Deck 7: Business Torts and Product Liability

Question 1

When a person suffers an injury due to deliberate deception, there may be a tort of fraud.

Answer 1

True

Question 2

You may be sued in tort for the damages incurred for interfering with a contract between two other parties.

Answer 2

True

Question 3

About a half-million tort cases are filed each year.

Answer 3

True

Question 4

The tort of fraud requires the wrongdoer to intentionally mislead another party.

Question 5

Scienter means a defendant knew false information was being passed to another party.

Question 6

The tort of fraud requires the wrongdoer to have a legal relationship with the tort victim.

Question 7

In a suit for intentional misrepresentation, punitive damages may be awarded.

Question 8

The tort system in the U.S. is estimated to cost right about $40 billion per year.

Question 9

Intentional misrepresentation is also known as fraud.

Question 10

A company cannot be a defendant in a tort suit since a firm is not a natural person.

Question 11

In a suit for fraud, a plaintiff is presumed to have had the right to rely on any information provided by defendant.

Question 12

When a person suffers an injury due to deliberate deception, there may be a tort of defamation.

Question 13

Scienter in tort law means the plaintiff can see the results of a fraud that has been suffered.

Question 14

About 80 percent of the total costs involved in tort litigation goes to awards to plaintiffs (injured parties).

Question 15

In a suit for fraud, the plaintiff must establish a good reason to rely on the bad information provided by the defendant.

Question 16

If a stranger tells you to invest all your money in a company, and you do, and it collapses, losing all your money, you have a good fraud suit against that person.

Question 17

The tort system in the U.S. is estimated to cost about $250 billion a year.

Question 18

Fraud may be the same as deceit in tort law.

Question 19

If you make an offer to sell a product to a person who is already buying the product from another party, you have interfered with contractual relations and will be liable in tort.

Question 20

The tort of intentional misrepresentation requires a showing that the defendant knew there was false information being passed.

Question 21

If Company A runs an aggressive advertising campaign that tells customers why they should quit doing business with Company B and do business with A instead, B will be able to sue A for interference with a prospective advantage.

Question 22

Under the old rule of caveat emptor a buyer injured by a defective product had no ability to sue the maker.

Question 23

In Gieseke v. IDCA, Gieseke formed a company to compete with his old employer and worked with one of the former owners of his old employer in the new company. His former employer moved some of the equipment of the new company and changed its mailing address without permission of Gieseke or his partner. When Gieseke sued, the courts held that the former employer had interfered with prospective business relations.

Question 24

MacPherson v. Buick Motor Co. introduced the rule of strict liability in tort for consumer products.

Question 25

In MacPherson v. Buick Motor Co. the court held Buick not liable because it did not make the wheel that collapsed and was the proximate cause of injury.

Question 26

A study found that plaintiffs in Japan win a much smaller percentage of tort liability suits than do American plaintiffs.

Question 27

MacPherson v. Buick Motor Co. introduced the rule of negligence in tort for consumer products.

Question 28

In Gieseke v. IDCA, Gieseke formed a company to compete with his old employer and worked with one of the former owners of his old employer in the new company. His former employer moved some of the equipment of the new company and changed its mailing address without permission of Gieseke or his partner. When Gieseke sued, the courts held that the former employer was not liable for improper interference as that tort is not recognized in Minnesota.

Question 29

While interfering with an existing contractual relationship can be a tort, if a contract has not yet been formed, there can be no tort.

Question 30

Strict liability was used as a standard by courts before caveat emptor was used.

Question 31

When the tort of interference with contractual relations occurs, the party responsible for the tort is the party who breached an existing contract.

Question 32

The legal standard that imposes tort liability on manufacturers when they produce a product negligently so that it hurts a consumer was first introduced in 1865.

Question 33

Privity of contract is a contract with an express warranty.

Question 34

If Company A runs an aggressive advertising campaign that tells customers why they should quit doing business with Company B and do business with A instead, B will be able to sue A for interference with a prospective advantage.

Question 35

In a case alleging interference with a contractual relation, the defendant must have known the plaintiff had a contract with a third party.

Question 36

In Gieseke v. IDCA, Gieseke formed a company to compete with his old employer and worked with one of the former owners of his old employer in the new company. His former employer moved some of the equipment of the new company and changed its mailing address without permission of Gieseke or his partner. When Gieseke sued, the courts held that the former employer acted properly to recover property and information improperly taken by Gieseke..

Question 37

The tort of interference with contractual relations occurs when Party C attempts to get Party A, who has a contract with Party B, to breach the contract in favor of doing business with Party C.

Question 38

In the 19th century, consumers bore more of the cost of product-related injuries.

Question 39

The rule of caveat emptor meant that if there was no privity between a producer and an injured consumer, the consumer had no case against the producer.

Question 40

Caveat emptor means let the buyer beware.

Question 41

Negligence in product liability suits means the defendant is found to have intended to produce a substandard, unsafe product.

Question 42

In Henningsen v. Bloomfield Motors, the New Jersey Supreme Court greatly expanded the legal protection offered by implied warranties of safety.

Question 43

The case Henningsen v. Bloomfield Motors, had a major impact on the application of tort law to foreign producers.

Question 44

Strict liability in tort was applied to food and drink first because of the promises of safety made by the sellers on the labels of their products.

Question 45

Under the negligence standard, a manufacturer is required to exercise reasonable care under the circumstances in the production of its product.

Question 46

In the 1913 case Mazetti v. Armour, the court held that privity of contract had to be proved before a plaintiff could sue a food company for breach of warranty in a product defect case.

Question 47

To win a case based on strict liability against a producer, the plaintiff must show that the product was defective, that a defect in it caused it to be dangerous, and the defect was the proximate cause of the injury.

Question 48

Strict liability was first applied based on implied warranties of safety of food and drink.

Question 49

Strict liability for defective products may arise from either an implied warranty or an express warranty.

Question 50

Strict liability based on express warranties was applied originally to alcohol and tobacco products.

Question 51

The rule of negligence in tort holds the producer responsible for any defect that is the proximate cause of an injury suffered by the user of the product.

Question 52

If a producer did not foresee a possible danger with a product that does, in fact, cause injury, the producer cannot be held negligent in tort.

Question 53

Strict liability based on express warranty of safety was first based on contract law.

Question 54

An express warranty of safety in a product is one the law derives by inference from the nature of the transaction between the parties.

Question 55

An express warranty is a promise that is clearly stated by the seller to the buyer; it is a part of the contract.

Question 56

Only express warranties may create liability for the seller for defective products.

Question 57

A warranty is an assurance from the manufacturer that its products will meet certain quality standards.

Question 58

In MacPherson v. Buick Motor Co. the court held Buick liable because it is responsible for the quality of wheels and other parts used on its vehicles.

Question 59

If a producer learns after it sells a product that it has a problem that might cause consumers injuries, the producer must warn consumers of the danger or face liability.

Question 60

Frustration over the difficulties of proving negligence led to the move in tort law from a negligence standard to a strict liability standard.

Question 61

The Restatement (Third) of Torts on product defect eliminates the concern about inadequate warnings that was critical to the Second version.

Question 62

The main author of the Restatement (Second) of Torts is the American Law Institute.

Question 63

The main author of the Restatement (Second) of Torts is the Association of State Supreme Courts.

Question 64

In Baxter v. Ford Motor, where Baxter lost an eye from a broken windshield, Ford's ads about the quality of the windshield were held to create an implied warranty of safety because Ford misrepresented the quality and safety of the product.

Question 65

In Greenman v. Yuba Power Products the court imposed strict liability on a producer due to failure to prevent a defect in its product that caused injury to a consumer.

Question 66

The Restatement (Third) of Torts on product defect recommends that the distinction between strict liability and negligence be given less attention.

Question 67

The Supreme Court of California, in Greenman v. Yuba Power, was the first court to adopt a general strict liability in tort rule in product-related injury cases.

Question 68

Since the Greenman v. Yuba Power Products decision, strict liability in tort has meant intentional harms committed by manufacturers against consumers.

Question 69

The Restatement (Third) of Torts, which some state courts have adopted, tends to abandon the traditional distinction between negligence and strict liability in design defect cases.

Question 70

In Greenman v. Yuba Power Products the court imposed strict liability on a producer for failure to warn the consumer of dangers involved in using the machine.

Question 71

The Restatement (Third) of Torts replaced the Second for the standard on product liability in 2010.

Question 72

In Baxter v. Ford Motor, where Baxter lost an eye from a broken windshield, Ford's ads about the quality of the windshield were held to create an express warranty of safety because Ford misrepresented the quality and safety of the product.

Question 73

In Greenman v. Yuba Power Products the Supreme Court of California made negligence in tort the general rule in products liability cases.

Question 74

The rule of strict liability in torts used in the Restatement (Second) of Torts helped bring about nationwide adoption of the rule.

Question 75

Courts developed strict liability in tort when strict liability under contract law proved too restrictive.

Question 76

Under the rule of strict liability in tort the injured party must show that the manufacturer failed to meet the standard of care of the industry in question.

Question 77

In Baxter v. Ford Motor (where Baxter lost an eye from a broken windshield) Baxter was compensated by Ford under the rule of strict liability in tort for injuries he suffered due to Ford's defective product.

Question 78

The consumer must purchase the (defective) product directly from the manufacturer in order to prevail in strict liability based on express warranty.

Question 79

The Restatement (Third) of Torts on product defect recommends that a risk-utility balancing test be used.

Question 80

A producer is relieved of strict liability in tort if it can show that it used all possible care to construct the product in question.