Deck 12: Product and Service Liability Law

Question 1

Which of the following describes the condition in which courts impose liability based on negligent design?

A)when the materials used by the manufacturer satisfy most of the standards acceptable in the trade
B)when the risk of harm outweighs the utility of the product
C)when the manufacturer fails to include a warning about obvious dangers
D)when the manufacturer warns only the original purchaser and not the user

Answer 1

B

Question 2

A defendant raising the ________ defense is claiming that the harm was not caused by the defendant's negligence.

A)res ipsa loquitur
B)contributory negligence
C)product misuse
D)comparative negligence

Answer 2

C

Question 3

Which of the following doctrines helps a plaintiff to recover damages when a manufacturer fails to meet the standards imposed by a statute?

A)res ipsa loquitur
B)breach-of-warranty doctrine
C)disclaimer doctrine
D)negligence per se

Answer 3

D

Question 4

In most states, the statute of limitations for tort actions is ________.

A)30 days from the date of injury
B)45 days to 11 months from the date of injury
C)2 to 4 years from the date of injury
D)4 to 7 years from the date of injury

Question 5

Which of the following refers to a scenario in which courts will impose liability due to negligent design?

A)A reasonable person concluding that the warning labels were simply inadequate.
B)A reasonable person concluding that despite any warnings given with the product, the risk of harm outweighed the utility of the product as designed.
C)A reasonable person concluding that the utility of the product as designed outweighed the risk of harm.
D)A reasonable person concluding that the product's design violated statutory duties.

Question 6

Eradication of the privity requirement reflected a shift in ________.

A)purchases toward only those products that were produced with proper care in design, manufacture, and labeling
B)social policy toward placing responsibility for injuries on those who market a product that could foreseeably cause harm if proper care were not taken in the manufacturing process
C)social policy toward placing responsibility for injuries on those who purchase a product that has a foreseeable risk
D)packaging strategies employed by manufacturers to begin including warnings about the potential danger of the product

Question 7

Which of the following refers to a scenario in which the plaintiff is said to have assumed the risk?

A)when the plaintiff voluntarily and unreasonably encounters a known danger
B)when the plaintiff encounters an unknown danger
C)when the plaintiff does not consider the dangers of a product
D)when the plaintiff does not read all of the provided warnings and instructions to prevent danger

Question 8

Which of the following statements is true of the statute of limitations?

A)It limits the time within which all types of civil actions may be brought.
B)It limits the types of civil actions that may be brought to court.
C)In most states, it permits lawsuits only when intentional torts have been committed.
D)If the injured party is a minor, it permits the parent or guardian to bring a civil action suit.

Question 9

Which of the following statements is true of the privity limitation?

A)The privity limitation allowed negligence suits against the manufacturer only if the owner of the product was using it when it failed.
B)The court indicated that it is unfair to impose liability on the manufacturer and seller even if they earn profits from a defectively made product.
C)Eradication of the privity requirement led to a shift in social policy toward placing responsibility for injuries on the victims.
D)It did not allow the plaintiff to recover damages unless the plaintiff purchased the defective goods directly from the manufacturer.

Question 10

Which of the following statements is true of the state-of-the-art defense?

A)It is a product liability defense based on adherence to existing economically feasible methods when the product was manufactured.
B)If proven, the defendant cannot be held liable for the defective product.
C)It bars actions arising more than a specified number of years after the product was purchased.
D)It is a valid defense in a negligence case because the focus is on the reasonableness of the defendant's conduct.

Question 11

Plaintiffs in product liability cases have traditionally used ________.

A)theories of warranty
B)theories of negligence
C)the strict product liability theory
D)the market share theory

Question 12

Which of the following refers to the state-of-the-art defense?

A)The defendant proves that a warning on the product would not have helped.
B)The defendant proves that there was insufficient scientific knowledge to make a safer product at the time it was manufactured.
C)The defendant proves that the plaintiff had insufficient knowledge to purchase the product.
D)The defendant proves that the warning could have been understood by any reasonable person.

Question 13

Which of the following statements is true of negligent failure to warn?

A)The manufacturers must provide warnings about obvious dangers.
B)The manufacturers have to include warnings only for the original purchaser of the product, but not the user.
C)The manufacturers need not include warnings about dangers from unforeseeable misuses of the product.
D)The manufacturers of prescription drugs need not provide warnings to physicians of any chance of serious adverse reactions.

Question 14

Which of the following statements is true of defenses to a negligence-based product liability action?

A)For misuse of a product to constitute a valid defense, the misuse must be unreasonable or unforeseeable.
B)An employee using an unsafe machine at work is presumed to have assumed the risk.
C)If contributory negligence is proved, the plaintiff can recover for only that portion of the harm attributable to the defendant's negligence.
D)If pure comparative negligence is proved, the plaintiff is barred from recovery.

Question 15

George met with an accident while skiing. He brings a negligence suit against Joe, who rented the skis to George. Which of the following statements is true of this scenario?

A)If Joe is 40 percent responsible, George would be able to recover 40 percent of the damages in a state that has adopted modified comparative negligence.
B)If Joe is 40 percent responsible, George would be able to recover 40 percent of the damages in a state that has adopted pure comparative negligence.
C)George can recover damages even if Joe proves contributory negligence.
D)George can recover damages if misuse of the product is proved.

Question 16

Which of the following best describes a statute of repose?

A)It is a statute that bars actions arising more than a specified number of years after the cause of the action arises.
B)It is a statute that limits recoverable damages based on the percentage of harm caused by the defendant.
C)It is a statute that limits recoverable damages to less than $1,000,000.
D)It is a statute that bars actions arising more than a specified number of years after the product was purchased.

Question 17

In a state that follows modified contributory negligence, in which of the following scenarios could the plaintiff recover the percentage of harm caused by the defendant?

A)The jury finds that the plaintiff's negligence was responsible for 55 percent of the harm.
B)The jury finds that the plaintiff's negligence was responsible for 75 percent of the harm.
C)The jury finds that the plaintiff's negligence was responsible for 65 percent of the harm.
D)The jury finds that the plaintiff's negligence was responsible for 45 percent of the harm.

Question 18

Which of the following is an effect of the growing acceptance of strict liability?

A)Negligence has become less important as a theory of liability.
B)Negligence has become more important as a theory of liability.
C)The doctrine of negligence per se is used more frequently.
D)The doctrine of res ipsa loquitur is used more frequently.

Question 19

Eradication of the privity requirement led to ________.

A)an increase in the liability of producers
B)an increase in the liability of consumers
C)a decrease in the liability of manufacturers
D)a decrease in the liability of sellers

Question 20

In early product liability cases, the privity limitation meant that the plaintiff was required to demonstrate that ________.

A)he or she purchased the defective product directly from the manufacturer
B)the seller owed a duty of care to the consumer
C)the manufacturer breached a duty of care
D)the damages are actual as opposed to punitive

Question 21

Which of the following is true about the standard adopted by the Restatement (Third) of Torts for design defects?

A)It is based on strict liability.
B)It is based on reasonableness.
C)It is a negligence-based test on the duty to warn.
D)It is based on the defendant's intent.

Question 22

Which of the following statements is true about strict liability in tort?

A)Product liability actions based on strict liability in tort focus on the producer or manufacturer.
B)To succeed in a strict liability action, the plaintiff must prove that the defendant did not exercise the degree of care that is reasonably expected under those circumstances.
C)A failure by the manufacturer or seller to adequately warn of a risk or hazard associated with the product can be used by the plaintiff to establish that the product is defective.
D)To be successful in a strict liability action, the plaintiff must prove that the product developed a defect before it was sold.

Question 23

Which of the following statements is true of implied warranty of merchantability?

A)It states that the product being sold is the safest one that can be produced with the scientific knowledge available.
B)To meet the standard of merchantability, the product must be adequately contained, packaged, and labeled as the agreement may require.
C)This warranty is made even if the seller does not regularly sell that type of good.
D)The Uniform Commercial Code considers contracts related to consumer goods that limit damages for injuries to a person as valid.

Question 24

Which of the following statements is true of defenses to a strict product liability action?

A)Product misuse is available as a defense to a strict product liability action.
B)Assumption of the risk is not permitted as a defense to a strict product liability action.
C)State-of-the-art defense is generally allowed in a strict product liability action.
D)State-of-the-art defense in a strict liability action requires testimony from an expert witness.

Question 25

Market share theory is used by courts when ________.

A)a defendant is not engaged in the business of selling the type of product that caused harm to the plaintiff
B)a defendant manufactures many different variations of the same type of product
C)many manufacturers produced the same product that caused harm to the plaintiff
D)the entire market share of a product belongs to one manufacturer

Question 26

Which of the following statements is true about malpractice actions?

A)They are no longer permitted under the Restatement (Third)of Torts.
B)They generally apply the strict liability standard.
C)The number of malpractice actions against professionals is rising at a rapid rate.
D)The number of malpractice actions against manufacturers is rising at a rapid rate.

Question 27

A(n) ________ is a disavowal of liability for breach of warranty by the manufacturer or seller of a good in advance of the sale of the good.

A)disclaimer
B)express warranty
C)implied warranty of fitness
D)tort

Question 28

Which of the following statements is true about disclaimers used to limit consequential damages for injury caused by consumer goods?

A)These disclaimers are considered unconscionable under the Uniform Commercial Code, and will not be enforced.
B)These disclaimers are enforceable only if the contract is in writing.
C)These disclaimers are enforceable whether or not the contract is in writing.
D)These disclaimers are not considered unconscionable, and are, therefore, not enforced.

Question 29

________ is a warranty that automatically arises out of a transaction.

A)Express warranty
B)Implied warranty
C)Limited warranty
D)Impact warranty

Question 30

________ is a warranty that is clearly stated by the seller or manufacturer.

A)Express warranty
B)Implied warranty
C)Limited warranty
D)Impact warranty

Question 31

Which of the following refers to unconscionability under the Uniform Commercial Code?

A)The seller was not aware of the defect at the time of purchase.
B)The plaintiff is a minor.
C)The contract clause is grossly unfair.
D)The lawsuit was brought after the expiration date of the statute of repose.

Question 32

Which of the following is true of adopting the Restatement (Third) of Torts: Product Liability?

A)The seller's liability differed depending on whether the defect was a manufacturing defect, a design defect, or a defective warning.
B)The seller's liability differed depending on whether the plaintiff was a merchant, a consumer, or a minor.
C)The privity limitation was reinstated as a defense to product liability lawsuits.
D)The state-of-the-art defense is permitted by courts in most strict liability cases.

Question 33

Which of the following statements is true of breach-of-warranty actions?

A)Most courts do not require that the purchaser provide the manufacturer a notice within a reasonable time of becoming aware of the breach of warranty if the two parties have not dealt with each other.
B)According to the Uniform Commercial Code, the cause of action arises the day the product malfunctions.
C)Most courts allow a manufacturer to relieve itself of liability for breach of warranty by using disclaimers even if the disclaimers are not stated on an integral part of the product or package.
D)The Uniform Commercial Code contains a provision stating that disclaimers on products cannot be considered as unconscionable.

Question 34

Tom purchases a new set of tires for his vehicle. He informs Richard, the vendor who specializes in such goods, that he intends to use it in snowy conditions. The tires do not provide sufficient grip in snow, and his vehicle meets with an accident. Which of the following statements is true of this scenario?

A)Richard cannot be held liable as Tom voluntarily assumed the risk of driving in snowy conditions.
B)Richard cannot be held liable if an express warranty was not issued with the product.
C)Richard is liable on the basis of negligent design.
D)Richard is liable as he breached an implied warranty of fitness for a particular purpose.

Question 35

Which of the following statements is true of the market share theory?

A)It is used when various manufacturers have produced different parts of the product.
B)It is used when the allegedly harmful products differ based on the manufacturer who has produced them.
C)It apportions liability among the defendants on the basis of the market share they held at the time the product was produced.
D)It apportions liability among the defendants on the basis of the market share they hold when the lawsuit is filed in court.

Question 36

According to the American Law Institute's Restatement (Third) of Torts: Product Liability, ________.

A)the liability is strict when there is a manufacturing defect
B)the liability is strict when there is a defective warning
C)a manufacturing defect is said to exist if the consumer uses it for its original purpose
D)the seller's liability is determined by the percentage of fault apportioned by the court

Question 37

Implied warranty of fitness for a particular purpose refers to ________.

A)a warranty that allows the purchaser to recover the full purchase price f1 or any dissatisfactions with the product
B)a warranty that is clearly stated by the seller or manufacturer
C)a warranty that arises when the seller tells the consumer that a product is fit for a specific use
D)a warranty that a product is reasonably fit for ordinary use

Question 38

Katherine purchased a pair of earphones from Simon. She realizes that they are defective and brings a strict liability action against Simon. Which of the following statements is true of this scenario?

A)Simon is not liable as he has not entered into any contractual relation with Katherine.
B)If Simon has exercised all possible care in sale of the product, he is not liable.
C)If Simon is not engaged in the business of selling electronic goods, he is not liable.
D)Simon is not liable as he is not the manufacturer of the product.

Question 39

A strict liability standard is applied when there is a ________.

A)design defect
B)defective warning
C)manufacturing defect
D)defect in marketing

Question 40

Which of the following statements describes a circumstance in which the manufacturer or distributor is liable for selling a defective product according to strict liability in tort?

A)The seller is not engaged in the business of selling the type of product that was found to be defective.
B)The product developed by the manufacturer is expected to reach the consumer or user after undergoing substantial change.
C)The product develops a defect four years after it was purchased by the consumer.
D)The user or consumer has not bought the defective product from or entered into any contractual relation with the seller.

Question 41

Privity means that one is a party to a contract.

Question 42

Statutes of repose are usually much shorter than statutes of limitations.

Question 43

Which of the following statements is true of accountants' liability?

A)The plaintiff only has to prove breach of duty in malpractice actions against accountants that are based on negligence.
B)All states follow the same guidelines to determine to whom an accountant can be held liable.
C)The Ultramares Doctrine allows third parties to sue accountants.
D)The smallest minority of states holds the accountant liable to any reasonably foreseeable user of the statement the accountant prepares.

Question 44

Abolition of the privity limitation opened the door for negligence as a theory of liability when people were injured because of a product manufacturer's or seller's lack of care.

Question 45

State-of-the-art defense is valid in a negligence case because the focus is on the reasonableness of the defendant's conduct.

Question 46

Producers are generally required to warn customers of obvious dangers associated with a product.

Question 47

Product liability and tort law are unrelated.

Question 48

If a product is to be used by someone other than the original purchaser, the manufacturer is generally required to put some sort of warning on the product itself.

Question 49

The ________ is a rule making accountants liable only to those in a privity-of-contract relationship with the accountant.

A)Doctrine of nondelegation
B)Ultramares Doctrine
C)Res ipsa loquitur Doctrine
D)Erie Doctrine

Question 50

In most cases, an employee using an unsafe machine at work is not presumed to have assumed the risk.

Question 51

Which of the following has an issue of disagreement among the states regarding accounting malpractice?

A)the applicability of Generally Accepted Auditing Standards (GAASs)
B)the applicability of Generally Accepted Accounting Principles (GAAPs)
C)the accountant's liability to third parties
D)the accountant's liability to his or her clients

Question 52

Jim, an accountant, is asked to prepare a statement by Clark. This statement provides details about property owned by Clark. Jim is aware that Clark intends to use this statement to obtain a loan from a bank. Which of the following statements is true of this scenario?

A)In the states that follow the Ultramares Doctrine, the bank cannot sue Jim for malpractice.
B)The bank can sue Jim for malpractice in all the states in the U.S.
C)The Ultramares Doctrine allows the bank to sue Jim for malpractice.
D)The bank cannot sue Clark because a contractual relationship exists between Jim and the bank.

Question 53

Which of the following statements is true about malpractice suits?

A)They are service liability suits brought against professionals.
B)They are service liability suits brought against manufacturers.
C)Strict liability is usually applied to malpractice suits.
D)Strict liability is generally not applied if the defendant has provided both a good and a service.

Question 54

Which of the following statements is true of liability suits that involve a foreign defendant?

A)If the manufacturer is located in another country, the U.S. importer, wholesaler, or distributor is liable for the injuries caused by the defective imported product.
B)If a foreign corporation produced the defective goods, the long-arm statute always provides a U.S. court jurisdiction over the corporation.
C)The Hague Convention on the Service of Judicial and Extrajudicial Documents in Civil and Commercial Matters accepts the means of service used in the U.S.
D)If a foreign defendant has no assets in the U.S., the U.S. importer, wholesaler, or distributor has to pay the damages.

Question 55

Which of the following statements is true about the Ultramares Doctrine?

A)It protects accountants against lawsuits from their clients.
B)It holds accountants liable only to those in a privity-of-contract relationship with the accountant.
C)It holds accountants liable to a limited class of intended users of the information.
D)It is followed by all the states of the U.S.

Question 56

A plaintiff often sues only ________ when the manufacturer is located in a foreign country.

A)the retailer and the wholesaler
B)the manufacturer in a foreign country
C)the retailer in a foreign country
D)the manufacturer's legal representative

Question 57

Section 552 of the Restatement (Second) of Torts holds accountants liable ________.

A)only to those in a privity-of-contract relationship with the accountant
B)to any reasonably foreseeable user of the statement the accountant prepares
C)to a limited class of intended users of the information
D)only to the accountant's clients

Question 58

According to the Uniform Commercial Code, to meet the standard of merchantability, the goods must pass without objection in the trade under the contract description.

Question 59

Which of the following statements is true of liability cases in foreign countries?

A)In New Zealand, most claims for damages due to pain and suffering receive automatic compensation due to its Accident Compensation Act.
B)U.S. manufacturers facing lawsuits in foreign countries are unlikely to be joined by foreign importers, retailers, and wholesalers.
C)U.S. courts do not enforce the judgment rendered by a foreign court.
D)U.S. manufacturers who sell their products abroad are not free from product liability considerations.

Question 60

Most courts recognize that the concept of voluntariness is an illusion in the workplace.

Question 61

The seller's liability is strict if the warning provided with the product is defective.

Question 62

Why did some courts conclude that compliance with the Clean Air Act does not preclude oil companies from liability?

Question 63

The broadest rule to define the parameters of an accountant's liability to third parties applies in most of the states in the U.S.

Question 64

Provide arguments for and against allowing the state-of-the-art defense in strict product liability actions.

Question 65

The risk-utility test is used to determine whether a product has met the standards that would be expected by a reasonable consumer.

Question 66

The plaintiff will have to ask a foreign court to execute a judgment against the defendant's assets if the foreign defendant refuses to pay damages and has no assets in the U.S.

Question 67

With reference to cosmetics and over-the-counter drugs, what should the plaintiff prove for the court to conclude that the defendant is guilty of negligent failure to warn?

Question 68

The Ultramares Doctrine is the most recent rule that is used to define the parameters of an accountant's liability.

Question 69

Section 402A of the Restatement (Second) of Torts is generally considered to be the foundation of modern product liability law.

Question 70

How did the 1916 case of MacPherson v. Buick Motor Co. lead to the elimination of the privity requirement?

Question 71

What are the arguments for and against the statutes of repose?

Question 72

Printing claims about products on their packaging creates an implied warranty of fitness for a particular purpose.

Question 73

What are the three rules used to determine the accountant's liability to third parties?

Question 74

Discuss the consequences of eliminating the privity requirement.

Question 75

New Zealand's Accident Compensation Act provides for automatic payment of compensation for claims for pain and suffering.

Question 76

The long-arm statute must be satisfied for a U.S. court to have jurisdiction over a foreign manufacturer.

Question 77

The feasible alternatives test, set out in the Restatement (Second) of Torts, is the consumer-expectations test.