Solution Manual for Cengage Advantage Books
Business Law The First Course Summarized
Case Edition 1st Edition by Miller ISBN 1305087852 9781305087859
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Chapter 7
Strict Liability and Product Liability
TRUE/FALSE QUESTIONS
B1 The extreme risk of an activity is a defense against imposing strict liability
ANSWER: F PAGES: Section 1
BUSPROG: Reflective AICPA: BB-Legal
B2 People who keep domestic animals can be held strictly liable for any harm inflicted by the animals.
ANSWER: F PAGES: Section 1
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B3 Manufacturers must use due care in selecting the materials to be used in a product.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
ANSWER: T PAGES: Section 2
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B4. A product liability action based on negligence does not require privity of contract between the injured plaintiff and the defendant-manufacturer.
ANSWER: T
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B5 Manufacturers must use due care in inspecting and testing any purchased components used in a product.
ANSWER: T PAGES: Section 2
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B6. Misrepresentation in an ad is enough to show an intent to induce the reliance of anyone who may use the product.
ANSWER: T PAGES: Section 2
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B7. The law imposes strict liability as a matter of public policy based in part on the assumption that manufacturers can better bear the costs associated with injuries caused by their products.
ANSWER: T PAGES: Section 3
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B8. Because many products cannot be made entirely safe for all uses, sellers or lessors are liable only for products that are unreasonably dangerous
ANSWER: T
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B9 An action in strict product liability requires that a product be in a defective condition caused by its purchaser.
ANSWER: F
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B10 The doctrine of strict liability can be applied to sellers of goods, including manufacturers, but not distributors.
ANSWER: F PAGES: Section 3
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B11 The types of product defects that have traditionally been recognized in product liability law include manufacturing defects
ANSWER: T PAGES: Section 3
BUSPROG: Analytic AICPA: BB-Legal
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
B12 A manufacturing defect is a departure from a product unit’s design specifications that results in products that are physically flawed.
ANSWER: T PAGES: Section 3
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B13 To successfully assert a design defect, a plaintiff has to show that no reasonable alternative design was available.
ANSWER: F PAGES: Section 3
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B14. Under a theory of market-share liability, a manufacturer sells “shares” of its potential strict liability and thereby spreads the risk and the cost.
ANSWER: F PAGES: Section 3
BUSPROG: Analytic AICPA: BB-Critical Thinking
B15 There is a duty to warn about risks that are obvious or commonly known.
ANSWER: F PAGES: Section 4
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B16 Sellers are required to take precautions against every conceivable misuse of a product.
ANSWER: F PAGES: Section 4
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B17 Generally, a seller must warn those who purchase its product of the harm that can result from the foreseeable misuse of the product.
ANSWER: T
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B18. Generally, the strict liability of manufactures and other sellers does not extend to injured bystanders
ANSWER: F
PAGES: Section 4
BUSPROG: Analytic AICPA: BB-Legal
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
B19 An injured party may sue only the manufacturer of defective products that are subject to comprehensive federal regulatory schemes.
ANSWER: F PAGES: Section 4
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B20. Statutes of repose places outer times limit on product liability actions.
ANSWER: T PAGES: Section 4
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MULTIPLE-CHOICE QUESTIONS
B1. Alice is injured when she is struck by debris floating on her property, which was flooded by a breach of Big R Ranch’s reservoir. The rule that a person who engages in certain activities may be liable under the doctrine of strict liability for any harm that results was established by
a. private parties engaged in negotiation.
b. the U.S. Congress
c a British court.
d. a U.S. court
ANSWER: C PAGES: Section 1
BUSPROG: Reflective AICPA: BB-Legal
B2 Luke is playing a video game on a defective disk that melts in his game player, starting a fire that injures his hands. Luke files a suit against Mystic Maze, Inc., the game’s maker under the doctrine off strict liability. A significant application of this doctrine is in the area of
a. cyber torts.
b. intentional torts.
c. product liability.
d. unintentional torts.
ANSWER: C PAGES: Section 1
BUSPROG: Analytic AICPA: BB-Critical Thinking
B3 Roadbuilders, Inc., uses dynamite in its operations. Sky-Hi Fireworx, Inc., stores explosives in its warehouses. Most likely liable under the doctrine of strict liability for any injury caused by an abnormally dangerous activity will be
a. none of the choices.
b. Roadbuilders and Sky-Hi.
c. Roadbuilders only.
d. Sky-Hi only.
ANSWER: B PAGES: Section 1
BUSPROG: Reflective AICPA: BB-Legal
B4. Soda Bubbles Corporation makes and sells soft drinks. Talia buys and drinks a Soda Bubbles beverage, which proves defective and injures her. One justification for holding Soda Bubbles strictly liable for the harm caused to Talia by its defective product is that
a. Soda Bubbles is making a profit from its activities.
b. Talia is a person, not a business
c. making and selling products are abnormally dangerous activities
d. Soda Bubbles and Talia are in privity.
ANSWER: A PAGES: Section 1
BUSPROG: Analytic AICPA: BB-Critical Thinking
B5 Street Bikes, Inc., makes and sells a bicycle to Theo Street Bikes fails to exercise “due care” to make the bicycle safe, however, and Theo is injured as a result. Street Bikes is most likely liable for
a. market-share liability.
b. none of the choices
c. negligence.
d. product misuse
ANSWER: C PAGES: Section 2
BUSPROG: Reflective AICPA: BB-Legal
B6 Island Breeze Company designs and makes desk, window, and ceiling fans. In a product liability suit based on negligence, Island Breeze could be liable for violating its duty of care with respect to all of the following except
a. the design of the fans
b. the production process used to make the fans
c. the warnings on the labels of the fans.
d. a consumer’s unforeseeable misuse of a fan
ANSWER: D PAGES: Section 2
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B7. Forest & Field Company makes and leases a backhoe to Gallagher. Due to a defect attributable to Forest & Field’s negligence, Gallagher is injured in an accident in which his neighbor Helga is also hurt. In a product liability suit based on negligence, Forest & Field may be liable to
a. Gallagher only.
b. no one.
c. Gallagher and Helga
d. Helga only.
ANSWER: C PAGES: Section 2
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B8 Garden Tool Company makes chain saws. Hadrian is injured while using a Garden Tool saw and sues the company for product liability based on negligence. To win, Hadrian must show that
a. Garden Tool did not use due care with respect to the trimmer.
b. Garden Tool used puffery in its advertising.
c. Hadrian was not experienced in the use of trimmers.
d. Hadrian was in privity with Garden Tool.
ANSWER: A PAGES: Section 2
BUSPROG: Reflective AICPA: BB-Legal
B9 Lipstik, Inc. makes cosmetics. Lipstik intentionally mislabels its packaged products to conceal a defect. Trusting and relying on the mislabeling, Mikayla buys a Lipstik product and suffers an injury. Lipstik is most likely liable for
a. product misuse.
b. fraud.
c. privity
d. puffery
ANSWER: B
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B10. Good Cookin’ Products Company makes heat convection ovens. Heidi discovers that her Good Cookin’ oven is defective and sues the maker for product liability based on strict liability. To win, Heidi must show that she
a. bought the oven from Good Cookin’.
b. did not misuse the oven.
c. suffered an injury caused by the defect.
d. did not know of the defect.
ANSWER: C
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B11. Sea & Surf Corporation makes sailboards, which are bought and distributed by Tropical Marketing Company to UV Sports Stores, Inc., which sells them to consumers. Wen is injured while using a Sea & Surf board that he bought from UV Sports. In a product liability suit based on strict liability, Wen may recover from
a. Sea & Surf only.
b. Sea & Surf, Tropical Marketing, or UV Sports.
c. UV Sports only.
d. none of the choices.
ANSWER: B
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©
B12 ClearCall Corporation makes phones, which are sold to consumers by DefDeals stores. Erna files a product liability suit against ClearCall, alleging a design defect. In deciding whether to hold ClearCall liable, the court may consider
a. Erna’s intended use for the phone
b. DefDeals’ method of accounting.
c. ClearCall’s quality control efforts.
d. an available alternative design.
ANSWER: D PAGES: Section 3
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B13. Fleet Feet Corporation makes athletic shoes. Gloria, a marathoner, files a product liability suit against Fleet Feet, alleging a design defect. In deciding whether to hold Fleet Feet liable, the court may consider an alternative design’s
a. popularity among industrial designers and consumers.
b. weight and heft.
c. aesthetics.
d. advantages and disadvantages
ANSWER: D PAGES: Section 3
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B14. MedBeat Inc., makesmedical devices, including heart pacemakers.Nina, a heart patient, files a product liability suit against MedBeat, alleging a warning defect with respect to its pacemaker. In deciding whether to hold MedBeat liable, the court may consider whether there is a foreseeable risk of harm posed by the pacemaker and
a. the omission of a warning renders the pacemaker not reasonably safe.
b. there is a reasonable alternative design.
c. MedBeat did not use due care in making the pacemaker
d. Nina lacks insurance coverage.
ANSWER: A PAGES: Section 3
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B15. SurgeStop Company makes electrical cords and other connectors for electronic devices. Rollo files a product liability suit against SurgeStop, alleging a warning defect. In deciding whether to hold SurgeStop liable, the court may consider
a. consumers’ general lack of desire to read the product’s warnings.
b. the plaintiff’s specific lack of desire to read the product warnings.
c. the obvious risks of other products.
d. the obvious risks of this product.
ANSWER: D PAGES: Section 3
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B16 BioChem Corporation, ChemCo Company, and DexLabs Inc. make and distribute toxic chemicals. In a product-liability suit against all of these parties, the court is most likely to impose market-share liability if it cannot be proved which of the parties
a. was in privity with the injured plaintiff.
b. exercised the least amount of due care in making the product.
c. supplied the particular product that caused the injury.
d. holds the largest share of the market for the product.
ANSWER: C PAGES: Section 3
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B17. Fine Motor Company buys gas pedals and other parts from General Mechanix, Inc., and puts them in its vehicles without changing their composition. If the pedals or other parts are defective, strictly liable for any damage caused by the defects are
a. Fine Motor only.
b. no one.
c. Fine Motor and General Mechanix.
d. General Mechanix only.
ANSWER: C PAGES: Section 3
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B18 The brakes on a train owned by Rolling Stock Railway, Inc., malfunction. The train rolls towards maintenance workers on the tracks. Everyone gets out of the way except Sid, who wants to show off. The train hits Sid, who sues Train Components, Inc., the brakes’ manufacturer. Train Components can raise the defense of
a. a component-part manufacturer.
b. assumption of risk.
c. privity.
d. product misuse.
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B19. Stan, an air-conditioning and heating technician, files a suit against Temp-Set Corporation, alleging that its thermostats are unreasonably dangerous due to the possibility of electrical shock. Temp-Set’s best defense is most likely
a. assumption of risk
b. knowledgeable user.
c. commonly known danger.
d. none of the choices
ANSWER: B PAGES: Section 4
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B20. Garage Magic, Inc., contracts for the sale of a certain number of garage door openers to Home & Yard Hardware stores Ian buys one of openers. The applicable statute of limitations prescribes a period of four years. To bring a product liability claim against Garage Magic, Ian must file a suit within four years of
a. Ian’s discovery of an injury caused by the opener
b. Garage Magic’s sale of the opener to Home & Yard.
c. Garage Magic’s design of the opener
d. Home & Yard’s sale of the opener to Ian
ANSWER: A PAGES: Section 4
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ESSAY QUESTIONS
B1 Vogel bought a phone made by WiFi Communications, Inc. Three months later, after recharging the battery through a power jack, Vogel picked up the phone only to have it ignite in his hand. Suffering a severe burn, Vogel filed a suit againstWiFi, alleging that a design defect in the phone weakened the connection between the power jack and the motherboard, causing the wiring to overheat and creating an unreasonable safety hazard. Could Vogel succeed on his strict product liability claim? Explain.
ANSWER: Yes, Vogel can succeed with his claim if he can meet the requirements.
A product is defective in design when the foreseeable risk of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design, and its omission renders the product not reasonably safe.
Vogel must show that the phone was defective when WiFi sold it, WiFi was normally engaged in selling that product, the phone was unreasonably dangerous to a user because of its defect, Vogel incurred physical harm by use of the phone, the defect was the proximate cause of the harm, and the phone was not substantially changed from the time that it was sold to the time of the injury.
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AICPA: BB-Decision Modeling
B2. The Prosthetic Legs and Arms Act (PLAA) sets up a no-fault compensation program for persons injured through the use of medical prostheses. The PLAA protects prosthesis makers from liability for unavoidable side effects. When Quint is injured in an auto accident, his physician prescribes and fits him for a certain prosthetic When Quint suffers injuries from its use, he, files a suit against Replacement Limbs LLC, the maker of the prosthetic, alleging strict product liability. Is there a defense that Replacement Limbs might successfully assert in this case? If so, what is it, and why?
ANSWER: Yes, there is a defense that Replacement Limbs might successfully assert to the allegations in this suit. The defense is preemption. The defense of preemption can be successfully raised by defendants. This theory basically states that in appropriate cases government regulations preempt plaintiffs’ claims for product liability. An injured party may not be able to sue the manufacturer of defective products that are subject to comprehensive
federal regulatory schemes. Medical treatments and devices are subject to extensive government regulation and undergo a rigorous premarket approval process.
In this question, the PLAA strikes a balance between paying victims harmed by the covered medical devices and protecting the prosthetic industry from collapsing under the possible costs of tort liability. In exchange for the compensation program, prosthetic makers who comply with the regulatory requirements are immunized from strict product liability
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BUSPROG: Reflective AICPA: BB-Decision Modeling
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in