SW Legal Educational Publishing

Continuation Theory Does Not Apply to Buyer of Company's Inventory for Resale
Description Georgia high court held that when a firm bought another firm in the same line of commerce, it was not responsible in strict liability for product defects related to inventory acquired that it put into commerce. Since it did not continue to manufacture the product, the continuation theory could not be used to impose liability.
Topic Torts
Key Words Products Liability, Continuation Theory
C A S E   S U M M A R Y
Facts Plaintiffs were sued for damages caused when a trailer became unhitched and struck a vehicle. They claimed that the proximate cause of the accident was a defectively designed hitch pin; they filed a third-party complaint against Farmex, a maker of hitch pins. The hitch pin involved in the accident was made by JA-BIL, which had been acquired by Farmex. The issue was whether Farmex could be liable under the continuation theory that holds successor corporations strictly liable as manufacturers.
Decision Farmex is not liable. It bought the hitch pins from JA-BIL and put them into commerce; hence it was a product seller, not manufacturer. Although Farmex bought JA-BIL, it did not produce any more of the pins in question, it merely sold the inventory in existence. Strict liability cannot be imposed on Farmex under the continuation theory, which would apply if Farmex had continued to produce the pins.
Citation Farmex Incorp. v. Wainwright, ---S.E.2d--- (1998 WL 340196, Sup. Ct., Ga.)
501 S.E.2d 802 (Sup. Ct., Ga., 1998)

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