In the early days of American industrialization, the legal doctrine of privity of contract protected manufacturers from consumer lawsuits. Under this rule, an injured party could only sue the immediate seller of a defective product, not the company that built it. When owner E.
M. Johnson was severely injured after a defective wooden wheel collapsed on his 1909 Cadillac, Cadillac argued it owed no legal duty to Johnson because he bought the car from an independent dealer rather than directly from the factory. The resulting landmark federal lawsuit, Johnson v.
Cadillac Motor Car Co. , which began in 1911, dismantled this defense. Alongside the famous MacPherson precedent, courts established that when a manufacturer places an inherently dangerous vehicle on the market, its duty of care extends directly to the ultimate consumer regardless of contractual privity.
This monumental shift created modern product liability law, forcing manufacturers to take full legal responsibility for consumer safety.