Deck 12: Business Marketing and Products: Ads and Product Safety

Question 1

The Federal Trade Commission is responsible for the regulation of deceptive advertising.

Answer 1

True

Question 2

Today, courts follow a policy of caveat emptor in handling product liability cases.

Answer 2

False

Question 3

Privity is not a requirement for recovery in a strict tort product liability case.

Answer 3

True

Question 4

A product can be defective for purposes of liability for injury if proper warnings about its use are not given.

Question 5

Caveat emptor is a Latin term meaning "let the buyer beware."

Question 6

Privity of contract is a direct contractual relationship between the parties.

Question 7

"This car has the finest workmanship money can buy" is an example of an express warranty.

Question 8

To establish an express warranty under the UCC, the buyer must produce evidence that the seller used the term "warrant" or "guarantee."

Question 9

The implied warranty of fitness for a particular purpose is given in every sale by a merchant.

Question 10

Express warranties cannot be disclaimed.

Question 11

The Federal Trade Commission does not have the authority to halt deceptive ads.

Question 12

"These dresses are 100% cotton" is an example of an express warranty.

Question 13

Today, courts require privity of contract for recovery in product liability cases.

Question 14

Strict tort liability under Section 402A is the same as negligence.

Question 15

The implied warranty of merchantability (unless disclaimed)is given in every sale of goods by a merchant.

Question 16

Bait and switch is not a deceptive advertising technique.

Question 17

The Federal Trade Commission was originally only permitted to regulate ads that affected competition.

Question 18

The implied warranty of fitness for a particular purpose (unless disclaimed)is given in every sale of goods by a merchant.

Question 19

A consent decree is essentially a guilty plea with the FTC.

Question 20

Ads by members of professional groups can be regulated by the state.

Question 21

Dam Good Adventures operates a helicopter tour business near Lake Mead, Nevada. Lake Mead is the site of Hoover Dam. Dam Good has purchased 5 helicopters over the 27 years it has been in business and its mechanic has rebuilt the engines on all of the helicopters. In addition, Dam Good's mechanic has altered the timing mechanisms on the helicopters so that they are able to hover longer and with less noise, two features that are important for tourists. One of Dam Good's helicopters crashed over Lake Mead, killing the pilot and the four passengers on board. Discuss liability and theories of liability.

Question 22

A candle has the following label: "NEVER LEAVE A BURNING CANDLE UNATTENDED." The warning:

A)is not necessary to prevent liability on the part of the maker.
B)would not cover a defect in the candle's manufacture.
C)is an example of a warning needed to prevent liability for negligence only.
D)All of the above

Question 23

Describe three defenses to product liability.

Question 24

The implied warranty of fitness for a particular purpose requires:

A)proof that the seller made the first contact with the buyer.
B)proof that the seller used the term "warrant."
C)proof that the seller is a merchant.
D)None of the above

Question 25

"As is" written in a contract:

A)serves to disclaim the implied warranty of merchantability.
B)serves to disclaim the implied warranty of fitness for a particular purpose.
C)has no effect on warranty protection.
D)Both a and b
E)None of the above

Question 26

A bike purchaser who alters the frame of a bike after the purchase and who is injured because the frame cracks:

A)may not be able to recover from the manufacturer because the product was in a different condition at the time of the accident.
B)can still recover from the manufacturer because the manufacturer should know that buyers would alter their bikes.
C)can still recover, but not punitive damages.
D)Both b and c

Question 27

A recommendation of a shoe by a salesperson in an athletic shoe store is an example of an implied warranty of:

A)merchantability.
B)wearability.
C)fitness for a particular purpose.
D)fitness for a general purpose.

Question 28

"These cartons will hold up to 100 pounds of books" is an example of:

A)an implied warranty of merchantability.
B)an express warranty.
C)misrepresentation.
D)privity.

Question 29

Which of the following does not constitute an express warranty?

A)"This car will give you a great deal of satisfaction."
B)"This car is equipped with Michelin radial tires."
C)"This car goes from 0 to 60 mph in 10 seconds."
D)All of the above are express warranties.

Question 30

Which is a requirement for an express warranty?

A)Use of the word "warrant" or "guarantee"
B)A description or promise of performance
C)Written statement
D)Must be made by a merchant

Question 31

Which of the following would be an express warranty?​

A)This pencil uses 0.5 width lead.
B)This bag of cookies will give you more for your taste buds than a Chips Ahoy Mega Pack.
C)This milk is the best tasting in the Valley area.
D)This car purrs at 90 mph.

Question 32

Arrion McClellan was using an underarm-aerosol deodorant one morning while smoking a cigarette. The deodorant had this warning in large letters on the side of the can: "DO NOT USE AROUND HEAT, FLAME OR WHILE SMOKING." The deodorant ignited McClellan's cigarette in her hand and the flames quickly spread to her silk robe. McClellan was severely burned and will have permanent scarring. Who is liable for her injuries?

A)The deodorant manufacturer
B)The cigarette manufacturer
C)The manufacturer of her silk robe
D)None of the above

Question 33

The opposite of caveat emptor is:

A)negligence.
B)privity requirements.
C)strict tort liability.
D)None of the above

Question 34

Ford manufactured its Pinto auto (a subcompact car)from 1968 to 1980. The gas tank was rigidly mounted and the top of the tank was the floor of the trunk compartment. There was no shield to prevent the spread of fire into the auto. Fox sustained severe burns when his Pinto was hit from behind and exploded into flames. Discuss possible theories of recovery for Fox.

Question 35

Bucky Warren, Inc. manufactured a hockey helmet. The helmet had gaps in it to give it flex and movement. Everett was injured when a puck struck his head in one of the gaps. Is Bucky Warren liable?

Question 36

Which of the following would be a "defect" for purposes of 402A?

A)Failure to warn not to put a hair dryer in water
B)Food package that permits tampering
C)A bolt on a car steering column that comes loose with slight vibrations
D)All of the above

Question 37

Mattel, Inc. had to recall 19 million toys because it learned that its manufacturer/supplier in China had used lead-based paint on the toys, a paint that is prohibited in the United States. Mattel:

A)is not liable to purchasers of the toys for any injuries resulting from the lead because it did not manufacture the toys or authorize the use of lead paint.
B)is not liable to purchasers because there is no privity of contract.
C)is liable to purchasers as a manufacturer/seller of toys.
D)can escape any liability because it was unaware of the lead paint use.

Question 38

Jetspack manufactures a device that, using a rocket, propels people who are in water, up 40 feet in the air.  The device is available in tourist locations such as Newport Beach, California and Honolulu, Hawaii.  Before allowing tourists to experience the device, the Jetspack dealers require users to sign a waiver that indicates that they understand the risks in using the device.  Which of the following statements is correct about the liability of the Jetspack manufacturer?​

A)Because of the waiver Jetspack would have no liability to tourists who are injured while using the device.
B)Jetspack would not have liability because the franchises are owned separately and there is no privity of contract between Jetspack and the tourists.
C)Jetspack would have liability, despite the waiver, if the Jetspack device malfunctioned.
D)None of the above

Question 39

Many school buildings constructed from 1930 to 1970 had asbestos insulation in them. Presently the schools are undertaking a massive program to replace the insulation and at substantial cost. Could the schools turn to asbestos manufacturers for recovery of the costs? What if students who were exposed to the asbestos during the time they attended the schools develop asbestosis or lung cancer? Where can the students turn?

Question 40

The implied warranty of merchantability requires:

A)proof that the seller is a merchant.
B)proof that the buyer relied on a merchant.
C)proof of a defective product.
D)All of the above

Question 41

American Exercise Gear (AEG)learned from its customers that its yoga pants were made of see-through fabric.  AEG had ordered the fabric from one supplier and then contracted to have the yoga pants manufactured by another company with its logo on them.  Which of the following statements is true?​

A)AEG is not liable to its customers for the problems with the yoga pants unless it made a representation that the yoga pants were not see-through.
B)AEG is liable to the customers, but neither the fabric supplier nor the manufacturer have any liability.
C)AEG is liable to its customers for the pants problem, but it will be unable to collect any damage from the fabric supplier or manufacturer.
D)None of the above

Question 42

Ace Hardware, Inc. ran a national ad that read, "Come in between 8:00 AM and 10:00 AM on Labor Day and get 20% off your purchase of any garden hose."  When Michael arrived at the store at 9:30 AM on Labor Day, the store clerk explained that they were out of garden hoses, but that Ace was selling sprinkler systems for $99.50.  Which of the following describes Michael's experience?

A)Ace has made an offer through its ad that Michael accepted by coming to the store and there is a breach.
B)Ace is guilty of bait and switch.
C)Ace has done nothing wrong because its ad was not an offer.
D)Ace does not have to be accountable for running out of advertised goods.