FIN 240 Chapter Notes - Chapter 7: Strict Liability, Product Liability, Operating Expense
Document Summary
Abnormally dangerous activities - involve a high risk of serious harm to persons or property that cannot be completely guarded against by the exercise of reasonable care. Manufacturer can better bear the cost of injury because it can spread the cost throughout society by increasing the prices of its goods. Manufacturer is making a profit from its activities and therefore should bear the cost of injury as an operating expense. Bailemnts - exists when goods are transferred temporarily into the care of another. Product liability - those who make, sell or lease goods can be held liable for physical harm or property damage caused by those goods to a consumer, user or bystander. May be based on the theories of negligence, misrepresentation, strict liability, and warranties. Negligence - failure to exercise the degree of care that a reasonable, prudent, person would hav exercised under the circumstances. Manufacturers must use due care in all of the following areas:
