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Social Costs View Of The Manufectures Duties-Business Ethics-Lecture Notes, Study notes of Business Ethics

This lecture handout is about Business Ethics course. It was provided by Prof. Deepanwita Subbaratnam at Bundelkhand University. Its main points are: Social, Cost, View, Manufacture, Duties, Society, Advertising, Ethics, Commercial, Manufacturer

Typology: Study notes

2011/2012

Uploaded on 08/04/2012

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
"'%&''0$"%$%.''
*         # 0   
  !##!  !  
0  !$ <  &    #  
#!<!"$
0## !
### !    $ & *  
          $<
!##$# &
$$$+###&
" ####"
# &# #I0#C
<# $#!
 !!&$ 
0#  # <## #  #
 < ## #  " ##
#( !! !&'#(##
"  !!   ## #      
&
4"  ! ### ##   !   " 
##   !  $!    &
-9     #   !"   #  
! &.
;" $  !   <" ##  $ 
0 &" ##
$#<"   
&! 0  !# # ""
#< $!##(! 
 $  ##  #   # 
&
"#(<# #
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LESSON 37 THE SOCIAL COSTS VIEW OF THE MANUFACTURER’S DUTIES A third theory on the duties of the manufacturer would extend the manufacturer’s duties beyond those imposed by contractual relationships and beyond those imposed by the duty to exercise due care in preventing injury or harm. This third theory holds that a manufacturer should pay the costs of nay injuries sustained through any defects in the product, even when the manufacturer exercised all due care in the design and manufacture of the product and has taken all reasonable precautions to warn users of every foreseen danger. According to this third theory a manufacturer has a duty to assume the risks of even those injuries that arise out of defects in the product that no one could reasonably have foreseen or eliminated. The theory is a strong version of the doctrine of caveat vendor: let the seller take care. This third theory, which has formed the basis of the legal doctrine of strict liability, is founded on utilitarian arguments. The utilitarian arguments for this third theory hold that the “external” costs of injuries resulting from unavoidable defects in the design of an artifact constitute part of the cost society must pay for producing and using an artifact. By having the manufacturer bear the external cost that result from these injuries as well as the ordinary internal cost that result form these injuries as well as the ordinary internal costs of design and manufacture, all costs are internalized and added on as part of the price of the product. Internalizing all costs in this way, according to proponents of this theory will lead to a more efficient use of society’s resources. First, because the price will reflect all the costs of producing and using the artifact, market forces will ensure that the product is not overproduced and resources are not wasted on it. (Whereas if some costs were not included in the price, then manufacturers would tend to produce more than is needed.) Second, because manufacturers have to pay the costs of injuries, they will be motivated to exercise greater care and thereby reduce the number of accidents. Therefore, manufacturers will strive to cut down the social cots of injuries, and this means a more efficient care for our human resources. To produce the maximum benefits possible from our limited resources, therefore, the social costs of injuries from defective products should be internalized by passing them on to the manufacturer even when the manufacturer has done all that could be done to eliminate such defects. Third, internalizing the costs of injury in this way enables the manufacturer to distribute losses among all the users of a product instead of allowing losses to fall on individuals who may not be able to sustain the loss by themselves. Underlying this third theory on the duties of the manufacturer are the standard utilitarian qssumptions about the values of efficiency. The theory assumes that an efficient use of lesources is so important for society that social costs should be allocated in whatever way will . lead to a more efficient use and care of our resources. On this basis, the theory argues that a docsity.com manufacturer should bear the social costs for injuries caused by defects in a product even when no negligence was involved and no contractual relationship existed between the manufacturer and user.