Imagine as a product manufacturer being held liable for defects in a product that you did not make, have never made, and have no plans to make. This very real possibility exists in Pennsylvania under what is commonly referred to as “the product-liability exception” to the general rule of successor nonliability. Although it has been around for close to 50 years, the exception is not well-developed in Pennsylvania.

In Pennsylvania, a company that acquires the assets of another company does not acquire the liabilities of the transferor corporation simply because the acquisition of assets. For liability to attach, Pennsylvania requires an express assumption of liability; the transaction amounts to a consolidation or merger; the successor corporation is a mere continuation of the predecessor; the transaction was fraudulently entered into; or the transfer is without adequate consideration. See Dawejko v. Jorgensen Steel, 434 A.2d 106, 107 (Pa. Super. 1981). Where one or more of these exceptions to the general rule of successor nonliability can be shown, the successor can be held liable for defects in products manufactured by the predecessor.