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where strict tort liability for defective products is an available theory of recovery. 45 Second, theState of Washington, which is one of the few states to adopt explicitly the product line exception, hasstated just as clearly that the exception does not apply where there is a sale of less than all of thepredecessor’s assets, because the purchaser cannot be deemed to have caused the destruction ofplaintiff’s remedy. 46 Finally, the product line exception is clearly a minority rule, having beenadopted only in four states and rejected in over 20 states 47 .7. Duty to WarnThe duty to warn exception is an anomaly among the successor liability exceptions, in that itis an independent duty of the successor, and it is derived from the successor’s own actions oromissions - namely, the failure to warn customers about defects in the predecessor’s products. Thereare two elements to this exception: first, the successor must know about the defects in thepredecessor’s products, either before or after the transaction is completed; second, there must besome continuing relationship between the successor and the predecessor’s customers, such as (butnot limited to) the obligation to service machinery manufactured by the predecessor. 488. Inadequate Consideration/Creditors Not Provided ForAlthough the concept of inadequate consideration usually arises as an element of one or moreof the other exceptions (typically fraud or de facto merger), occasionally it is cited as a separateexception where the purchaser has not paid adequate consideration, and the seller would be renderedinsolvent and unable to pay its debts. 49 Since the asset sale is the cause of the seller’s problems,many courts will try to find a way to rule in favor of an innocent third person who otherwise may bewithout a remedy. The various rationales used often sound like the analyses used in some de factomerger cases, or those found in the product line exception cases.Quite often, the inquiry in inadequate consideration cases focuses on the fact thatconsideration is paid directly to the seller’s shareholders rather than to the seller. If the considerationtakes the form of the purchaser’s stock, one again finds oneself in the de facto merger or merecontinuation cases.4546474849Ray, supra note 50, at 19 Cal.3d 34. See, also, Florom v. Elliott Mfg., 867 F.2d 570, 578 (10thCir. 1989), and Welco Indus., Inc. v. Applied Companies, 617 N.E.2d 1129, 1133 (Ohio 1993).Hall, supra note 57.Adopted in California, New Jersey, Pennsylvania and Washington. Rejected in Arizona, Colorado,Florida, Georgia, Iowa, Kansas, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire,North Dakota, Ohio, Oklahoma, Texas, Vermont, Virginia and Wisconsin.For cases discussing the “duty to warn” exception, see, for example, Chadwick v. Air Reduction Co., 239F. Supp 247 (E.D. Ohio 1965); Shane v. Hobam, Inc., 332 F. Supp. 526 (E.D. Pa. 1971; Gee v. Tenneco,Inc., 615 F.2d 857 (9 th Cir. 1980); and Travis v. Harris Corp., 565 F.2d 443, 449 (7 th Cir. 1977).West Texas R&D Co. v. Comm’r. of Internal Revenue, 68 F.2d 77 (10 th Cir. 1933).Appendix C – Page 82525936v1