HỌC VIÊN: LÊ QUÔC VINH – MBA ANDREWS K03HN

FINAL EXAMINATION QUESTIONS

Question 1:

Bord Inc. manufactured motor cars. Its new model, the Panto, was produced with a new design for
the fuel tank. The company's market research had showed it was desirable to provide a larger boot
with sufficient room for two sets of golf clubs. The Panto therefore was designed with a fuel tank
mounted behind the rear axle rather than on top of it. Mickey purchased a new Panto from Slapp-
Happy Motors after test driving and inspecting it for one hour. Twelve months later he was
involved in a collision in which his car was hit from behind after he stopped suddenly. Because of
the position of the fuel tank, it split open on impact, spilling fuel onto the road which then
exploded. Minnie, a passenger of Mickey’s was killed. Expert evidence shows that the explosion
would not have occurred had the fuel tank been mounted above the rear axle.

Required:

(a) discuss the potential liability of Bord Inc.

(b) discuss the way that the law in this area has developed.

(a) Discuss the potential liability of Bord Inc.

According to expert evidence shows that the explosion would not have occurred had the fuel tank
been mounted above the rear axle, so it is was clearly Mickey & Minnie ‘s damages, loss due to
Bord Inc ‘s negligence:
◼ The defendant owed the plaintiff a duty of care
◼ This failure to use the degree of care required under the circumstances is called a breach of
duty
◼ The breach of duty by the defendant was the proximate cause of the injury to the plaintiff
◼ The plaintiff suffered some actual harm or injury

Mickey & Minnie must sue Bord Inc. in Tort Law and prove that all four elements by a
preponderance of the evidence:
◼ Duty
◼ Breach of Duty
◼ Causation (two parts)
◼ Damages

As a car manufacturer Bord Inc. is required to meet the ordinary expectations of a consumer. But
due to the design defect led to consumer’s danger. To its car customers like Mickey & Minnie,
Bord Inc. has to take seasonable care in design, manufacturing car, so the manufacturer Bord Inc.
held product liability.
Product’s liability: manufacturer should be liable for personal injury or property damage that
results from a defect in a product or from false representations made by the manufacturer of the
product.
(b) Discuss the way that the law in this area has developed.

When courts in the United States began to impose implied warranties of merchantability in the
late 1800s, the rule required that the plaintiff have privity of contract with the defendant. This
meant that the buyer must have purchased a product directly from the manufacturer in order to
recover from the manufacturer. During that time, manufacturers had begun to rely more heavily
on retailers to sell products. Since many buyers did not actually purchase the products directly
from the manufacturers, though, those buyers could not recover for breach of implied warranty
from the manufacturers due to a lack of privity of contract.

Courts opened the doors to modern products liability cases in the 1950s and 1960s by allowing
remote plaintiffs to recover against the manufacturers of defective products. The American Law
Institute (ALI) included rules pertaining to products liability in the Restatement (Second) of Torts,
which was officially promulgated in 1965. Since the 1960s, the law of products liability has
continued to expand and develop. The ALI recognized this development by approving the
Restatement (Third) of Torts: Products Liability, in 1998.

Another major step in product liability law was the incorporation of strict liability. Most areas of
law are deeply concerned with fault – the idea that a party should be liable only if its wrongdoing
caused an injury. Negligence concerns the conduct of the defendant, while contract law concerns a
breach of contract. Strict liability is an exception. Under strict liability, a party is liable for
damages regardless of whether its conduct contributed to the injury.

California became the first state to adopt strict products liability in 1963. Other states followed
suit, and in 1986 the U.S. Supreme Court incorporated strict product liability into admiralty law.
Today, most states recognize some version of strict products liability. Plaintiffs routinely assert
strict liability claims along with other tort claims and contract claims when filing a product
liability lawsuit.

Types of Product Liability Defects

If someone is injured by a defective product, there are three types of product liability claims that
may apply to their case:

1. Manufacturing defects
2. Design defects
3. Marketing defects (manufacturer fails to provide adequate warnings or instructions
regarding how to properly use the product)

“Source: Product Liability Law- Legal Background”

Question 2:

MEGA Co issued an offer to ANDOR Company to sell 1,000 tons of imported cotton. Among
other things, the offer contained the terms and conditions as follows:

(i) price of cotton –1,500 USD/ton;

(ii) payment – 30% of total price payment in advance, remaining 70% payment at the time of
delivery of the goods;
(iii) transport of goods – cost to be borne by ANDOR Company, delivery within seven days after
the conclusion of the contract.

Upon receipt of the offer, ANDOR Company replied via a fax to MEGA Co which stated: ‘We
accept all the terms and conditions of your offer and will take delivery of the goods within seven
days upon the conclusion of this contract. Please keep the cotton in good condition and with sound
package.’ MEGA Co received the fax but did not respond to it.
ANDOR Company hired a logistics company, five days after sending the fax, to take delivery of
the cotton from MEGA Co but failed to take any goods from MEGA Co. MEGA Co insisted that
it was not under a contractual obligation to sell the goods to ANDOR Company, as there was no
contract between the two parties. MEGA Co stated further that the fax sent by ANDOR Company
added the term ‘keep the cotton in good condition and with sound package’, which should be
regarded as additions to the offer and constituted a counter-offer by ANDOR Company, rather
than an acceptance. Therefore, the two parties did not reach an agreement on the terms and
conditions for the sale of the cotton.

Required:

With reference to the UCC, analyse the scenario and discuss:

(a) whether there was a contract between MEGA Co and ANDOR Co, and explain your
reasoning;
(b) the legal nature of ANDOR Company’s fax to MEGA Co;
(c) Would the answers in question (a) and (b) be different if the US common law apply?

(a) Whether there was a contract between MEGA Co and ANDOR Co, and explain your
reasoning:

The Uniform Commercial Code rejects the mirror image rule and converts a common law
counteroffer into an acceptance even if it states additional or different terms. The UCC states:

A definite and seasonable expression of acceptance or a written confirmation which is sent within
a reasonable time operates as an acceptance even though it states terms additional to or different
from those offered or agreed upon, unless acceptance is expressly made conditional on assent to
the additional or different terms.
The additional terms are to be construed as proposals for addition to the contract. Between
merchants such terms become part of the contract unless:
 • (a) the offer expressly limits acceptance to the terms of the offer;
• (b) they materially alter it; or
• (c) notification of objection to them has already been given or is given within a reasonable
time after notice of them is received.

The above scenarios shows that upon receipt of the offer from Mega, Ando Company replied via a
fax to Mega Co which stated: ‘We accept all the terms and conditions of your offer and will take
delivery of the goods within seven days upon the conclusion of this contract. Please keep the
cotton in good condition and with sound package.’ Mega Co received the fax. In this situation of
added “keep the cotton in good condition and with sound package’ from Ando Co. is not
considered as an counter offer under the UCC, so there was a binding contract between Mega Co.
and Andor Co.

(b) The legal nature of ANDOR Company’s fax to MEGA Co:

The confirmation of Ando Co. via a fax was an acceptance with contained additional term related
to keeping condition & packaging its does not conflict to original offer from Mega Co. because
there was not packaging information in the initial offer and accepted under the UCC.

(c) Would the answers in question (a) and (b) be different if the US common law apply?
Contracts law principles in general are uniformly understood and applied across the United
States. Contract law is governed by the common law and the Uniform Commercial Code "UCC."

The common law dictates that any change to an offer is a rejection and counter offer (this
creates a new offer and changes the person who was initially the offeree to the offeror). So, in
question (a) and (b) if the US common law applied there was no contract binding and Ando added
term “keep the cotton in good condition and with sound package’ was a counter offer.