Chapter 15Chapter 15

Consumer ProtectionConsumer Protection

DebateDebate

Hot DebateHot Debate What protection does Edison have?What protection does Edison have? How should this case be resolved?How should this case be resolved?

What’s Your VerdictWhat’s Your Verdict Pg 259Pg 259 How should this case be resolved?How should this case be resolved?

Governmental ProtectionGovernmental Protection

ConsumerConsumer – individual who acquires – individual who acquires goods that are intended for personal goods that are intended for personal use.use.

Caveat EmptorCaveat Emptor Let the buyer bewareLet the buyer beware

Caveat VenditorCaveat Venditor ?????? Why the change in philosophy?Why the change in philosophy?

Class ActionsClass Actions

Class Actions Class Actions – Allows one or several – Allows one or several people to sue on behalf of people to sue on behalf of themselves, and others.themselves, and others. Ex: Erin Brockovich, concert tickets, etc.Ex: Erin Brockovich, concert tickets, etc. Is this necessary? Why?Is this necessary? Why?

Governmental ProcedureGovernmental Procedure

Cease-and-desist orderCease-and-desist order: an order : an order requiring a company to stop the requiring a company to stop the specified conduct.specified conduct.

Consent orderConsent order: voluntary, court-: voluntary, court-enforceable, agreement to stop a enforceable, agreement to stop a practice.practice.

RestitutionRestitution: Permits a party to a : Permits a party to a contract to recover money or contract to recover money or property given to the other party.property given to the other party.

Protection Against Inferior Protection Against Inferior Services and GoodsServices and Goods

What’s your verdict?What’s your verdict? Pg 260Pg 260

LicensingLicensing Who needs a license to operate?Who needs a license to operate? Who would you rather go to?Who would you rather go to?

Unsafe ProductsUnsafe Products

1972 Consumer Product Safety Act1972 Consumer Product Safety Act Created the Consumer Product Safety Created the Consumer Product Safety

Commission (CPSC)Commission (CPSC) Law Brief pg 261Law Brief pg 261 You can sue CPSC, to ensure they are You can sue CPSC, to ensure they are

doing their jobdoing their job

Food, Drugs and CosmeticsFood, Drugs and Cosmetics

Food and Drug Administration (FDA)Food and Drug Administration (FDA) Requires Food, Drugs and Cosmetics be Requires Food, Drugs and Cosmetics be

cleanclean Adulterated = does not meet standardsAdulterated = does not meet standards Requires labelingRequires labeling Very cautious (praise and criticism)Very cautious (praise and criticism)

Weights and MeasuresWeights and Measures

Weights and Measures DivisionWeights and Measures Division Nat’l Institute of Standards and Nat’l Institute of Standards and

TechnologyTechnology UniformityUniformity

Pound is a Pound, etc.Pound is a Pound, etc. Seals certify accuracySeals certify accuracy

Protection Against Unfair Trade Protection Against Unfair Trade PracticesPractices

WYV pg 263WYV pg 263 Unfair Trade PracticeUnfair Trade Practice: any method of : any method of

business that is dishonest or business that is dishonest or fraudulent or that illegally limits fair fraudulent or that illegally limits fair competition.competition.

Unfair Trade PracticesUnfair Trade Practices

Price FixingPrice Fixing False / Misleading AdvertisingFalse / Misleading Advertising

Bait and SwitchBait and Switch Federal Trade CommissionFederal Trade Commission

Corrective AdvertisingCorrective Advertising Cease and desistCease and desist

Unfair Trade PracticesUnfair Trade Practices

Illegal LotteriesIllegal Lotteries Required Payment to participateRequired Payment to participate Winner determined by chance not skillWinner determined by chance not skill A prize is wonA prize is won

Punishable by fine and or Punishable by fine and or imprisonmentimprisonment

What about Bingo?What about Bingo? Confidence GamesConfidence Games

Pyramid scheme (Madoff)Pyramid scheme (Madoff)

Unfair Trade PracticesUnfair Trade Practices

Unfair PricingUnfair Pricing Free, artificial two for one, low estimatesFree, artificial two for one, low estimates

Mislabeled GoodsMislabeled Goods Others pg 265Others pg 265

Product LiabilityProduct Liability

WYV pg 266WYV pg 266 Product LiabilityProduct Liability: Affixing of : Affixing of

responsibility to compensate for responsibility to compensate for injuries caused by a defective injuries caused by a defective product.product. Product Liability suitProduct Liability suit

Based on Breach of Based on Breach of WarrantyWarranty: an assurance : an assurance the seller makes about qualitythe seller makes about quality

Expansion of Product LiabilityExpansion of Product Liability

Warranty = ContractWarranty = Contract Parties involvedParties involved

Privity of ContractPrivity of Contract : relationship that : relationship that exists between buyer and sellerexists between buyer and seller

Wholesaler, Manufacturer, Wholesaler, Manufacturer, Bystander?Bystander?

Legal focus – spoiled hamLegal focus – spoiled ham

Recovery for Tortious ConductRecovery for Tortious Conduct

Product Liability suit can be based onProduct Liability suit can be based on Breach of warrantyBreach of warranty FraudFraud NegligenceNegligence Strict LiabilityStrict Liability

Has been expanded due to high burden of Has been expanded due to high burden of proofproof

Defenses to LiabilityDefenses to Liability

Used for non-intended purposeUsed for non-intended purpose ScrewdriverScrewdriver

Used for non-foreseeable purposeUsed for non-foreseeable purpose Altered ProductAltered Product Improper conductImproper conduct Misusing ProductMisusing Product

WarrantiesWarranties

Express WarrantyExpress Warranty: An assurance of : An assurance of quality explicitly made by the seller.quality explicitly made by the seller.

WYV pg 268WYV pg 268 Can be made byCan be made by

Oral or writtenOral or written Conduct – show a sampleConduct – show a sample

Breach of Warranty = Breach of Breach of Warranty = Breach of ContractContract

Requirements of Express Requirements of Express WarrantiesWarranties

Magnuson MossMagnuson Moss Lemon LawsLemon Laws

WarrantiesWarranties

Full WarrantyFull Warranty: An express warranty : An express warranty that obligates the seller to repair or that obligates the seller to repair or to replace a defective product to replace a defective product without cost to the buyer, in a without cost to the buyer, in a reasonable amount of time.reasonable amount of time.

Limited WarrantyLimited Warranty: Any warranty that : Any warranty that provides less protection than a full provides less protection than a full warranty.warranty.

Opinions vs. WarrantiesOpinions vs. Warranties

PuffingPuffing: Exaggerated Seller’s talk.: Exaggerated Seller’s talk. Expert OpinionsExpert Opinions

May create warrantiesMay create warranties Jeweler says a diamond is flawlessJeweler says a diamond is flawless

Implied WarrantiesImplied Warranties

Implied WarrantyImplied Warranty: An implicit warranty : An implicit warranty obligation imposed by law.obligation imposed by law. Warranty of titleWarranty of title

You own what your sellingYou own what your selling Warranty against encumbrancesWarranty against encumbrances

There are no third party claimsThere are no third party claims Warranty of Fitness for a Particular PurposeWarranty of Fitness for a Particular Purpose

Pg 270Pg 270

Those 3 are made by Those 3 are made by all sellersall sellers

Implied Warranties Given Only Implied Warranties Given Only by Merchantsby Merchants

Warranty against infringementWarranty against infringement Free of third party’s claimsFree of third party’s claims

Trademark, copyright, patent, etc.Trademark, copyright, patent, etc.

Warranty of merchantabilityWarranty of merchantability Fit for ordinary purposesFit for ordinary purposes

Quality and safetyQuality and safety May be disclaimedMay be disclaimed

Exclusion of WarrantiesExclusion of Warranties

DisclaimerDisclaimer: a notice of exclusion: a notice of exclusion Conspicuous and in writingConspicuous and in writing

Ex: “With All Faults”, “As Is”, “There are no Ex: “With All Faults”, “As Is”, “There are no warranties of merchantability or fitness that warranties of merchantability or fitness that extend beyond the description on the label.”extend beyond the description on the label.”