Product Advertising and Liability

Product Advertising and Liability 150 150 Affordable Capstone Projects Written from Scratch

Description

Find an ad, product container, or product and evaluate for the following: safety, warranties, adequacy of instructions, defects, and liability. Attach a picture or copy of the ad to your post. Used attached PPT and Word document as a guide.

LECTURE OUTLINE

 

 

13-1   Development of Product Liability (See PowerPoint Slide 13-1)

 

  • Initially Courts Followed a Theory of Caveat Emptor (Let the Buyer Beware) – No Liability for the Seller
  • Henningsen v. Bloomfield Motors – Caveat Emptor Removed

 

 

13-2   Advertising as a Contract Basis for Product Liability

 

UCC Article II (Sales) Governs

 

13-2a    Express Warranties (§ 2‑313) (See PowerPoint Slide 13-2)

 

  • Description of goods and abilities
  • Promise of performance
  • Seller need not intend to create warranty or use the terms “promise,” “warrant,” or “guarantee”

 

Example:  Preshrunk fabric – will not shrink; 50/50 poly-cotton; nontoxic (use Exhibit 13.1 and see PowerPoint Slides 13-3 and 13-4)

 

 

See PowerPoint Slide 13-5.

 

 

 

CASE BRIEF 13.1

 

Castro v. QVC Network, Inc.

139 F.2d 114 (2d Cir. 1998)

 

FACTS:  QVC advertised the “T-Fall Jumbo Roaster” as big enough to hold a 25-pound turkey.  Loyda Castro purchased one, but the pan’s handles were not large enough.  The hot turkey in the pan was too heavy, the pan tipped and burned Mrs. Castro’s foot and ankle.  She sued for breach of warranty and strict liability.

 

DECISION BELOW:  The court dismissed the warranty charge and the jury found for QVC.

 

ISSUE ON APPEAL:  Did the ads representing the pan as suitable for a 25-pound turkey constitute an express warranty?

 

DECISION:  Yes, the case should have gone to the jury with the warranty issue.

 

 

 

13-2b    Federal Regulation of Warranties and Advertising

 

  • Federal Trade Commission given broad authority
  • Federal Trade Commission Act authorizes FTC as enforcement agency (See PowerPoint Slide 13-6)

 

  • Passed in 1914
  • Requires regulation of “unfair and deceptive trade practices”

 

  • Broadened by Wheeler‑Lea Act of 1938 (See PowerPoint Slide 13-7)

 

  • “Is public deceived?” standard
  • Not limited to adverse impact on competition

 

13-2c    Content Control and Accuracy (See PowerPoint Slide 13-8)

 

  • Claims of product contents: “no aspirin,” “aspirin free,” all dairy products
  • Like express warranties

 

13-2d    FTC Control of Performance Claims

 

  • Like express warranties – promise of performance
  • FTC has required corrective advertising when unsubstantiated claims have been made

 

 

See PowerPoint Slide 13-9.

 

 

CASE BRIEF 13.2

 

Warner‑Lambert Co. v. FTC

562 F.2d 749 (D.C. Cir. 1977); cert. den. 435 U.S. 950 (1978)

 

FACTS:  Listerine (made by Warner‑Lambert) was repre­sented in ads as being beneficial in curing colds, cold symptoms, and sore throats.  The FTC issued a complaint and after hearings ordered Warner‑Lambert to run corrective ads:  “Contrary to prior advertising, Listerine will not help prevent colds or sore throats or lessen their severity.”  Warner‑Lambert appealed.

 

ISSUE ON APPEAL:  Can the FTC require corrective advertising?

 

DECISION:  Yes, not as strict as language ordered; “contrary to” is not needed.

 

 

 

ANSWER TO CONSIDER 13.3:  They have the authority to halt the ads, make the companies change the labels, and even issue corrective ads so that consumers are not misled.  There is considerable class-action litigation against the supplement manufacturers for the misrepresentation.

 

ANSWER TO ETHICAL ISSUES (Faux Fur):  The FTC required the companies to stop the claims on the “faux fur” and to notify customers that there had been inaccuracies in their ads with regard to real fur vs. faux fur. The companies complied with the FTC’s notices about the ads and no further action was taken once the companies had made the corrections and done the notifications.

 


 

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