Phase I - McGraw Hill Higher Education
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Transcript Phase I - McGraw Hill Higher Education
Essentials Of Business Law
Chapter 29
Product Liability
McGraw-Hill/Irwin
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Product Liability
The liability of a manufacturer or seller for injury
to purchasers, users, and third parties
Plaintiffs must prove four elements in order to be
successful in a product liability lawsuit
Duty
Breach
Proximate cause
Damages
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Chapter 29-2
Product Liability
Injury And Claims
Product flaw
Abnormality or condition in a single unit of the product that was
not intended
Makes a product more dangerous than it would have been had it
been as intended
Failure to warn
Dereliction of duty manufacturers and sellers have to advise
purchasers and users of dangers inherent in a product
Design defect
Fault in a product that creates a hazardous condition that causes
injury
Exists throughout an entire product line
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Chapter 29-3
Strict Liability
Liability without the necessity of proving
fault
Application from state to state varies
greatly
Fewer new or innovative products are
released due to the fear of liability lawsuits
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Chapter 29-4
Drugs
Food and Drug Administration
Federal agency responsible for ensuring all drugs sold in the
U.S. be tested to for both safety and effectiveness
Phase I: A small number of people are tested to
determine safety and dosage, and to identify side effects
Phase II: Effectiveness is measured, comparing subjects
who receive the drug to those who receive a placebo
Phase III: Safety and effectiveness of the drug is
evaluated in trials involving a great number of people
Phase IV: Continued testing occurs subsequent to FDA
approval of the drug
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Drugs
Costs a pharmaceutical company approximately
$700 million for each drug approved
Takes about 12 years
One of 5,000 chemicals tested ultimately is
approved for sale as a drug
One-third of approved drugs become profitable
One-fifth of all drugs that are approved have
alleged safety problems
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Chapter 29-6
Consumer Products
Consumer Product Safety Commission
The federal agency responsible for the safety of
consumer products sold in the U.S
Tests products to determine dangers
Order manufacturer’s to recall dangerous products
Wool products, fur products, and textile fiber
products
Must be properly labeled and identified
Flammable products
Must incorporate flame retardant materials
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Consumer Products
Hazardous substances, toxic, corrosive, irritant,
or flammable
Must be properly labeled with appropriate warnings
Children’s toys
May not contain electrical, thermal, or mechanical
hazards
Paint
Generally may not contain lead
Radiation emitting products
Must contain appropriate safeguards
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Chapter 29-8
Tobacco
Federal and state statutes strictly regulate
tobacco products
Cannot be advertised on television or radio
Tar and nicotine levels on cigarette packages
must be disclosed
Cigarettes must contain the Surgeon General
warning regarding the dangers of smoking
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Chapter 29-9
Tobacco
Master Settlement Agreement
Tobacco companies agreed not to engage in certain
advertising strategies
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Not to advertise using cartoon characters
Not to place advertising on billboards or stadium signs
Not to pay for product inclusion in films and television shows
Not to provide free caps, t-shirts, etc
Not to distribute free samples of cigarettes
Not to target youth markets by sponsoring concerts, athletic
events, etc
Support a foundation that provides education
regarding the dangers of tobacco products
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Chapter 29-10
Automobiles
National Highway Traffic Safety
Administration
The federal agency responsible for the safety
of automobiles sold in the U.S.
Requires that automobiles contain appropriate
safety features
• Airbags, seat belts, antilock brakes
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Chapter 29-11