A. ASSUMPTION OF RISK
In some states, this is a defense if (1) plaintiff knew and appreciated the risk created by the defect and (2) 
plaintiff voluntarily engaged in the risk, event though it was unreasonable to do so.

B. PRODUCT MISUSE
The use must not be the one for which the product was designed, and the misuse must not be reasonably 
foreseeable.

C. COMPARATIVE NEGLIGENCE (FAULT)
Most states consider a plaintiff’s actions in apportioning liability.

D. COMMONLY KNOWN DANGERS
Failing to warn against such a danger is not ground for liability.

TRUE­FALSE QUESTIONS
(Answers at the Back of the Book)
        1. Promises of fact made during the bargaining process are express warranties.

        2. A contract cannot include both an implied warranty and an express warranty.

        3. A merchant cannot disclaim an implied warranty of merchantability.

        4. An express warranty can be limited.

        5. Privity of contract is required to bring a product liability suit based on negligence.

        6. One requirement for a product liability suit based on strict liability is a failure to exercise due care.

        7. In many states, the plaintiff’s negligence is a defense that may be raised in a product liability suit based 
on strict liability.

        8. A warranty of title can be disclaimed or modified only by specific language in a contract.

        9. A manufacturer has a duty to warn about risks that are obvious or commonly known.
        10. Assumption of risk can be raised as a defense in a product liability suit.

FILL­IN QUESTIONS
(Answers at the Back of the Book)
An   express   warranty  ________________  (can/cannot)   be   disclaimed   in   writing   if   it   is   called   to   the   buyer’s 
attention. An implied warranty of fitness for a particular purpose  ______________  (can/cannot) be disclaimed in 
writing. An implied warranty of merchantability ___________ (can/cannot) be disclaimed in writing. A disclaimer of 
the implied warranty of fitness for a particular purpose ________________ (must/need not) use the word “fitness.” A 
disclaimer   of   the   implied   warranty   of   merchantability  ______________  (must/need   not)   include   the   word 
merchantability.

MULTIPLE­CHOICE QUESTIONS
(Answers at the Back of the Book)
        1. Eagle  Skis, Inc., makes and sells  skis. In deciding  whether the skis are merchantable, a court  would 
consider whether
a. Eagle violated any government regulations.
b. the skis are a quality product.
c. the skis are fit for the ordinary purpose for which such goods are used.
d. the skis are made in an efficient manner.

        2. Great Furniture Company makes and sells furniture. To avoid liability for most implied warranties, their 
sales agreements should note that their goods are sold
a. “as is.”
b. by a merchant.
c. for cash only.
d. in perfect condition.

        3. Fine Textiles, Inc., sells cloth to Gail by showing her a sample that Fine’s salesperson claims is the same as 
the goods. This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffing.

        4. Superb   Auto   Sales   sells   cars,   trucks,   and   other   motor   vehicles.   A   Superb   salesperson   tells   potential 
customers, “This is the finest car ever made.” This statement is
a. an express warranty.
b. an implied warranty.
c. a warranty of title.
d. puffing.

        5. A bridge’s design is defective and soon after completion it begins to sway in the wind. Everyone stays 
off, except Carl, who wants to show off. Carl falls from the bridge and sues its maker, who can raise the 
defense of
133 UNIT THREE: SALES AND LEASE CONTRACTS

a. assumption of risk.
b. commonly known danger.
c. product misuse.
d. none of the above.

        6. Kitchen Products, Inc. (KPI), makes knifes and other utensils. Jay is injured while using a KPI knife, and 
sues the maker for product liability based on negligence. KPI could successfully defend against the suit 
by showing that
a. Jay’s injury resulted from a commonly known danger.
b. Jay misused the knife in a foreseeable way.
c. KPI did not sell the knife to Jay.
d. the knife was not altered after KPI sold it.

        7. Standard Tools, Inc., makes and sells tools. Tina is injured as a result of using a Standard tool. Tina sues 
Standard for product liability based on strict liability. To succeed, Tina must prove that Standard
a. was in privity of contract with Tina.
b. did not use care with respect to the tool.
c. misrepresented a material fact regarding the tool on which Tina relied.
d. none of the above.

        8. Yard Work, Inc., makes and sells garden tools. Under the  Restatement (Second) of Torts, a tool could be 

unreasonably dangerous

a. only if, in making the tool, Yard Work failed to use a less dangerous but economically feasible alternative.
b. only if the tool is dangerous beyond the ordinary consumer’s expectation.
c. if, in making the tool, Yard Work failed to use a less dangerous but economically feasible alternative or if 
the tool is dangerous beyond the ordinary consumer’s expectation.
d. none of the above.

        9. Fran is in Green’s Grocery Store when a bottle of Hi Cola on a nearby shelf explodes, injuring her. She 
can recover from the manufacturer of Hi Cola only if she can show that

a. she did not assume the risk of the explosive bottle of Hi Cola.
b. she intended to buy the explosive bottle of Hi Cola.
c. she was injured due to a defect in the product.
d. the manufacturer failed to use due care in making the bottle of Hi Cola.

        10. Omega, Inc., designs and makes DVD players. In a product liability suit based on negligence, Omega 

could be liable for violating its duty of care with respect to a player’s

a. design only.
b. manufacture only.
c. design or the manufacture.
d. none of the above.

SHORT ESSAY QUESTIONS
1. What is the difference between the implied warranty of merchantability and the implied warranty of fitness for a 
particular purpose? 
2. How defective must a product be to support a cause of action in strict liability in a product liability suit?

ISSUE SPOTTERS
(Answers at the Back of the Book)
1. Adam sells a car to Beth. Two months later, Consumer Credit, Inc., tells Beth that it has a security interest in the 
car, Adam missed three payments, and it is taking the car. Beth says, “I know nothing about any of this. You have to 
get your money from Adam. You can’t take the car.” Is Beth right?

2. Delta Corporation makes tire rims, which it sells to Eagle Vehicles, Inc., to put on its cars. One set of rims is 
defective, which an inspection would reveal. Eagle does not inspect the rims. The car is sold to Fast Auto Sales. Greg 
buys the car, which is soon in an accident caused by the defective rims and in which Greg is injured. Is Eagle liable?
135 UNIT THREE: SALES AND LEASE CONTRACTS

3. Real Chocolate Company makes a box of candy, which it sells to Sweet Things, Inc., a distributor. Sweet sells the 
box to a Tasty Candy store, where Jill buys it. Jill gives it to Ken, who breaks a tooth on a stone the same size and 
color of a piece of the candy. If Real, Sweet, and Tasty were not negligent, can they be liable for the injury?

CUMULATIVE HYPOTHETICAL PROBLEM
FOR UNIT THREE—INCLUDING CHAPTERS 15–18

(Answers at the Back of the Book)
Alpha Engineering Corporation designs products for companies in the aerospace industry. Beta Computers, 
Inc., makes and sells hard drives.

        1. Alpha writes to Beta to order 100 hard drives. Beta writes to accept but adds a clause providing for 
interest   on   any   overdue   invoices   (a   common   practice   in   the   industry).   If   there   is   no   further 
communication between the parties

a. Beta has made a counteroffer.
b. there is a contract but without Beta’s added term.
c. there is a contract that includes Beta’s added term.
d. there is no contract because Alpha did not expressly accept the added term.

        2. Beta tenders delivery of the hard drives to Alpha. Alpha says that it cannot take possession immediately 
but will do so later in the day. Before Alpha takes possession, the goods are destroyed in a fire. The risk 
of loss

a. passed to Alpha at the time the contract was formed.
b. passed to Alpha on Beta’s tender of delivery.
c. remained with Beta, because Alpha had not yet taken possession.
d. remained with Beta, because title had not yet passed to Alpha.

        3. Beta tenders delivery of the hard drives to Alpha. Alpha says that it had decided not to buy them. In 
Beta’s suit against Alpha, Beta can recover the contract price if

a. Beta does not seek any damages in addition to the contract price.
b. Beta identified the goods to the contract and a reasonable effort to resell the goods would not succeed.
c. specific performance is not possible.
d. the goods have been destroyed and Beta’s insurance is inadequate.

        4. Alpha tries to put the hard drives into use, but they do not do what Beta promised. In the deal between 
Alpha and Beta, the most important factor in determining whether an express warranty was created is 
whether 

a. Beta intended to create a warranty.
b. Beta made the promises in the ordinary course of business.
c. Beta’s promises became part of the basis of the bargain.
d. Beta’s statements were in writing.

        5. Under the UCC, to be subject to an implied warranty of merchantability, Beta’s hard drives do NOT need 
to be

a. adequately packaged and labeled.
b. fit for all of the purposes for which Alpha intends to use the goods.
 c. in conformity with any affirmations of fact made on the package.
d. sold by a merchant.

QUESTIONS ON THE EXTENDED CASE STUDY FOR UNIT THREE—GREENE V. A. P.  
PRODUCTS, LTD.
(Answers at the Back of the Book)
        1. Berry Scents, Inc., makes and markets fruit­scented perfumes. According to the  majority’s  reasoning in 
Greene v. A. P. Products, Ltd., Berry owes

a. a duty to warn consumers that ingesting the perfume poses a general material risk of harm.
b. a duty to warn consumers of that ingesting the perfume poses a specific material risk of death.
c. a duty to warn consumers of that ingesting the perfume poses a specific material risk of illness.
d. no duty to warn consumers that ingesting the perfume poses a material risk.

        2. In the facts of the previous question, according to the dissent in the Greene case, Berry may owe

a. a duty to warn consumers that ingesting the perfume poses a general material risk of harm.
b. a duty to warn consumers of that ingesting the perfume poses a specific material risk of death.
c. a duty to warn consumers of that ingesting the perfume poses a specific material risk of illness.
d. no duty to warn consumers that ingesting the perfume poses a material risk.

        3. In   the   facts   of   the   previous   questions,   under   the   reasoning   of   the   majority   in   the  Greene  case,   the 
conclusion in Berry’s situation would be that

a. any material risk involved with ingesting the perfume is not, nor should it be assumed to be, obvious.
b. any material risk involved with ingesting the perfume is or should be obvious.
c. the material risk of death in ingesting the perfume is an assumed risk.
d. the material risk of illness in ingesting the perfume is a misuse of the product.
137 UNIT THREE: SALES AND LEASE CONTRACTS

Which of the following statements do not create an express warranty?

a. The seller states that the goods conform to a description she offers.

b. The seller states that she purchased the goods from a reputable manufacturer.

c. The seller states that the goods conform to a promise of fact she makes to the buyer.

d. The seller states that the goods conform to a sample she has showed the buyer.
status: correct (1.0)
correct: b
your answer: b
feedback: Correct. This statement would not create an express warranty.
2 An implied warranty of merchantability means that:

a. the goods are of less than average quality.

b. the goods are reasonably fit for the ordinary purpose for which they are sold.

c. the goods are fit for a particular use specified by the buyer.

d. the goods do not meet federal standards of safety.

status: incorrect (0.0)
correct: b
your answer: c
feedback: Incorrect. Such a warranty would be an implied warranty of fitness for a particular
purpose.
3 The implied warranty of merchantability applies to food. Merchantable food would include which of
the following?

a. A bag of apples with a razor blade inside.

b. A jar of applesauce with an earthworm inside.

c. A can of peaches with a portion of a peach pit inside.

d. A package of green beans with a dead grasshopper inside.

status: correct (1.0)
correct: c
your answer: c
feedback: Correct. It is not unreasonable for a consumer to find a portion of a pit in a can of peaches;
this is merchantable food.
4 There has been sharp disagreement among state courts as to the extent to which warranty liability
Your AnswerCorrect?Correct AnswerDescription 1.dyes
This kind of warranty arises automatically in most sales contracts. 2.byes
The seller states that she purchased the goods from a reputable manufacturer. 3.dnocNo,
opinions are not express warranties. 4.byes
the goods are reasonably fit for the ordinary purpose for which they are sold. 5.cyes
A can of peaches with a portion of a peach pit inside. 6.anoban implied warranty of
merchantability. 7.byes
An implied warranty of fitness for a particular purpose. 8.ayes
express warranties displace inconsistent implied warranties, except for implied warranties of
fitness for a particular purpose. 9.dnocprovides three alternatives for liability to third parties;
states can adopt whichever alternative they choose. 10.cyes
This kind of disclaimer is allowed, and Joe will probably lose his case. 11.byes
the Magnuson-Moss Act. 12.ayes
defective automobiles. 13.anodManufacturers and sellers. 14.cyes
negligence. 15.anocFraud. 16.ayes
That consumers should be protected from unsafe products. 17.cyes
Greenman v. Yuba Power Products, Inc. 18.dnobThe product must be in reasonably fit
condition for the general purpose for which it was intended. 19.ayes
a less dangerous alternative was commercially feasible, but was not produced. 20.dnoathe
plaintiff need not prove which particular distributor of a widely distributed product caused
his or her injury. 21.bnoaAttributional defects. 22.anobThat Goldman had a reasonable
alternative design available, which it failed to use. 23.cnodUnder no theory, Greg is not
liable for obvious harms. 24.ayes
Assumption of risk. 25.cyes
A comparative negligence standard.

1. What is the general rule for when a warranty of title arises in most sales contracts?

a. Only after the buyer has inspected the goods.

b. Only if the seller specifically mentions the warranty.

c. Only if the seller details the warranty in writing.

d. This kind of warranty arises automatically in most sales contracts.

2. Which of the following statements do not create an express warranty?

a. The seller states that the goods conform to a description she offers.

b. The seller states that she purchased the goods from a reputable manufacturer.

c. The seller states that the goods conform to a promise of fact she makes to the buyer.

d. The seller states that the goods conform to a sample she has shown the buyer.
139 UNIT THREE: SALES AND LEASE CONTRACTS

3. If a seller expresses her opinion about the value of goods being sold, does the seller create an
express warranty?

a. Yes, as long as the buyer relies on her opinion.

b. Yes, as long as the opinion is in writing.

c. No, opinions are not express warranties.

d. No, because she has created an implied warranty instead.

4. An implied warranty of merchantability means that:

a. the goods are of less than average quality.

b. the goods are reasonably fit for the ordinary purpose for which they are sold.

c. the goods are fit for a particular use specified by the buyer.

d. the goods do not meet federal standards of safety.

5. The implied warranty of merchantability applies to food. Merchantable food would include which of
the following?

a. A bag of apples with a razor blade inside.

b. A jar of applesauce with an earthworm inside.

c. A can of peaches with a portion of a peach pit inside.

d. A package of green beans with a dead grasshopper inside.

6. The case of Webster v. Blue Ship Tea Room, Inc., involved:

a. an implied warranty of fitness for a particular purpose.

b. an implied warranty of merchantability.

c. an express warranty.

d. a warranty of title.
7. Joe is shopping for something to put on the floor of his dairy barn. Lorraine tells him that she has
just the thing, a special rubber flooring that should work great in dairy barns. Based on Lorraine's
comments, Joe buys the floor covering and installs it in his dairy barn. Within two weeks two dozen
cows slip, fall, and seriously injure themselves on the slippery rubber. If he sues Lorraine, what kind of
warranty would Joe claim that she breached?

a. A warranty of title.

b. An implied warranty of fitness for a particular purpose.

c. An implied warranty of merchantability.

d. A void warranty.
8. Generally, when express and implied warranties are inconsistent, the courts usually hold that:

a. express warranties displace inconsistent implied warranties, except for implied

warranties of fitness for a particular purpose.

b. inconsistent samples or general descriptions take precedence over technical

specifications.
 c. Inconsistent general descriptions take precedence over samples.

d. Implied warranties always take precedence over inconsistent express warranties.

9. There has been sharp disagreement among state courts as to the extent to which warranty liability
should extend to third parties. In view of this disagreement, the UCC:

a. provides that warranty liability can never extend to third parties because this is
precluded by the doctrine of privity of contract.

b. provides that warranty liability always extends to third parties, regardless of the type of
injury or harm involved.

c. provides three alternatives for liability to third parties; states can adopt whichever
alternative they choose.

d. decided not to include any provisions in the UCC concerning warranty liability to third
parties.
10. Reconsider question #7. Suppose that when Joe purchases the rubber flooring for his barn he
signs a contract that states, in large type and in boldface type, "flooring sold with no warranties of
merchantability or of fitness for a particular purpose." What happens when Joe sues Lorraine?

a. This kind of disclaimer is not allowed; Joe will probably win in court.

b. This kind of disclaimer is allowed, but because Joe used the floor covering for a very
unique purpose, he will probably win.

c. This kind of disclaimer is allowed, and Joe will probably lose his case.

d. This kind of disclaimer is not allowed based on fraud.

11. A law that is designed to prevent deception in warranties is known as:

a. the Smoot-Hawley Act.

b. the Magnuson-Moss Act.

c. the Lanham Act.

d. the Effective Disclaimer Act.

12. A lemon law deals with:

a. defective automobiles.

b. defective electrical appliances.

c. infected fruit crops.

d. government corruption.
13. Product liability laws are aimed at holding which of the following groups responsible for harms?

a. Consumers.

b. Bystanders.

c. Users.

d. Manufacturers and sellers.

14. If a manufacturer fails to exercise "due care" in its efforts to make a product safe and as a result
someone is injured, the manufacturer may be held liable for:
141 UNIT THREE: SALES AND LEASE CONTRACTS

a. embezzlement.

b. theft.

c. negligence.

d. disclaimer of title.
15. When a misrepresentation has been made to a consumer and the misrepresentation results in an
injury, which of the following could serve as a basis for liability?

a. Assumption of risk.

b. Product misuse.

c. Fraud.

d. Breach of privity.
16. Strict product liability is imposed by law as a matter of public policy. On which of the following
assumptions does the policy rest?

a. That consumers should be protected from unsafe products.

b. That defense lawyers need more work.

c. That plaintiffs' attorneys had sufficient basis for bringing claims against manufacturers.

d. That manufacturers would be put out of business by forcing them to bear the risk of
injuries.
17. California was the first state to impose strict product liability in tort on manufacturers. In which of
the following cases did the California Supreme Court set out the reasons for applying tort law rather
than contract law in cases involving consumers injured by defective products?

a. Palsgraf v. Long Island Railroad.

b. Macpherson v. Buick Motor Co.

c. Greenman v. Yuba Power Products, Inc.

d. Rogers v. Ingersoll-Rand, Inc.

18. Which of the following is not a requirement for strict product liability?

a. The defective condition of the product must be the proximate cause of the harm.

b. The product must be in reasonably fit condition for the general purpose for which it was
intended.

c. The defendant must normally be engaged in the business of selling the product at issue.

d. The plaintiff must suffer a physical harm.

19. A court might consider a product to be unreasonably dangerous if:

a. a less dangerous alternative was commercially feasible, but was not produced.

b. the product was less dangerous than was expected by the ordinary consumer.

c. the product was frequently misused by consumers, despite adequate warnings about the
dangers of misusing the product.

d. the product was adequately labeled with warnings for the ordinary consumer.
20. When market-share liability is imposed:
 a. the plaintiff need not prove which particular distributor of a widely distributed product
caused his or her injury.

b. the plaintiff must prove which distributor supplied the product that caused his or her
injury.

c. the plaintiff must prove which distributor supplied the product that caused his or her
injury only if the product was distributed internationally.

d. the defense of assumption of risk allows the defendants to avoid liability.

21. The Restatement (Third) of Torts categorizes product defects into three categories. Which of the
following is not one of these categories?

a. Attributional defects.

b. Warning defects.

c. Design defects.

d. Manufacturing defects.
22. If Carl sues the Goldman Manufacturing Co., alleging that he suffered injuries as a result of a
design defect in Goldman's food processor machine, what must Carl show?

a. That Goldman failed to adequately warn him of the danger of harm.

b. That Goldman had a reasonable alternative design available, which it failed to use.

c. That Goldman met his consumer expectations and that his injury was unintended.

d. That Goldman met the statute of repose limitations.

23. If Greg manufactures high-quality knives for chefs and other food professionals and if Jillian
severely injuries her left hand when she accidentally strikes it with one of Greg's knives, under which
legal theory may Jillian successfully sue Greg?

a. Under the theory of negligence.

b. Under the theory of market-share liability.

c. Under the theory of strict liability.

d. Under no theory, Greg is not liable for obvious harms.

24. Which of the following is a defense to product liability?

a. Assumption of risk.

b. Self-defense.

c. Bona fide occupational qualification.

d. Justifiable ignorance of the facts.

25. In those states in which the negligent or intentional actions of the plaintiff and the defendant are
considered in a strict liability case, what standard is applied?

a. A known-danger standard.

b. A discriminatory standard.

c. A comparative negligence standard.

d. A repository of negligence standard.

143 UNIT THREE: SALES AND LEASE CONTRACTS