The high end magnifying glass is one of QPI’s products. This product which is intended for use in office settings only is being sold with limited warranties of merchantability and fitness for a particular purpose. It also warns the buyers that it is “intended for use indoors only. ” One day, Timmy, a four year old child, was playing with one of QPI’s magnifying glass in the backyard. A severe burn was caused to his eye while he was attempting to make the sun bigger by focusing the it to the sun. Consequently, Timmy’s parents filed suit against QPI. IV. Discussion a.
The suit against QPI for product liability may prosper. To be able to successfully file a suit under product liability law, the plaintiff must be able to pove that the product is defective in either of the three areas: manufacturing, defect and marketing. QPI’s magnifying glass has no manufacturing defect as its product did conform to the manufacturer’s plans and specifications. It also has no design defect as the magnifying glass when used as intended is not dangerous. While the product has no manufacturing and design defect, the absence of warning on a product may be considered a defect.
In this case, the failure of QPI to adequately provide a warning on the product by stating that the magnifying glass should not be used by children below 7 years old increased the danger posed by the product. It can thus be considered that QPI was negligent in its failure to adequately provide a warning. (Silver H. Silverglate 2) b. QPI has legal and ethical duty to all purchaser of its magnifying glass to inform them of the dangers posed by their product. This duty includes its responsibility to provide warning on their product that the magnifying glass is not intended to be used by children below 7 years old.
V. Conclusion In the light of the facts of this case, the courts are most likely to rule against QPI. While its product did not have manufacturing and design defect, its failure to adequately warn its purchasers of the dangers of its magnifying when used by children below 7 years old is a marketing defect which can be considered as an act of negligence on its part. Legal Memorandum To: Nouv From: Liddly Lawless Date: March 18, 2009 Subject: Product Liability ———————————————————————————————————————-
I. Questions a. What are the benefits and burdens of QPI’s listing its shares publicly? b. What are the alternatives that QPI should consider to increase its capital? II. Answer a. There are many benefits but there are also disadvantages to listing QPI’s shares publicly. b. There are other alternatives that QPI can adopt to increase the capital of the company. III. Facts of the Case Nouv seeks to raise funds for QPI. One of its alternatives is to list QPI in the US Stock Exchange to enable it to accept investment from potential investors.
It wants to find out the benefits and disadvantages of going public and if there are other alternatives that it can use to raise funds. IV. Discussion a. Going public has may advantages. Firstly, it provides the company with equity financing opporutnities to help expand the operations of the company. Secondly, it will also help improve QPI’s visibility and prestige as a company. Thirdly, it helps provide liquidity for shareholders as it gives them a venue to trade their own shares. Fourthly, it provides an incentive for employees to participate in the ownership in the company they work for as a shareholder.
Fiftly, listing shares publicly may help facilitate growth for the company. On the other hand, there are disadvantages in listing a corporation publicly. Firstly, the public corporation may become subject to market fluctuations. Secondly, the owners of the public corporation are restricted in running the affairs of the corporations since they need to consider the interest of shareholders. Thirdly, the corporation is subject to a wide range of disclosure and regulatory requirements. b. Going public is not the only alternative for a company which seeks to raise additional capital.
One of these alternatives is the system known as Factoring where accounts receivable of the corporation is assigned in exchange for immediate cash for as high as 90% of the face amount of the receivables. Other alternatives include merger with other corporation by virtue of which QPI’s funds and assets are joined with other corporation. Reverse mergers is also an alternative where a privately-held company acquires a publicly-traded but dormant company making it a public company. Private placement is aso an additional alternative by virtue of which the company raises money by selling securities to accredit investors. Dorkman. V. Conclusion
In the light of the facts of this case, going public is an option for QPI to raise the necessary funds. However, before QPI exercises this option it must take into account factors such as its readiness to go public and the number of years QPI has been in existence. It must also take into account the present global financial crisis which may hinder the investors from investing in the company. Cited Works Silverglate, Spencer H.. “The Restatement (Third) of Torts: Products Liability – the tension between product design and product warnings. ” Florida Bar Journal. Florida Bar. 2001. HighBeam Research. 18 Mar. 2009 <http://www. highbeam. com>.