Strict or Vicarious Liability of Lessors

"No Wisconsin case has addressed whether a finance lessor may be held strictly liable for damages resulting from the lease of a defective and unreasonably dangerous product. However, a finance lessor would probably not be strictly liable in Wisconsin.

Generally, finance lessors are not strictly liable because the policy considerations which impose strict liability on a typical commercial lessor do not apply when the lessor is not marketing or supplying the injury-causing property. See 63A Am. Jur. 2d, Products Liability § 1289 and Cole v. Elliot Equip. Corp., 653 F.2d 1031, 1034-35 (C.A.Tex. 1981) (declining to apply strict liability to finance lessor under the Restatement (Second) of Torts, § 402A). A finance lessor typically does not have control or possession of the product and is not in a position to address potential defects and does not introduce the product into the stream of commerce. See id.

The same factors which support Wisconsin's imposition of strict liability on a typical commercial lessor strongly suggest that Wisconsin probably would not impose strict liability on a finance lessor. In order to hold a commercial lessor strictly liable for damages caused by leased equipment, a Plaintiff must establish that the equipment was in a defective condition when it left the possession or control of the lessor and that the lessor was engaged in the business of leasing the equipment because a commercial lessor is familiar with the characteristics of the what it leases and is in a position to discover and correct defects. See Kemp v. Miller, 154 Wis. 2d 538, 558, 453 N.W.2d 872 (Wis. 1990) (Wisconsin Supreme Court imposed strict liability under § 402A of the Restatement (Second) of Torts on a rental car agency). A Wisconsin court would likely not impose strict liability based on these factors just as the Texas court in Cole refused to do.

Although there is no Wisconsin reported case directly on point, it is likely a Wisconsin court would not hold a lessor vicariously liable for the wrongful acts of the lessee. Generally, under the doctrine of respondeat superior, vicarious liability is imposed when a person is deemed responsible by virtue of the close relationship between that person and the tortfeasor. Kerl v. Rasmussen Inc., 273 Wis. 2d 106, 117, 682 N.W.2d 328, 334 (Wis. 2004). And if a principal does not control or have the right to control the day-to-day physical conduct of the agent, then the opportunity and incentive to promote safety and the exercise of due care are not present, and imposing liability without fault ""becomes difficult to justify on fairness grounds."" Id. at 122-23."