National American University

BUSINESS L 3100

Chapter 25-PRODUCT LIABILITY: WARRANTIES AND TORTS

TRUE/FALSE

1)Negligence and fraud are easy to prove in a mass production world.

 

                                           

 

 

2. The requirement of privity of contract to allow recovery in a sales contract has been widely rejected.

 

                                           

 

3. The right to sue for damages sustained from a defective product is reserved exclusively to the buyer of such goods.

 

                                           

 

4. Plaintiffs suing for damages caused by a defective product are limited to taking action only against the manufacturer(s) of such goods.

 

                                           

 

5. A warranty may be express or implied.

 

                                           

 

6. An express warranty is basically any statement of fact or promise made about the goods that becomes part of the basis of the bargain.

 

                                           

 

7. It is necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee.”

 

                                           

 

8. An express warranty can be disclaimed even if it was a critical part of the bargain to the buyer.

 

                                           

 

9. An express warranty can be made orally or in writing.

 

                                           

 

10. An express warranty arises when goods are purchased based on a catalog illustration.

 

                                           

 

11. Ordinarily, a seller's opinion about the good(s) cannot be treated as a warranty.

 

                                           

12. A seller who makes a written express warranty for consumer goods costing more than $50 must con- form to FTC regulations.

 

                                           

 

13. No law requires a seller to make an express warranty.

 

                                           

 

14. A full warranty allows the seller to require the buyer to assume the shipping cost of returning the good(s) for repair.

 

                                           

 

15. Any warranty that does not provide the complete protection of a full warranty is called a warranty in breach.

 

                                           

 

16. A seller cannot be held liable for the breach of an express warranty if the seller honestly believed that the warranted statement was true.

 

                                           

 

17. An implied warranty arises automatically from the fact a sale has been made.

 

                                           

 

18. Whenever a sale of goods is made, certain warranties are implied unless they are expressly excluded.

 

                                           

 

19. When a buyer makes a purchase without relying on the seller's skill and judgment, no warranty of fit- ness for a particular purpose exists.

 

                                           

 

20. A merchant has greater potential warranty liability than does a casual seller.

 

                                           

 

21. Unless otherwise agreed, every merchant seller warrants that goods are sold free of any rightful claim by any third party.

 

                                           

 

22. The scope of warranties remains the same regardless of whether the seller is a merchant or a casual seller.

 

                                           

23. If a merchant sells a lawn mower that will not cut any type of grass, there is a breach of the warranty of merchantability.

 

                                           

 

 

24. Manufacturers who prepare goods to the buyer's specifications are under exceptionally stringent war- ranty obligations for fitness for a particular use.

 

                                           

 

25. In applying the “foreign substance/natural substance” liability test in the sale of food or drink, courts hold that there is liability if the seller does not deliver to the buyer goods of the character that the buyer reasonably expected.

 

                                           

 

26. The warranties of both merchantability and fitness for a particular purpose exist under the Convention on Contracts for the International Sale of Goods (CISG).

 

                                           

 

27. If there is a written contract, a disclaimer of the implied warranty of merchantability must be conspicu- ous.

 

                                           

 

28. An exclusion of warranties made in the manner specified by the Uniform Commercial Code is not un- conscionable.

 

                                           

 

29. An auto manufacturer is excused from liability if it can be shown the defect was in a component part purchased from a manufacturer.

 

                                           

 

30. An action for negligence rests upon common law tort principles.

 

                                           

 

31. The theories of product liability are mutually exclusive.

 

                                           

 

MULTIPLE CHOICE

 

1. Which of the following is not a product liability theory that protects buyers and allows them to recover for injury and economic loss?
   1. express warranty
   2. implied warranty
   3. strict tort liability
   4. assumption of the risk

                                           

 

2. Only the parties to a sales contract could sue each other under the traditional concept of:
   1. exclusivity of contract.
   2. privity of contract.
   3. privacy of contract.
   4. priority of contract.

                                           

 

3. The defendant in a defective product suit may be:
   1. the seller.
   2. the manufacturer.
   3. the manufacturer of a component part.
   4. all of the above.

                                           

 

4. Which of the following statements made by the seller does not likely constitute an express warranty?
   1. "This looks beautiful on you."
   2. "This is 100 percent wool."
   3. "This motor generates 100 horsepower."
   4. "This is a 3.2 liter rotary engine."

                                           

 

5. Under what type of warranty is the seller obligated to fix or replace a defective product within a rea- sonable time at no cost to the buyer?
   1. full
   2. express
   3. limited
   4. implied

                                           

 

6. The federal regulation of express warranties:
   1. applies only to limited warranties.
   2. applies to a seller who makes a written express warranty for a consumer product costing more than $10.
   3. requires all express warranties to be full warranties.
   4. requires an implied warranty to be designated as either full or limite

                                           

 

7. A warranty is limited if:
   1. only the original buyer is covered by the warranty.
   2. the buyer must pay any cost for repair or replacement of a defective product.
   3. it covers only part of the product purchased.
   4. all of the above.

                                           

 

8. If an express warranty is breached:
   1. the warrantor is not liable if due care was exercised in the manufacture or handling of the product

1. 2. the seller has no warranty obligation if the buyer had the opportunity to inspect the goods before purchasing them.
   3. the warrantor is not liable if (s)he honestly believed that the warranty was true.
   4. the warrantor is always liable.

                                           

 

9. In most instances, the mere fact that a sale was made gives rise to a(n):
   1. express warranty.
   2. limited warranty.
   3. implied warranty.
   4. full warranty.

                                           

 

10. By the mere act of selling, a warranty is made that the:
    1. goods are the finest available.
    2. seller's title is good and the transfer is rightful.
    3. price is the lowest available.
    4. all of the above.

                                           

 

11. Which of the following implied warranties is created when the buyer relies on the seller to pick out the goods that the buyer requires to meet a stated need?
    1. conformity to description
    2. Merchantability
    3. fitness for a particular purpose
    4. conformity to a sample or model

                                           

 

12. The warranty of merchantability guarantees that the:
    1. party in question is a merchant.
    2. product is fit for the ordinary purposes for which it is sold.
    3. product will remain fit for its normal use for the applicable statute of limitations period.
    4. product can be resold by the buyer if the buyer does not want to keep it.

                                           

 

13. With used or secondhand goods, what is fit for normal use will be:
    1. a higher standard than with new goods.
    2. a lower standard than with new goods.
    3. the same standard as with new goods.
    4. not applicable since the goods are not new.

                                           

 

14. How do the warranty provisions under the CISG compare to the provisions of the UCC?
    1. In most instances, the standards are the same.
    2. In all instances, the standards are the same.
    3. The CISG standards are stricter when compared to the UCC standards.
    4. The standards are completely different.

                                           

15. Regarding the sale of food or drink, there is an implied warranty that:
    1. the food item is of average quality.
    2. the food item is fit for human consumption.
    3. that no foreign substances such as a nail or screw will be found.
    4. all of the above.

                                           

 

16. A disclaimer or exclusion of the warranty of merchantability will be invalid if:
    1. the goods cost $500 or more.
    2. the defects in the goods are obvious to all buyers.
    3. it is made at the time of the sale.
    4. it is not conspicuously set forth in a writing.

                                           

 

17. An examination of goods excludes any implied warranty with respect to a defect that:
    1. is apparent after a reasonable examination is made.
    2. will not be apparent without chemical analysis.
    3. will not be apparent until the goods are processed or used in manufacturing.
    4. is unknown to all parties and is not detectable by reasonable examination.

                                           

 

18. The theories of product liability
    1. are mutually exclusive.
    2. are not mutually exclusive.
    3. are set forth exclusively in the UCC.
    4. are set forth exclusively in the common law.

                                           

 

19. Which of the following must be proven by a plaintiff to recover for strict liability in tort?
    1. negligence of the seller or manufacturer
    2. recklessness of the seller or manufacturer
    3. unreasonably dangerous defects in goods that cause harm
    4. privity of contract between the manufacturer and the buyer

                                           

 

20. Strict tort liability is applied:
    1. independently of the UCC.
    2. without regard to privity of contract.
    3. despite negligence on the part of the plaintiff.
    4. all of the above.