Products Liability

"(4) Product liability claim. ""Product liability claim"" includes any claim or action brought for harm caused by the manufacture, production, making, construction, fabrication, design, formula, preparation, assembly, installation, testing, warnings, instructions, marketing, packaging, storage or labeling of the relevant product. It includes, but is not limited to, any claim or action previously based on: Strict liability in tort; negligence; breach of express or implied warranty; breach of, or failure to, discharge a duty to warn or instruct, whether negligent or innocent; misrepresentation, concealment, or nondisclosure, whether negligent or innocent; or other claim or action previously based on any other substantive legal theory except fraud, intentionally caused harm or a claim or action under the consumer protection act, chapter 19.86 RCW. (RCW 7.72.010)

(1) Except as provided in subsection (2) of this section, a product seller other than a manufacturer is liable to the claimant only if the claimant's harm was proximately caused by:
(a) The negligence of such product seller; or
(b) Breach of an express warranty made by such product seller; or
(c) The intentional misrepresentation of facts about the product by such product seller or the intentional concealment of information about the product by such product seller.
(2) A product seller, other than a manufacturer, shall have the liability of a manufacturer to the claimant if:
(a) No solvent manufacturer who would be liable to the claimant is subject to service of process under the laws of the claimant's domicile or the state of Washington; or
(b) The court determines that it is highly probable that the claimant would be unable to enforce a judgment against any manufacturer; or
(c) The product seller is a controlled subsidiary of a manufacturer, or the manufacturer is a controlled subsidiary of the product seller; or
(d) The product seller provided the plans or specifications for the manufacture or preparation of the product and such plans or specifications were a proximate cause of the defect in the product; or
(e) The product was marketed under a trade name or brand name of the product seller. (RCW 7.72.040)

(1) Evidence of custom in the product seller's industry, technological feasibility or that the product was or was not, in compliance with nongovernmental standards or with legislative regulatory standards or administrative regulatory standards, whether relating to design, construction or performance of the product or to warnings or instructions as to its use may be considered by the trier of fact.
(2) When the injury-causing aspect of the product was, at the time of manufacture, in compliance with a specific mandatory government contract specification relating to design or warnings, this compliance shall be an absolute defense. When the injury-causing aspect of the product was not, at the time of manufacture, in compliance with a specific mandatory government specification relating to design or warnings, the product shall be deemed not reasonably safe under RCW 7.72.030(1). (RCW 7.72.050)"

Washington's Product Liability Act imposes liability on manufacturers and "product sellers." RCW 7.72.040. The Act defines "product sellers" to include "parties who are in the business of leasing or bailing such products." RCW 7.72.010(1). However, the Act excludes finance lessors from its coverage and defines "finance lessor" as "one who acts in a financial capacity, who is not a manufacturer, wholesaler, distributor, or retailer, and who leases a product without having a reasonable opportunity to inspect and discover defects in the product, under a lease arrangement in which the selection, possession, maintenance, and operation of the product are controlled by a person other than the lessor." RCW 7.72.010(1)(d). The Washington Court of Appeals, in an unpublished opinion, has applied the Act to a commercial lessor. Hofstrand v. Coast Crane Co. of Wash., 113 Wash.App. 1060 (2002) (unpublished decision). However, the Court of Appeals held that the lessor did not breach its duty to the plaintiff and held in favor of the lessor. Id.

Products liability represents another example of the benefits of finance lease characterization. In addition to drafting lease documents as finance leases, lessors should be careful to disclaim all warranties and to clarify that lessees have not relied on any representations of lessors.