Product Liability Law Research Articles

A Positive Economic Analysis of Products Liability

THIS paper asks whether the principal doctrines of products liability law are consistent with the hypothesis that the common law is best understood as an endeavor (which need not be conscious) to promote economic efficiency, taking the existing distribution of income and wealth as given.1 In contrast to most of the literature on products liability law, we emphasize positive rather than normative analysis, and we even offer some empirical analysis-a rarity in this field. Heavily criticized as a willful interference with the free market in goods and services,2 modern products liability law seems at first glance a powerful contradiction to the efficiency model. We shall argue, however, that both the historical development of the law and its current doctrinal structure are in the main consistent with efficiency. We emphasize this qualification. We shall not try to explain every decision-there are thousands every year. We shall not consider the day-to-day administration of the law, or even every doctrinal twist and turn-in fact, we identify several doctrines that are anomalies from an economic standpoint. We shall not discuss all the major doctrines of this immense field, an undertaking too ambitious for a single paper.

Comments on Landes and Posner: A Positive Economic Analysis of Products Liability

products liability law are consistent with the hypothesis that the common law is best understood as an endeavor (which need not be conscious) to promote economic in the sense in which they use that term.1 Their definition of economic efficiency involves providing efficient incentives for injury prevention and some informal concern for the costs of transacting and litigation, but no concern for efficient bearing of risk. If their conclusions were widely held, we probably would not be here today. Although their ingenuity is impressive, I find their conclusions less than compelling. My objections fall into three categories. The first is methodological. The second is the treatment of information costs. I think they overstate the information problem facing consumers and underestimate the information problems created for courts, producers, and insurers, by the rules designed to solve the consumer information problem. Third, even if they had shown that the common law tends to be efficient by their criterion of efficiency, I would argue that this criterion is too narrowly defined. Because it excludes costs of risk bearing, it cannot be used either as the basis of normative statements about what courts should do, if the goal is efficiency, or for positive statements about how the courts would behave if they were moved to act efficiently. Let me now discuss each of these issues in some detail.

The Intellectual Development of Modern Products Liability Law: A Comment on Priest's View of the Cathedral's Foundations

FEw scholars in recent years have seriously studied the intellectual history of modern products liability theory. Although the economics of the area has caught the fancy of many recent scholars, only a few writers have critically reviewed the original (and still conventional) rationales for strict manufacturer accountability for product accidents.' Perhaps this lack of scholarly interest is attributable to the compelling force of the academic scholarship-spearheaded by James, Prosser, and others in the 1950s and early 1960s and elaborated in the late 1960s and 1970s by Wade, Keeton and others-which set firmly in place the now conventional rationales.2 Probably the lack of interest was reinforced by the rapid and overwhelming judicial acceptance of the doctrine and its standard rationales-led by Judge Francis in Henningsen in 1960 and Judge Traynor

“Coase Theorem”, Competitive Market and Products Liability Law

According to the famous “Coase Theorem”, market forces, under given conditions, will automatically, without any external intervention, bring about an efficient allocation of resources. These conditions, necessary for the smooth operation of the “invisible hand” which leads to efficiency, are denoted as “absence of transaction costs”, as the presence of transaction costs may impede this desired process. The main legal implication outlined by Coase is that absent transaction cost, there is no need, and no place, from an efficiency point of view, for liability rules: resource allocation would be the same either with or without them. An act which is efficient will be carried out despite a liability rule which imposes the burden of compensation on the actor. On the other hand, an inefficient act will be barred by market forces without the help of liability rules.

Orphan Drugs: The Question of Products Liability

Orphan drugs, essential for the treatment of persons with rare diseases, generally are unprofitable for manufacturers to develop and market. While congressional and administrative efforts to promote the development of orphan drugs have met with modest success, application of products liability doctrine to orphan drug sponsors could subvert those efforts. This Note describes the provisions of the Orphan Drug Act and analyzes products liability law with respect to orphan drug litigation. It argues that the goals of tort law support the imposition of liability for design defect, failure to warn and negligence in testing. Finally, the Note acknowledges that liability costs create disincentives for orphan drug development and suggests mechanisms for reducing manufacturers' liability concerns.

Managing the Risks of the Automobile: A Study of a Swedish Car Manufacturer

Hazard management of the risks of human injury and death related to the automobile are described and exemplified by the Swedish car manufacturer Volvo. The study presents the Volvo units engaged in accident hazard management and their roles in the elaborate system of feedbacks (information, penalties and rewards) created by the company and society for maintaining a high level of automobile safety. Improvements are suggested although the overall quality of the accident hazard management process is considered quite good. Although the study is focused on the automobile industry, it should be regarded as part of a much-needed wider perspective on hazard management applying to other technologies and industries as well. In general, the following factors are considered important to high quality accident hazard management by companies and society: (1) Public concern about safety issues, (2) technological capacity and organizational tradition of safety engineering in the manufacturing company, (3) routines for announcing future proposed safety standards, e.g., US Federal Register, (4) laws enforcing a recall system, (5) annual vehicle inspections and (6) effective product liability laws.

Safety And The Unreasonably Dangerous Product

Two points are made here. First, the classic definition of safety is simply unsuitable as an engineering instruction to a designer. Thus, let us harmonize safety and design by using a different definition. Let us define safety (in the context of product design) as the absence of unreasonable danger. Then, by using the language of the courts and taking into account the engineering implications of the tests used there to assess the presence of design defects in a product, a designer can establish criteria against which to measure its safety before the design is released for manufacture. Second, there have been specific improvements in the design of products that can be attributed to litigation brought under products liability law. With the data base and software being generated today, engineers have at hand the means to create designs that should be safe -- or, let us say, not unreasonably dangerous.

ERA Voting: Labor Force Attachment, Marriage, and Religion

Previous articleNext article No AccessERA Voting: Labor Force Attachment, Marriage, and ReligionEthel B. JonesEthel B. Jones Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by The Journal of Legal Studies Volume 12, Number 1Jan., 1983 Sponsored by The University of Chicago Law School Article DOIhttps://doi.org/10.1086/467718 Views: 15Total views on this site Citations: 8Citations are reported from Crossref Copyright 1983 The University of ChicagoPDF download Crossref reports the following articles citing this article:Brian J. Osoba Religion and state economic growth in the USA, International Journal of Foresight and Innovation Policy 4, no.1/21/2 (Jan 2008): 160.https://doi.org/10.1504/IJFIP.2008.016912David S. Gedde, Tantatape Brahmasrene The role of interest groups in products liability law, Managerial Finance 25, no.3/43/4 (Mar 1999): 76–89.https://doi.org/10.1108/03074359910766389Marshall H. Medoff, Christopher Dennis, Benjamin G. Bishin Bimodal issues, the median voter model, Legislator's ideology, and abortion, Atlantic Economic Journal 23, no.44 (Dec 1995): 293–303.https://doi.org/10.1007/BF02298765W.C. Heath, M.S. Waters, J.K. Watson Religion and economic welfare: An empirical analysis of state per capita income, Journal of Economic Behavior & Organization 27, no.11 (Jun 1995): 129–142.https://doi.org/10.1016/0167-2681(94)00028-DMARSHALL H. MEDOFF AN EMPIRICAL ANALYSIS OF ADOPTION, Economic Inquiry 31, no.11 (Jan 1993): 59–70.https://doi.org/10.1111/j.1465-7295.1993.tb00866.xMarshall H. Medoff Constituencies, ideology, and the demand for abortion legislation, Public Choice 60, no.22 (Feb 1989): 185–191.https://doi.org/10.1007/BF00149245Marshall H. Medoff Determinants of the political participation of women, Public Choice 48, no.33 (Jan 1986): 245–253.https://doi.org/10.1007/BF00051621Marshall H. Medoff The effect of the equal rights amendment on the economic status of women, Atlantic Economic Journal 13, no.33 (Sep 1985): 60–68.https://doi.org/10.1007/BF02304295

Product Liability Laws in Common Market Countries

Product Liability Laws in Common Market Countries

The Best Evidence of the Effect of Products Liability Law on the Accident Rate: Reply

The differences between Professor Whitford's views' and mine are of crucial importance to the law of products liability. Our objectives-indeed, the objectives of all interested in the field-are similar: to identify policies that, other things equal, will reduce the seriousness and frequency of injuries suffered by consumers. Professor Whitford and I differ sharply, however, in our predictions of the empirical effects of modern products liability policy. According to Professor Whitford, the policy adopted by courts over the last twenty years-the expansion of manufacturer liability beyond that undertaken in warranties-is likely to have reduced the rate of product defects.2 According to my investment theory,3 on the other hand, if consumer and manufacturer investments in safety are substitutes at the margin, the expansion of manufacturer liability is likely to have increased the rate of defects and the rate of consumer injuries.4 The vast number of product-related injuries compels us to examine these different implications very carefully. It is estimated that in 1977 alone, for example, consumers in the United States suffered 36 million product-related injuries.5 Professor Whitford's criticism of my article rests upon a misunderstanding of the nature of scientific reasoning. Whitford demands that my investment theory, as a complete theory, explain every phenomenon associated with product warranties and directly refute every conceivable alternative warranty theory.6 These requirements allow Whitford to confer

Modern Products Liability Law

Modern Products Liability Law

New Developments in Products Liability Law

New Developments in Products Liability Law

Products Liability Problem

This paper presents an analysis of the changing impact of products liability risk on various individuals, firms, and institutions in today's society. After defining products liability and products liability risk, the pendulum-like evolu tion of products liability law is documented. Then an analysis of some of the most important factors responsible for the recent increases in the frequency and severity of products liability litigation is presented. Several of these elements have appar ently combined to produce a synergistic increase in products- related lawsuits. These elements include recent development in the law of products liability, together with a newly emerging products claim consciousness, public concerns about product safety, and the plethora of old and new products in use today. Finally, the paper concludes with an analysis of the potential impact of enacting one or more of the many proposed solutions to the problem of products liability risk.

Adjudication as a Private Good

This paper examines the question whether adjudication can be viewed as a private good, i.e., one whose optimal level will be generated in a free market. Part I focuses on private courts, noting their limitations as institutions for dispute resolution and rule creation but also stressing the important role that the private court, in its various manifestations, has played both historically and today. Part II discusses a recent literature which has argued that the rules generated in the public court system, in areas of the law where the parties to litigation are private individuals or firms and the rules of law are judge-made, are the efficient products of purely private inputs. Our analysis suggests that this literature has overstated the tendency of a common law system to produce efficient rules, although areas can be identified where such a tendency can indeed be predicted on economic grounds. Viewed as a contribution to the emergent literature on the positive economic theory of law, our finding that the public courts do not automatically generate efficient rules is disappointing, since it leaves unexplained the mechanisms by which such rules emerge as they seem to have done in a number of the areas of Anglo-American judge-made law. However, our other major finding, that the practices and law governing private adjudication appear to be strongly influenced by economic considerations and explicable in economic terms, is evidence that economic theory has a major role to play in explaining fundamental features of the legal system.

An Impact Analysis of Judge-Made Products Liability Policies

This paper assesses the impact of changes in products liability law by measuring liability insurance expenditures. Expenditure for liability insurance premiums is used as an index of resource redistribution from sellers of defective products to individuals who have been harmed by such products. Using multiple regression, comparative state data are analyzed for the period immediately prior to the enactment of the Consumer Products Safety Act in 1972, when doctrines concerning manufacturers' liability for defective products were changing in the direction of stricter negligence standards and thus greater liability for the manufacturer. Three types of products liability policies were in effect among the 50 states at that time. They were strict liability in tort, negligence plus warranty with no privity requirement, and negligence plus warranty with privity of contract required. Data from states with strict liability policies are compared with data from states where the negligence plus warranty standards were used. In states where manufacturers were subject to greater liability for defective products, more money was spent on liability insurance. This example from one area of tort law shows that common law decisions can have important social effects, and suggests a method for measuring those effects.

Engineering risk reduction in satellite programs : Ervin S. Dean, Jr.Proc. IEEE Reliab. Symp., Washington, D.C., 23–25 January 1979, p. 169

Methods developed in planning and executing system safety engineering programs for Lockheed satellite integration contracts are presented. These procedures establish the applicable safety design criteria, document design compliance and assess the residual risks where non-compliant design is proposed, and provide for hazard analysis of system level test, handling and launch preparations. Operations hazard analysis identifies product protection and product liability hazards prior to the preparation of operational procedures and provides safety requirements for inclusion in them. The method developed for documenting all residual hazards for the attention of program management assures an acceptable minimum level of risk prior to program deployment. The results are significant for persons responsible for managing or engineering the deployment and production of complex high cost equipment under current product liability law and cost/time constraints, have a responsibility to minimize the possibility of an accident, and should have documentation to provide a defense in a product liability suit.

Erratum to : Draft Proposal on the Products Liability Law

Erratum to : Draft Proposal on the Products Liability Law

Draft Proposal on the Products Liability Law

Draft Proposal on the Products Liability Law

Minimizing legal liability for unsafe products

Directed at the legal, engineering, and management aspects of product safety. A historical development of the law of products liability is traced through statutory and case law. In addition, the importance of governmental agencies in regulating product safety is explained. A pragmatic systems approach for enhancing product safety is offered as an aid to the manufacturing engineer.

Strict Liability and Judicial Resources

UNDER strict liability for manufacturers of defective products, no longer must the injured party prove that the defect is attributable to the manufacturer's lack of reasonable care in fabrication or assembly. Recovery of damages will be allowed if the product was defective and if the defect caused the injury.' This article investigates empirically the effect of the change in legal doctrine on the amount of judicial resources-the number of court cases and the court time taken by each case-devoted to products liability litigation. The subject warrants attention because these resources represent part of the cost of administering products liability law and should be included in a complete assessment of the social merit of replacing the negligence rule with strict liability for manufacturers of defective products. And empirical inquiry is particularly appropriate because offsetting forces make it impossible to predict the direction of change in a principal index of the amount of judicial resources-the number of products liability cases decided by the courts. On the one hand, for example, dispensing with the negligence requirement enhances an injured party's incentive to sue the manufacturer and could lead to more court decisions, given a constant settlement rate. But with negligence no longer an issue, the fraction of claims settled out of court could increase. Parties fail to settle legal disputes in advance of a trial when, because they hold divergent expectations of how the court will decide their case, the plaintiff's minimum demand exceeds the maximum the defendant is willing to pay. By reducing the number of litigable issues, strict liability could also reduce the possibility of such disagreement and facilitate settlement prior to a court decision.2