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30 Cards in this Set
- Front
- Back
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MacPherson v.Buick Motor Car |
1916 case that expanded the liability of manufacturers for injuries caused by defective products |
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Due Care |
Idea that consumers & sellers do not meet as equals & that the consumer's interests are particularly vulnerable to being harmed by the manufacturer, who has knowledge & expertise the consumer does not have Manufacturers have an obligation, above & beyond any contract, to exercise due care to prevent the consumer from being injured by defective products |
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Caveat Emptor |
Let the buyer beware Old doctrine before due care |
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Greenman v. Yuba Power Products |
1963 landmark case the court held that an injured consumer may be awarded damages without having to prove that the manufacturer of the defective product was negligent |
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Strict Product Liability |
Holds that the manufacturer of a product has legal responsibilities to compensate the user of that product for injuries suffered because tge product's defective condition made it unreasonably dangerous regardless of whether the manufacturer was negligent in permitting that defect to occur Utilitarian |
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Government Product Safety Commission (CPSC) |
Created by Congress in 1972 to regulate product safety And to protect the public against unreasonable risks of injury associated with consumer products 5 member commission that sets standards for products, bans products presenting undue risk of injury, and in general policies the entire consumer-product marketing process from manufacturer to final sale Critics contend that these regulations are costly & prevent individuals from choosing to purchase a riskier but less expensive product |
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Economic Costs |
Safety regulations benefit consumers but raise the price of products Economists estimate how many lives a regulation saves & then compare that # with the cost of implementing the rule |
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Legal paternalism |
The idea that the law may justifiably be used to restrict the freedom of individuals for their own good |
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Regulations |
Help ensure that business meets its responsibilities to consumers, although many products are nit as closely regulated as people think & political considerations sometimes interfere with the regulatory process. |
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Self Regulation |
Preferred by businesses & favor government deregulation But this sometimes provides inefficient consumer protection |
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Moral responsibilities of a businessfor safety |
1- give safety the priority warranted by the product 2-abandon the misconception that accidents occur exclusively as a result of product misuse & that it is thereby absolved of all responsibility 3- business must monitor the manufacturing process itself 4-when a product is ready to be marketed, companies should have their product safety staff review their market strategy & advertising for potential safdty problems 5- when a product reaches tge marketplace, firms should make available to consumees written information about the product's performance 6- companies should investigate consumer complaints and do so quickly |
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Areas of Business Responsibility |
Product Quality Pricing Labeling Packaging |
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Horizontal Price Fixing |
Occurs when competitors agree to adhere to a set price schedule, not to cut prices below a certain minimum, or to restrict advertising or the terms of sales, discounts, or rebates |
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Price Fixing |
Horizontal price fixing Vertical price fixing |
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Vertical price fixing |
Takes place when manufacturers & retailers - as opposed to direct competitors - agree to set prices |
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Business obligations beyond safety |
Product quality must live up to express & implied warranties Prices should be fair Business should refrain from price fixing, price gouging, & manipulative pricing |
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Price Gouging |
Seller's exploiting a short term situation in which buyees have few purchase options for a much needed priduct by raing prices substantially |
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Labeling & Packaging |
Business's general responsibility to provide clear, accurate, & adequate priduct information Its tge consumers primary source of information |
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Deception & Unfairness in Advertising |
Deceptive techniques Ambiguity Concealment of Facts Exaggeration Psychological Appeals |
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Warranties |
Obligations to purchasers that sellers assume 2 kinds are: Express Implied |
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Express warranties |
Sellers that explicitly state that for example a product is shrink proof or does not require maintenance for 2 years |
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Implied warranties |
Include the claim, implicit in any sale, that a priduct is fit for its ordinary, intended use Implied warranty of merchantability |
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Manipulative pricing |
Consumers are misled by prices that obscure a products true cost for ex 3 for 2 |
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Ambiguity |
Cads that can be understood in 2 or more ways that can be deceiving |
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Concealment of Facts |
Supression of information that is unflattering to their product. Tgey neglect to mention or they distract consumers' attention away from information, knowledge of which would probably make their products less desirable |
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Exaggeration |
Way that advertisers can mislead by making claims unsupported by evidence |
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Puffery |
Supposedly harmless use of superlatives & subjective prause in advertisements King of beers, Breakfast of Champions |
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Psychological Appeals |
Persuasive effort aimed primarily at emotion, not reason Ads that rely extensively on pitches to power, prestige, sex, masculinity, feminitry, acceptance, approval, and the like aim to sell more than a product |
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Subliminal advertising |
Adverstising that communicatrs at a level beneath conscious awareness, where, psychologists claim, tge vast reservoir of human motivation primarily resides |
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Federal Trade Commission (FTC) |
1914 was originally created as an antitrust weapon |
