Deck 12: Warranties, Product Liability, and Consumer Law

Question 1

Courts in many jurisdictions consider the negligent actions of both the plaintiff and the defendant when apportioning liability in a product liability action.

Answer 1

True

Question 2

A design defect is not the sort of product defect that will support the imposition of liability on a strict product liability basis.

Answer 2

False

Question 3

Under the doctrine of strict liability, people are liable for the results of their acts only if their intentions are malicious.

Answer 3

False

Question 4

Sellers or lessors are liable only for products that are reasonably dangerous.

Question 5

Implied warranties can arise from a "course of dealing."

Question 6

An implied warranty of merchantability does not arise in every lease by a merchant who deals in goods of the kind leased.

Question 7

To succeed in a strict product liability suit, an injured plaintiff must show that a product's defect was the proximate cause of the injury.

Question 8

Vague generalities constitute deceptive advertising.

Question 9

The dangers associated with using sharp knives are so commonly known that manufacturers need not warn users of those dangers

Question 10

Advertising will not be deemed deceptive so long as it appears to be based on factual evidence, even if it is not.

Question 11

A warranty against infringement is a promise by the seller that the prod?uct is free from any patent, trademark, or copyright claims of a third person.

Question 12

Warranties of title do not arise in most sales contracts.

Question 13

Suppliers are generally required to expect reasonably foreseeable misuses of their products.

Question 14

Puffery creates an express warranty.

Question 15

A seller does not have to use words such as "warrant" to make an express warranty.

Question 16

Only a statement made after a contract is entered into can be an express warranty.

Question 17

Recovery in a product liability case may be limited when it can be shown that the plaintiff misused the product.

Question 18

An action in strict product liability requires that the product not be in a defective condition when the defendant sells it.

Question 19

Goods must be of the highest quality possible to be merchantable.

Question 20

Strict liability depends on privity of contract between an injured party and a seller.

Question 21

Food labels are not required to provide standard nutrition facts.

Question 22

All ads-both online and offline-must be truthful.

Question 23

Manufacturers are required to report on any products intended for sale if the products have proved to be hazardous.

Question 24

Sari buys a new sport utility vehicle (SUV) from Terrific Cars & Trucks, Inc. The most important factor in determining whether an ex?press war?ranty is created is whether

A) Sari expresses to Terrific what she wants warranted.
B) Sari's desire for the SUV becomes part of her motivation to deal.
C) Terrific expresses to Sari what it expects of its customers.
D) Terrific's promise becomes part of the basis of the bargain.

Question 25

Merchants must ship orders within the time promised in their ads.

Question 26

Major credit reporting agencies must provide consumers with free copies of their own credit reports every twelve months.

Question 27

Obvious exaggerations constitute deceptive advertising.

Question 28

Labels must use words that are easily understood by the ordinary marketing executive.

Question 29

Merchants must issue a refund within a specified period of time when a consumer cancels an order.

Question 30

A collection agency must include a validation notice whenever it initially contacts a debtor for payment of a debt.

Question 31

John is an art dealer with special expertise in modern art. Rachel comes to John's gallery to purchase a modern art painting as an investment. John shows her several paintings that he says are high quality and will increase in value in the next ten years. John's statement is

A) an express warranty.
B) an implied warranty.
C) an opinion.
D) puffery.

Question 32

Krissa, a horse breeder, shows Maggie, a customer looking for a new stallion for her breeding program, a stallion and tells her that the stallion is very fertile and can easily breed twenty mares per year. Krissa's statement is

A) an express warranty.
B) an implied warranty.
C) a warranty of title.
D) puffery.

Question 33

A credit-card company is not required to provide advance notice to consumers before changing credit-card terms.

Question 34

Fancy's Feedlot orders one hundred sacks of cattle feed from Bovine Feeders, Inc. Each bag has the words "Twenty percent protein" printed on the front. This is

A) an express warranty.
B) an implied warranty.
C) a warranty of title.
D) puffery.

Question 35

Counteradvertising requires a company to advertise the products of its competitor to counter its own false claims.

Question 36

The key federal statute regulating the credit and credit-card industries is basically a disclosure law.

Question 37

Jean buys a bike from Mike's Bike Shop. She wants to make sure that there is a warranty of title. Jean

A) does not need to do anything because warranties of title arise automatically in most sales contracts.
B) must request a written warranty of title.
C) must request an oral warranty of title.
D) must request both a written and an oral warranty of title.

Question 38

Labels on vegetables and fruits are not required to indicate where the food originated.

Question 39

A credit-cardholder is liable for all unauthorized charges made before the creditor is notified that the card has been lost.

Question 40

Bait-and-switch advertising occurs when an ad appears to be based on factual evidence but in fact is not reasonably supported by evidence.

Question 41

Va-Va-Voom Products, Inc., engages in de?ceptive advertising when it markets its product Weight-No-More as able to help consumers lose weight in their sleep. Va-Va-Voom is ordered to include in all future adver?tising of Weight-No-More the statement, "This product will not cause anyone to lose weight while sleeping." This is

A) a counteradvertising order.
B) restitution.
C) a "cooling-off" law.
D) a validation notice.

Question 42

Goldtone Corporation makes cell phones. Haji files a product liabil?ity suit against Goldtone, alleging a design defect. In deciding whether to hold Goldtone liable, the court may consider an alternative design's

A) popularity among industrial designers.
B) attractiveness to consumers.
C) aesthetics.
D) effect on the product.

Question 43

Corner Market sells groceries. Delite Food & Drug Store sells groceries and fills prescriptions. The chief responsibility to prevent unsafe food and drugs from being sold rests with

A) the Consumer Product Safety Commission.
B) no single federal agency.
C) the Federal Trade Commission.
D) the Food and Drug Administration.

Question 44

Regal Autos, Inc., sells cars to consumers. To avoid liability for oral ex?press warranties, each sales agreement should note that a car is sold

A) as is.
B) in perfect condition.
C) subject to warranties included in the written contract only.
D) with no known defects.

Question 45

Dwayne, an electrician, files a suit against Electro Mechanix, Inc., alleging that its circuit breakers are unreasonably dangerous due to the possibility of electrical shock. Dwayne's suit is most likely to

A) fail, because Dwayne assumes the risk if he uses an Electro product.
B) fail, because Dwayne is a knowledgeable user.
C) succeed, because the danger is open and obvious.
D) succeed, because Electro's products are not safe for all uses.

Question 46

Regional Wood Products Company and Sylvia enter into a contract for a sale of lumber. Regional knows the purpose for which Sylvia will use the goods. Under the UCC, an implied warranty of fitness of a particular purpose arises

A) if the buyer is relying on the seller to select suitable goods.
B) if the buyer asks for it.
C) if the seller is a merchant who deals in goods of the kind sold.
D) in conjunction with lease contracts, not sales contracts.

Question 47

Robert is selling his used lawnmower. He wants to disclaim any implied warranties. Robert

A) cannot disclaim implied warranties.
B) should include a written disclaimer that the lawnmower is being sold "as is."
C) should orally disclose all known faults of the lawnmower.
D) should include a written warranty of title.

Question 48

Fun Toyz Corporation makes skateboards, which it sells to con?sumers, including Holly and Ira. Due to a defect, Holly is injured while using her new board. Ira's board has the same defect, but he is not injured. In a product liability suit based on strict product liabil?ity, Fun Toyz may be liable to

A) Holly and Ira.
B) Holly only.
C) Ira only.
D) no one.

Question 49

TruCalling, Inc., sells ringtones for cellphones. The company's ad states, "Our tones aren't phony-they ring true!" The Federal Trade Commission would consider this ad

A) false and misleading.
B) impermissibly vague and general.
C) a deceptive half-truth.
D) none of the choices.

Question 50

Bright Brew Coffee, Inc., processes and sells a variety of coffee products. Bright Brew's product packages must include

A) the identity of the company owner.
B) the net quantity of the contents.
C) the restaurants and stores in which the product is sold.
D) the type of consumer most likely interested in the product.

Question 51

Fred goes to Carla, a knowledgeable dog breeder, and tells her that he wants to get a dog that will be good with small children. Carla sells Fred a dog. When Fred takes the dog home, it bites both his small children and causes them serious injuries. Fred can sue Carla for breach of

A) an express warranty.
B) an implied warranty of fitness for a particular purpose.
C) an implied warranty of merchantability.
D) a warranty of title.

Question 52

SurgeStop Company makes electrical cords and other connectors for elec?tronic devices. Rollo files a product liability suit against SurgeStop, alleg?ing 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.

Question 53

Sigrud buys spiked mountain-climbing shoes from Rockridge Gear store. The spikes come out of the shoes when Sigrud is on the side of a mountain, caus?ing her to be injured in a fall. Rockridge breached

A) an express warranty.
B) an implied warranty of fitness for a particular purpose.
C) an implied warranty of merchantability.
D) a warranty of title.

Question 54

Precise GPS Company's ad states that its product is "the finest that money can buy." Because of this ad, the Federal Trade Com?mission is most likely to issue

A) a cease-and-desist order.
B) a counteradvertising order.
C) restitution.
D) none of the choices.

Question 55

Ocean Vessels, Inc., and Pacific Harbor Company enter into a contract for a sale of a boat. Ocean is a merchant who deals in goods of the kind sold. The goods are defective. Under the UCC, the implied warranty of merchantability is breached

A) only if Ocean did not know about and could not have discovered the defect.
B) only if Ocean did not know about the defect.
C) only if Ocean knew about or could have discovered the defect.
D) regardless of what Ocean knew or could have discovered.

Question 56

Paltry Assembly Company makes espresso machines and sells one to Vim through a misrepresentation on the label on which Vim relies and that results in an injury to Vim. Paltry is most likely liable for

A) a commonly known danger.
B) fraud.
C) privity.
D) puffery.

Question 57

Mountain Bikes, Inc. (MBI), and Nero enter into a contract for a sale of a mountain bike. MBI, a merchant who deals in goods of the kind sold, makes implied and express warranties in connection with the sale. The Magnuson-Moss Warranty Act attempts to prevent deception in warranties by

A) displacing the UCC as the primary source of warranty rules.
B) making warranties easier to understand.
C) prohibiting disclaimers of warranties.
D) requiring sellers to give written warranties for consumer goods.

Question 58

Sweet Treats, Inc., wants to market a new snack food. On the prod?uct's la?bel, standard nutrition facts are

A) prohibited.
B) required.
C) strictly voluntary.
D) warranted by the nature of the food.

Question 59

Under federal law, the calorie content of the food on a menu must be posted by Organic Mix, LLC, if Organic Mix is

A) a restaurant chain with twenty or more locations.
B) a food distributor with twenty or more customers.
C) a food processor with twenty or more products.
D) a food producer with twenty or more acres.

Question 60

Forest & Field Company makes and leases a backhoe to Zac. Due to a defect attributable to Forest & Field's negligence, Zac is injured in an accident in which his neighbor Aaron is also hurt. In a product liability suit based on negligence, Forest & Field may be liable to

A) Aaron only.
B) no one.
C) Zac and Aaron.
D) Zac only.

Question 61

Kirk receives an unsolicited credit card in the mail and tosses it on his desk. Without Kirk's permission, his roommate Leif uses the card to buy a new laptop for $1,800. Kirk is

A) liable for $1,000.
B) liable for $500.
C) liable for $50.
D) not liable for any amount.

Question 62

The credit department of Metro-Mart calls Nikki at work about an overdue bill. Nikki's employer objects. Metro-Mart continues to call Nikki at work. This is a viola?tion of

A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.

Question 63

Quik Collection Agency calls Pat several times a day, and some?times in the middle of the night, about an overdue bill that Regal Sporting Goods turned over to Quik for collection. This is a violation of

A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.

Question 64

Steel Tool Company makes and sells tools. One of the tools is believed to be haz?ardous. The appropriate government agency may require Steel to

A) export the tool and sell it only abroad.
B) increase the price to cover the cost of any injuries or damage.
C) reduce the price to indicate the hazard to consumers.
D) remove the tool from the market.

Question 65

Creditworthy Loan Company extends credit in the ordinary course of its busi?ness. Under the Truth-in-Lending Act, Creditworthy must inform potential borrowers of

A) credit terms offered by other lenders.
B) comparative prices for goods to be bought with the borrowed funds.
C) Creditworthy's credit terms.
D) the borrowers' credit scores.

Question 66

Bodie's application to City Bank for a credit card is denied. Bodie can obtain information on her credit history in a credit agency's files under

A) no federal law.
B) the Equal Credit Opportunity Act.
C) the Fair Credit Reporting Act.
D) the Fair Debt Collection Practices Act.

Question 67

Bob is shopping in Carl's Hardware Store when a nail gun in use by Dan, one of Carl's employees, fires without warning and hits Bob in the leg. Carl checks the gun and discovers that it was assembled improperly. Bob files a suit against Eagle Tools, Inc., the manufacturer of the gun, for product liability, on the ground of strict liability. What are the elements for an action based on strict liability? In whose favor is the court likely to rule and why?

Question 68

Milo buys an all-terrain-vehicle (ATV) from No-Limit Toys, Inc., on credit but makes no payments on the account. Odell, the owner of No-Limit Toys, calls Milo at home on a Monday morning at three
a.m. Odell represents himself as PayNow Collection Agency and demands payment "or else." The next day, Odell sends Milo notice that he has thirty days in which to request verification of the debt and that its payment will be suspended during that time, but that if he does not pay the full amount due within five business days, Odell will arrange for the "destruction of Milo's good credit rating." Which laws has Odell violated, if any, and in what ways?

Question 69

Dita takes out a student loan from Everloan Bank. When she fails to make the scheduled payments for six months, Everloan advises her of further ac?tion that it will take. This violates

A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.

Question 70

Consumer Finance Corporation (CFC) extends credit to consumers. CFC is subject to the Equal Credit Opportunity Act, which prohibits credit dis?crimination based on

A) intelligence.
B) education.
C) income.
D) race.

Question 71

Tory borrows $10,000 from USA National Bank to remodel a room in her home. This transaction is subject to

A) no federal law.
B) the Consumer Leasing Act.
C) the Consumer Product Safety Act.
D) the Truth-in-Lending Act.

Question 72

Kip opens an account at a Lotsa Goodies Store, and buys a digital music player and other items, but makes no payments on the account. To collect the debt, Mako, the manager, contacts Kip's parents. This violates

A) no federal law.
B) the Fair and Accurate Credit Transactions Act.
C) the Fair Debt Collection Practices Act.
D) the Truth-in-Lending Act.