ABC Company manufactures a contraption meant to enable a rider to fly behind a ski boat.After a few months,ABC begins to hear of injuries when riders crash into water or boats.In hopes of escaping liability,the president of ABC Company decides to discontinue business and sell all assets to XYZ Company.The president of XYZ Company is excited to purchase the assets at a bargain price and help ABC avoid liability based upon the assertion of the president of ABC that XYZ cannot legally be held liable for the flying accidents.Which of the following is true in a majority of states applying the traditional successor liability rule?

Question

Quizplus · Accepted Answer

In a majority of states applying the traditional successor liability rule, XYZ Company will likely be held liable for the accidents based upon the transaction being entered into wrongfully in order for ABC Company to escape successor liability. The key factor in determining whether successor liability exists is whether the buyer assumed the risk of the seller's product liability. If the transaction was entered into with the intent to avoid successor liability and if XYZ continued producing the same product line as ABC, then XYZ may be held liable for the accidents.

ABC Company Manufactures a Contraption Meant to Enable a Rider