Name: Ameer Hamza

Class: BSAF-5B

Roll N: 180818

Subject: Business Ethics

Submitted to: Dr. Sohail

Q.1) How manufacturer would be responsible for the injury caused to buyer due to
defect in product? Advantages of government intervention in market system.

Product liability:

 is the liability of a manufacturer or a seller for injuries to a consumer resulting

from a defective product. In frequently results in a civil lawsuit against the makers of a product.
The lawsuit claims that a person or group of persons was injured by a product that was defective
or not suitable for the use for which it was advertised. In the negligence context, claims for
product liability generally arise in the following situations:

 A product has negligent design

 A product has negligent manufacture
 There was a failure to warn

Negligent design:

A negligently designed product is dangerous because the manufacturer created it in a way

that could harm users or others. The product must be free from unreasonable risks—ones
that are unexpected, inappropriate, or not sensible. However, the product does not need to be
absolutely safe. For example, a chainsaw manufacturer can build a chainsaw to the highest
manufacturing standards, but it still does not reduce the risk inherent in using a chainsaw.

Negligent manufacture:

A product that is negligently manufactured is one that is designed properly yet left the
manufacturing plant in a dangerous condition because of an inadequate inspection or other
failure on the part of the manufacturer.

Failure to warn:
 A manufacturer has a duty to warn purchasers or users about the potential dangers of using
the product in a normal manner (in other words, the way it was intended to be used). The
manufacturer also has a duty to warn purchasers or users of the dangers associated with the
foreseeable misuse of the product.

Marketing Defect:

A marketing defect occurs when a manufacturer or seller of a product fails to communicate

to consumers about the product's safe and proper use, the product's unobvious dangerous
characteristics, or the risks of using the product. For example, if a medical device retailer
sells medical equipment without including information on the product's safe and proper use,
this is a marketing defect.

Example:

There was a high-profile product liability case involving Johnson & Johnson. In 2018, the
company was ordered to pay over $4 billion to 22 women (and their family members) who
claimed that asbestos in their talcum powder products caused them to develop ovarian cancer.
The plaintiffs in the case accused Johnson & Johnson of failing to warn them of the cancer risks
associated with using the powder. As a result a jury decided against Johnson & Johnson and
awarded the plaintiffs compensatory damages (money to replace what was lost) as well as
punitive damages (penalties to punish the defendant). As this case shows, product liability cases
can be serious and can end up costing the at-fault party (or that party's insurer) significant sums.

Advantages of government intervention:

Following are the advantages of government intervention in market system:

Provide public goods (e.g. law and order) not supplied in free market.
Provide merit goods (education, health) underprovided in free market.
Reduce inequality and poverty through tax and benefit system.
Gov’t regulations can protect environment, workers and consumers.
Protect long-term interests of environment.
Limit monopoly power.