Case Study 1

Case Study 1

Problems Identified

Mr. Murphy concerns are justified due to these facts:

Fauquier Gas Company is one of the 440 gas companies of the nation

The company has decided to expand its business and has proposed a new project plan, for which they need raw materials.

The company, prior to the current request for purchases, used to buy the pipelines with the wall thickness of 3/8 inches and the length was of “random double normal” (40 feet plus or minus 5 feet).

The decision on which wrapper would be used was not been taken by Wilson. Fauquier used two types of wrapper- coal tar and pry tech. The mills supplying this pipeline also would apply the wrapping. The company that applied pry-tech wrapper was in Atlanta while the company applying coal tar wrapper was in Philadelphia.

Murphy was concerned about the economic consequences and the scheduling of the plan.

Facts

Fauquier Gas Company was planning to implement a new gas project. Therefore, they needed the raw materials such as pipes, meters, fitting, etc.

Mr. Murphy was the manager of supply chain management, and he was in charge for the project and had the responsibility of purchasing the raw materials required for the project.

Mr. Pat Wilson was the design engineer and he was required to do the pipe specifications for the project.

Sam Law was the construction project engineer who approved the design.

Product liability is a general term that applies to several possible causes of a compensable injury. The application and legal foundation of tort litigation to compensate for product-related injuries was fundamentally redefined after the mid-1960s (Goldberg and Zipursky 2010). Prior to this time, liabilities for products sold into commerce followed from claims of negligence, breach of warranty, and fraud. These causes of liability are based on manufacturer conduct. Under a theory of negligence, the injured party seeks to prove that the product manufacturer has violated the law or has failed to follow commercial standards that would have protected the buyer or user of the product (i.e., the manufacturer violates a duty owed to the injured party). Under breach of warranty, the injured party seeks to prove that the product manufacturer has breached certain express or implied warranties about the fitness of a product for a particular use. Under fraud, the injured party seeks to prove that the product manufacturer knowingly and materially misrepresented information about the product and its risks to the buyers or users.

Although claims based on negligence, breach of warranty, and fraud continue in product liability litigation today, contemporary product liability litigation often focuses on causes based on defect considerations in addition to claims about manufacturer conduct. Importantly, strict liability for known or reasonably known product defects will attach to the manufacturer even if there is no aspect of negligence or improper conduct. Not surprisingly, this legal view is controversial from a law and economics perspective that emphasizes efficiency and maximizing innovation and product development (Viscusi and Moore 1993; Polinsky and Shavell 2010).

Manufacturing defects: When the product departs from its intended ...