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Case Analysis - The Ford Pinto

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Introduction

Week 4 – Case Analysis – The Ford Pinto – By: Michelle Hingtgen

Legal Case Analysis

Facts:

        The American Automobile industry has historically been tied to the nations economic cycle in which three or four years were good followed by one or two poor years. In 1977 there were four major U.S. automakers including General Motors, Ford, Chrysler and American Motors. Imports were starting to make their presence in the market because they offered subcompact cars at reasonable prices. Ford started producing the Ford Pinto on August 10, 1970. Ford accelerated the planning process and achieved the design and development time in 38 months, compared to the industry average of 43 months. Ford wanted the car to weigh less than 2,000 pounds and cost less than $2,000. The only Pinto that was first sold was a two-door sedan. The hatchback model and station wagon model followed in later years. They also converted one of its assembly plants from full-size to compact cars in 51 days to help produce many more compact and subcompact cars, which were overtaking the market. Ford had conducted many tests related to the Ford Pinto’s fuel system. An early question was where to safely put the gas tank. They decided to keep the tank in the original location behind the rear axel even though it was determined that above the axel would have been safer.

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Middle

        Legal Rules:

        The UCC makes the rules that constitute liability. Improper inspection can be filed against Ford because they have a duty to inspect their products for defects that can cause harm. They did inspect the Pinto but make necessary changes. Another legal rule that could gave been brought against Ford is the design defects liability. Manufactures have a duty to design their products to avoid reasonably foreseeable risks of harm. Strict liability under section 402A, American Law Institute. Under strict liability the seller must be engaged in the business of selling the product that harmed the plaintiff. The product must also be in defective condition when sold and be unreasonably dangerous because of that condition. The product must have also not been substantially modified by the plaintiff after the sale and the modifications contributed to the injury or other loss.

Observations:

        Ford had known about the risks and continued to manufacture the Pinto without modification. They knew the fuel system was safe but met the standards at the time. They knew modifications would need to be done in future years were standards were going to change. Ford used a cost benefit analysis by changing the system or installing a new part to make the fuel system more effective. They placed a value on a life by using the economic loss to society standard.

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Conclusion

Judgment and Rational:

It was in Ford’s best interest to settle out of court and recall the vehicles. They could have faced large fines and large class action lawsuits. Ford could have also lost a lot of consumers because of a negative image they could have given. Ford also was given the opportunity to correct their mistake for a cost less than what it would have been if it had gone to court. It was not the consumers’ fault that they didn’t know the safety of the vehicle. They only had a responsibility to buy a vehicle that they liked and were able to afford. They trusted the standards set by the NHTSA since it was a federal agency. Ethically Ford took advantage of uneducated consumers that are relying on the federal agency that did not fully protect them.

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