Which of the Following Would Most Likely Be a Defect

question 64

Multiple Choice

Which of the following would most likely be a defect under 402A of the Restatement of Torts?

• A) A chair produced without inserting the appropriate screws.
• B) A product with a defective design that is nevertheless the "state of the art."
• C) Vodka that is 100 proof and makes people drunk and causes liver damage after years of heavy use.
• D) All of these are defects under 402A.

---

Definitions:

Forward Contract

A bespoke arrangement between two parties for acquiring or disposing of an asset at a designated price on an upcoming date.

Hedge

An investment made to reduce the risk of adverse price movements in an asset.

Speculative Forward Contract

A financial derivative used to speculate on the future price of an asset, involving an agreement to buy or sell the asset at a future date for a price determined today.

Fair Value Hedge

A risk management technique that uses financial instruments to mitigate the risk associated with changes in the fair value of an asset or liability.