Product liability and warranty law evolved in the United States in the middle of the 20th century to encourage consumers to access product markets and enable access to courts when the defective products they purchased caused injury.  The mid-20th century consumer markets that prompted cases like MacPherson v. Buick Motor Co.[1] and Henningsen v. Bloomfield Motors[2] and involved standardized goods – in these cases automobiles – that were mass-produced and distributed across a long supply chain to consumers who thought they knew the good they were buying, but who may not have understood how it worked or how it might pose danger.  Today’s products continue to include standardized, mass-produced goods involving unanticipated attributes, but may also be combined with intangible property, such as software, or services, such as telecommunication services or financial services.  Where services are the only subject of the consumer’s transaction, the defective “product” may be the contract itself. [3]   

Product liability law has not evolved to meet the changes of the 21st century. Current law is unlikely to provide redress when these consumer-contracts-as-products do not “perform” as expected for the parties or should otherwise be viewed as “defective.” Moreover, efforts by the American Law Institute to modernize this law have so far obscured, rather than clarified, the discussion. The draft Restatement of Consumer Contracts’ adoption of a liberal view of assent facilitates the enforcement of boilerplate, while the recent Restatement of Product Liability narrows concepts of consumer expectations.  The result is to severely limit the remedies available to consumers when consumer-contracts-as-products fail to measure up to consumer expectations.

Modernized concepts of product liability should, we argue, extend beyond transactions in goods and include liability for defects in the design of consumer-contracts-as products. In this paper, we offer an alternative standard, drawing on the common law of both tort and contract.  Specifically, we argue that the law of consumer protection needs robust concepts of implied warranty and implied obligations of good faith and should pay as much attention to consumers’ reasonable expectations as express contract terms.  We conclude by exploring the benefits and detriments of these common law alternatives, leaving regulatory implications for later discussion.

 

 

[1]   MacPherson v. Buick Motor Co., Inc., 217 N.Y. 382, 111 N.E. 1050 (1916).

[2]   Henningsen v. Bloomfield Motors, 32 N.J. 358, 161 A.2d 69 (N.J. 1960).

[3]   Our description of some consumer contracts as “products” is hardly novel.  See Arthur Leff, Contract as Thing, 19 Am. U. L. Rev. 131 (1970); Elizabeth Warren and Oren Bar-Gill, Making Credit Safer, 157 U. Pa. L. Rev. 1 (2008).