Insulate Inc. makes and sells fire-retardant building materials. In a product liability suit against Insulate, a court would use a risk-utility analysis of the company’s product as designed to determine whether
a risk of harm outweighs the products’ utility to the users and the public.
the product performed as a consumer would reasonably expect.
the product is as useful and as risky as the public expects.
the risk of return on investment in the product supports its utility.
The correct answer and explanation is :
Correct Answer:
A risk of harm outweighs the product’s utility to the users and the public.
Explanation:
In a product liability suit, courts often use the risk-utility test to determine whether a product is defectively designed. This test assesses whether the risks posed by the product outweigh its benefits to consumers and society.
For Insulate Inc., a manufacturer of fire-retardant building materials, a court would evaluate whether the dangers associated with their products (such as toxicity, flammability, structural weaknesses, or health hazards) are justified by the benefits they provide (such as fire resistance, durability, and safety enhancements). If the risks significantly outweigh the benefits, the product may be deemed defectively designed, making Insulate liable for damages.
The risk-utility analysis considers factors such as:
- The severity and likelihood of harm – If the product poses a high risk of injury or fatality, it is more likely to be considered defective.
- Availability of safer alternative designs – If a safer alternative design was feasible and Insulate Inc. failed to implement it, liability is more likely.
- The cost of improving safety – If making the product safer is not prohibitively expensive, the company may be expected to do so.
- The usefulness of the product – If the product has significant public utility (e.g., saving lives by preventing fires), this may justify certain risks.
- Consumer expectations and industry standards – If the product does not meet industry safety standards or fails to perform as users reasonably expect, it could be considered defective.
This test differs from the consumer-expectation test, which focuses solely on whether a product performs as an ordinary consumer would expect. The risk-utility test is broader and applies in cases where a product’s risks and benefits must be weighed.