Quality control leads to fewer defective products and fewer lawsuits. Consequently, managers know that quality control is important to their company’s long-term financial health. At the same time, the more quality control that managers impose on their organization, the higher the average cost per unit of whatever is produced and sold. How does a manager decide how much quality control to undertake?

In this chapter, you learned that breaches of warranties and manufacturing and design defects can give rise to liability. Although it is possible to minimize liability through warranty disclaimers and various defenses to product liability claims, all businesspersons know that such disclaimers and defenses do not necessarily fend off expensive lawsuits. The legal issues surrounding product liability and warranties relate directly to quality control. As all of your management courses will emphasize, quality control is a major issue facing every manager in all organizations. Companies that have cost-effective quality control systems produce products with fewer manufacturing and design defects. As a result, these companies incur fewer potential and actual warranty and product liability lawsuits.