||More low-down on product liability law
Maura Paternoster is risk manager at ARA Insurance Services, a subsidiary of the American Rental Association. She can be reached at (800) 821-6580.
|Last month’s column examined negligence as one of the legal theories behind product liability law. Today we continue with strict liability and warranty. Strict liability is a legal obligation for an accident due to a product deficiency. For example, if there is an error on the assembly line and a unit comes off with a part missing, it is said to have a manufacturing defect. The manufacturer did not intend for the defect, but is strictly liable for any resulting accidents. A product can have a design defect if it fails to meet ordinary consumer expectations when used in a reasonably foreseeable manner. For example, if it is reasonably foreseeable that a backhoe will be used on a steep grade, but its brakes are not strong enough to stop it from rolling down the grade, the manufacturer can be held strictly liable if an accident results from the brakes not holding on a grade. A third deficiency — failure to warn — applies if a manufacturer should have known about an inherent risk in its product and inadequately warns consumers about the risk, like failing to add a warning sticker. If someone is injured as a result, the manufacturer can be held strictly liable for failure to warn. Strict liability applies to manufacturers, but if a manufacturer cannot adequately compensate an accident victim, the theory can be applied to any entity in the chain of commerce, including rental companies. A real-life example of a rental company’s strict liability is the teenager whose neck was broken during an interactive game because his opponent broke the rules and jumped on him. It was determined that the manufacturer should’ve known that the game might be misused in that manner. The manufacturer was found strictly liable for both a defect in the product’s design and failure to warn of its inherent risks, but did not carry sufficient insurance limits to fully compensate the injured boy. Under the strict liability doctrine, the rental company also had to pay. The third product liability legal theory — warranty — means an assurance about a product. A warranty can be written or verbal, explicit or implied. Breach of warranty is claimed when a product does not satisfy these assurances. There are several types of product liability warranties. We’ll only review those claimed in cases of property damage or injury. Implied warranty of merchantability means a product is fit to be used as intended. If you rent chairs, you imply they are suitable to sit in. If you rent a heater, you imply it will warm the air in a room. Breach of warranty can be claimed if a chair breaks or the heater doesn’t get warm. When used to support a product liability claim, this theory is often named in addition to other offenses. For example, suppose a chair collapses when someone sits on it because the metal frame broke where it was rusty. By renting the chair, the rental company implied it was fit to sit in. The injured party might claim breach of warranty and negligence for failing to inspect the chair and find its weakness. A second type of warranty is fitness for a particular purpose, which applies when a customer voices his needs and a dealer suggests a product to fill those needs. For example, if a renter is injured by the concrete saw you rented him to cut firewood, he can claim breach of warranty. Such warranty can be implied even if a dealer doesn’t suggest a product for an unintended use, but knows the customer’s intention to use it incorrectly and sells or rents it anyway. In a real-life example, a forklift was rented with a separate platform. The rental company knew the contractor was using the platform on the forks to lift personnel. That was not an intended use, but by renting them, the rental company implied fitness of the platform for use with the forklift. The man injured when the combination toppled could claim breach of warranty against the rental company. Product liability law clearly puts the burden of safety on product experts, including rental companies. Here are some ways to protect customers from harm and yourself from liability: |
- Ask how renters will use equipment and, if needed, suggest a more appropriate option.
- Ensure equipment is in excellent working condition, including all labeling.
- Warn renters about dangers and instruct them on how to correctly operate equipment.
- Only buy from dealers with adequate insurance coverage — those with at least as much as coverage as you have.