Contracts v. Torts: North Dakota's Aftermarket Risk Contract & (and) Aftermarket Risk Insurance, Products Liability, and the General Aviation Industry
![handle is hein.journals/nordak72 and id is 673 raw text is: CONTRACTS V. TORTS: NORTH DAKOTA'S
AFTERMARKET RISK CONTRACT & AFTERMARKET
RISK INSURANCE, PRODUCTS LIABILITY, AND THE
GENERAL AVIATION INDUSTRY
I. INTRODUCTION
The person or business who decides to purchase a general aviation
airplane' pays for a significant insurance premium attached to the price
of the plane.2 This premium reflects approximately one-third of the cost
of the plane, accounting for the expenses that manufacturers of general
aviation aircraft3 pay for product liability litigation controlled by tort
principles.4 In other words, purchasers pay a premium that allows them
to sue general aviation manufacturers for both pecuniary5 and non-
pecuniary damages6 in the event of an accident. Yet, purchasers cannot
modify the premium because the state has chosen the premium for them
by forcing general aviation manufacturers to insure against tort liability.
Consequently, the general aviation industry is almost nonexistent
because buyers are unwilling to pay for the state mandated premium.7
For example, in 1978, before tort law hit its prime, a total of 17,811
1. General aviation airplanes are typically those airplanes designed to carry less than twenty
passengers, but excluded are the large domestic and international commercial airplanes used for
scheduled airline flights. Robert Martin, General Aviation Manufacturing: An Industry Under Siege,
in THE LiABLrrY MAZE 478, 478 (Peter W. Huber & Robert Litan, eds., (1991)). Some examples of
general aviation include air ambulance service, air charter, flight training, pleasure flying, agricultural
aerial application, air taxi, and other aviation activities that do not fall under the category of scheduled
airlines. John H. Boswell & George A. Coats, Saving the General Aviation Industry: Putting Tort
Reform to the Test, 60 J. Am L. & CoM. 533, 535 (1994-95). North Dakota defines general aviation as
aircraft weighing less than 12,500 pounds, powered and intended to fly above the ground and
designed to carry one person or more, but with a maximum seating capacity of fewer than twenty
passengers. N.D. CENT. CODE § 26.1-48-01(2) (1995).
2. George L. Priest, Can Absolute Manufacturer Liability be Defended?, 9 YALE J. ON R FG. 237,
262 (1992).
3. Boswell & Coats, supra note 1, at 535. The general aviation industry includes manufacturers
of general aviation aircraft, major aircraft components [of general aviation aircraft] (such as engines
and propellers), and small components. Id.
4. Cf. PETER W. HUBER, THE LEGAL REVOLUTION AND ITS CONSEQUENcEs 3-4 (1988) (discussing the
effect of litigation on the cost of products). This cost is called a tort tax. Id.
5. Pecuniary damages are damages that can be estimated in and compensated by money such
as lost wages, medical expenses, and the price of the good. BLACK's LAW DICTIONARY 392 (6th ed.
1990).
6. Non-pecuniary damages include injuries that cannot be accurately calculated in monetary
terms such as pain and suffering, loss of pleasure of life, or a lost limb. Compare id. (stating the
definition of pecuniary damages).
7. Cf. George L. Priest, The Current Insurance Crisis and Modern Tort Law, 96 YALE L. J. 1521,
1567 (1987) (noting that several plane models have been taken off the market because the cost of
insurance has so greatly raised the price); James H. Andrews, Injury Lawsuits Said to Cause Financial
Crisis for Many U.S. Companies, CtuIsTLAN SCi. MoNIToR, Jan. 25, 1994, at 11 (noting that difficulty in
obtaining insurance caused Cessna to stop producing single-engine piston aircraft).](ViewImageLocal?handle=hein.journals/nordak72&div=36&collection=&method=preview&ext=.png&size=3)
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