Question 2 Assume Erica and Patrick agree on a price for the car. When she picked up the car, Patrick gave Erica a preprinted form titled "Terms and Conditions of Purchase" and the owner's manual. Erica signed to acknowledge that she had received the form and manual. Paragraph 5 of the form, which Erica did not read, read as follows:

"Dealer's warranty is limited to the cost of repair of any defect in materials or workmanship. No other warranty applies."

On November 15th Erica was driving in the country near Wainfleet. Erica loved her Tesla. Although it was 1C, she had put on her snowmobile suit and was cruising with the windows down and sunroof open, the heater on and "Born to be Wild" on the radio.

Suddenly it began to rain. Erica tried to close the sunroof but the mechanism failed. The rain fell harder. She put the wipers on high but they did not speed up and were unable to clear the windshield. Erica could barely see the road. Suddenly a transport truck coming from the other direction passed her spraying rainwater over the windshield and into the car. She was temporarily blinded by the water. As her vision cleared, she saw a cow directly in her path. She swerved to miss it, going off the road, striking a hydro pole and totalling the car.

As a result of striking the hydro pole, power in the area was disrupted for 8 hours. The interruption extinguished the oxygen supply to Farmer Brown's barn and several thousand chickens died. Brown brought an action for damages of $30,000.00 against Erica.

Erica denied responsibility and, in turn, sued Farmer Jones (the owner of the cow), Patrick's Tesla Ltd. and Tesla Motor Company for damages of $1,000,000.00 representing

(i) any liability she might have to Farmer Brown;

(ii) lost income (she was unable to work for 6 months);

(iii) damage to property (the value of her car) and pain and suffering.

At trial, the following was established:

(i) The cow had escaped through a hole in Farmer Jones' fence. Farmer Jones was unaware of the hole, but had inspected his entire property three months before the accident and had not noticed any defect.

(ii) The windshield wiper motor on the Tesla was defective and, as a result, only operated on the slowest speed.

(iii) Engineers at Tesla Motor Company were aware of the problem with the roof assembly. Page 47 of the owner's manual (printed in the U.S.) provided the following warning under the heading - Operation of Roof Assembly:

"Roof closure apparatus may fail if vehicle is in motion at temperatures below 36F."

The cost of re-engineering and replacing the sensors which operated the roof assembly was in excess of $25,000,000.00. The Engineers felt that the warning would be sufficient since it was very improbable that anyone would need to work the roof assembly in conditions where the vehicle was in motion and the temperature was below 36F.

(iv) Farmer Brown had installed a battery-operated power generator in the barn to be available as an emergency backup. The batteries were not charged and therefore the generator did not start when the power went out, resulting in the disruption of the oxygen supply.

Required: Explain the issues which will be raised in the lawsuits, the applicable principles and the likely result of the action. Be certain to make reference to the elements which must be established for a successful tort action and the effect of paragraph 5 of the Terms and Conditions of Purchase.