Products Liability as Enterprise Liability

Abstract

The prevailing wisdom about the rise of modern products liability law is framed by a debate which took place more than a generation ago. George Priest argued that modern American products liability law was born as enterprise liability incarnate and consequently ran amok in a nightmare of unlimited liability. Gary Schwartz countered that product liability law strict in name but fault-based in fact. Strict products liability was a revolution in rhetoric alone. To this day, these positions dominate our understanding of products liability law in its formative moment. We are long overdue for a fresh look. This paper argues that Priest was right to argue that modern American product liability law exploded when it was crystallized as a form of enterprise liability in §402A of the Second Restatement of Torts. But he loses the thread of the narrative when he claims that strict products liability self-destructed because enterprise liability is inherently limitless Enterprise liability is liability for the characteristic risks of an activity and it is as preoccupied with identifying those risks of activities as fault liability is preoccupied with determining the presence or absence of fault. Professor Schwartz, for his part, is right that conceptions of balancing, duties of care, and comparative fault all find their ways into product liability law in its formative period. But Schwartz’s identification of products liability with negligence is fundamentally mistaken. In products liability’s formative moment these elements of negligence law were deliberately refashioned to construct a form of liability more strict than ordinary negligence liability.This paper proceeds as follows. Part I briefly traces the long common law pre-history of modern product liability law as it passes through four phases: freedom of contract, negligence liability, warranty liability and strict enterprise liability. Part II explains the idea of enterprise liability as a distinctive conception of tort liability, focused on activities not actions and finding its fullest incarnation in strict liability. Part III explains the liability rules that constituted products liability as enterprise liability with a particular eye to showing how they articulated a distinctive regime consciously designed to be more stringent than ordinary negligence liability. Part IV takes stock of the Priest and Schwartz theses in light of the regime described in Part III. Very briefly, Part IV also suggests why enterprise liability should be considered a valid alternative to negligence liability in the emerging world of autonomous vehicles.