Exam 22: Product Liability: Warranties and Strict Liability

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A principle of law in the nineteenth century established that a plaintiff could not recover for breach of warranty unless he was in a contractual relationship with the defendant. This relationship is called privity of contract. Horizontal privity determines who benefits from a warranty and who may therefore sue for its breach. Horizontal privity involves noncontracting parties who are injured by the defective goods, including users, consumers, and bystanders. Vertical privity pertains to remote sellers within the chain of distribution, such as manufacturers and wholesalers, with whom the consumer purchaser has not entered into a contract. The Code relaxes the requirement of horizontal privity of contract. It sets a minimum standard that the states may expand through case law. Most states have judicially, for all practical purposes, eliminated horizontal privity in warranty cases. The Code adopts a neutral position about vertical privity, and the courts in most states have eliminated the requirement of vertical privity in warranty actions.