Chapter3ReadingNotes.doc

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Department
Accounting & Financial Management
Course Code
AFM 231
Professor
Valerie B Irie

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READING NOTES Chapter 3 – The Law of Torts Tort derives from French, meaning ‘wrong’. Tort is a wrong, an injury, done by one person to another whether intentional or unintentional. This injury could be physical or financial. Scope of Tort Law • Role of law of torts is to compensate victims for harm suffered from the activities of others while punishment is generally left to criminal law • Basic issue for society is to determine who should bear the loss • Tort law is an instrument for apportioning loss, along with such others as insurance and government compensation schemes Development of Tort Concept • In early society it was common to have strict liability, where anyone who caused direct injury to another had to pay compensation, regardless of fault • Gradually courts began to recognize indirect or consequential injuries • Evolved in two ways o Took into account the fault of the defendant o Took into account the causation, whether the defendant’s conduct could be considered the cause of the harm The Basis for Liability • Fault o Fault refers to blameworthy or culpable (in the wrong) conduct, conduct that in the eyes of the law is unjustifiable because it intentionally or carelessly disregards the interests of others o Justification for liability on fault is in the hopes that it will act as a deterrent • Strict Liability o As mentioned before, strict liability persists in some areas of modern law  People who collect potentially dangerous things on their land are liable for any resulting damage, even if they are blameless  Eg. African Lion Safari case or Dog Owner’s Liability o A person who undertakes a dangerous activity should charge for his service according to the degree of risk, and carry adequate insurance to compensate for possible harm done to others o Note that in Canadian negligence cases, standards of care increase proportionally with danger • Social Policy o The basis of liability, whether fault or strict liability, is a question of policy  Policies change with social standards which consequently force the law to adapt in many ways o The most radical proposals (from the left) would eliminate lawsuits for all personal injuries and compensate victims through a government scheme  Eg. ‘No fault insurance’ which makes insurance compulsory and eliminates fault as a basis for claims  Eg. Worker’s compensation where industrial accidents are seen as inevitable and employers must contribute to a fund • Vicarious Liability o Highlights an area where the law has responded to the pressure of social needs with respect to torts committed by employees in the course of their employment o Vicarious liability involves the liability of an employer to compensate for harm caused by an employee  Eg. If an employer instructs an employee to perform a dangerous task for which he knows the employee is not trained o The employer is liable even when he has given strict instructions to take proper care, or not to do the act that causes the damage o Justifications  Prevents legally harmful demands from being placed upon employees  Employees generally have limited assets available to pay compensations  Based upon fairness, the person who makes the profit should also be liable for the loss Negligence • By far, negligence is the most common basis for legal actions in court • Concept is quite simple, negligence involves anyone who carelessly cause injury to another should compensate the victim for that injury • Elements of a Negligence actions o Defendant owed plaintiff a duty of care (value judgement) o Defendant breached that care (policy and fact) o Defendant’s conduct caused injury to the plaintiff (what is causal) • Note: All three requirements must be established • Duty of Care (Extended) o Principle criterion of duty of care is that the alleged wrongdoer should have foreseen that his actions might do harm o One cannot be expected to anticipate all possible consequences but, “would a normally intelligent and alert person have foreseen that this conduct would have likely caused harm?”  Hunt vs. Sutton • Christmas party with open bar ends with a paraplegic after a drunken employee refused a ride home • Woman drank a lot at the party, then went to the hotel bar after that • Hunt charged her employer with negligence because they knew she was drunk but didn’t do enough to stop her o Plaintiff must go further and establish a duty of care  Duty will arise only where the defendant could reasonably have foreseen a risk of harm to that plaintiff or someone in the plaintiff’s position  Eg. Courier company was not held liable for delivering an article of mail too late for a private sale to be completed as it could not reasonably foresee the delay would cause a loss to some third party outside its relation with the client (not allowed to read the mail!) o Courts have sometimes held that duty of care is owed to persons other than the individual who is directly injured  Eg. Court held driver liable when a mother died by emotional trauma of seeing son hit by the driver because that type of injury was foreseeable o Court will consider any statutes with respect to the matter • Standard of Care (Extended) o Law places a general duty on every person to take reasonable care to avoid causing foreseeable injury to other persons and their property o Standard of care varies according to the activity in question such as a brain surgeon vs. person on the subway o Court must balance competing interests;  Degree of likelihood that harm will result from the activity as well as the potential severity  Social utility of the activity and the feasibility of eliminating the risk • Ie. Where there is danger of a major catastrophe it would be unreasonable not to take every known precaution o Increasingly, legislation not only imposes duties, but also sets out appropriate standard of care (regulations) for particular activities  Eg. Motor Vehicle Owner’s Act • Causation o Must prove that the injury to the plaintiff is caused by the breach of duty o No matter how blameworthy a person’s conduct may have been, he will not be able to be held liable for damage he did not cause o Also, a person will not be held liable for consequences of his acts that are considered to be too remote  Generally, the closer in time to the injury the more likely he is to be found to the cause of the injury o Eg. A man and wife were hurt in a car crash where the wife was severely injured, after crashing the car 2 years later the husband claimed that he crashed his car as a result of depression from the first crash and claimed damages…. The claim was rejected because it was too long after the initial crash • Remoteness of Damage o Foreseeability is a major element, it reappears again when the question of the extent of liability for negligence is considered o Until the 1960’s, the actor was liable for all damage resulting directly from the act  Wagon Mound decision (leaky oil tanker causes fire in harbor) restricted liability to damage that was reasonably foreseeable o Subsequent decisions in Canada have largely restored the earlier position though • Economic Loss o As noted before, the object of tort law is to compensate for loss suffered as a consequence of the wrongful act of another o The remedy of negligence is a sum of money by way of damages  Eg. a plaintiff injured in an auto collision may be compensated not only for physical injuries to herself and the car, but also for economic loss such as lost wages o Two types of cases can be distinguished  Economic loss without any physical damage • eg. Financial loss suffered as a result of negligent misstatement can be recovered  Physical damage, but not to the plaintiff or her property • eg. Tugbout owned by B collides with railway bridge owned by C. Railway company D suffered a loss of profit because it had to re-route traffic and was awarded compensation • Burden of Proof o Burden is on plaintiff must prove his/her case by the balance of probabilities  Injured party need only establish that defendant’s car or product physically caused the injury o Burden then shifts to defendant to show that he was not at fault, by producing evidence that on balance he was not in breach of a duty to the plaintiff (ie. Mechanical failure of brakes) as well as highlighting the plaintiff’s own conduce (below) o Res ipsa loquitur means that “the facts speak for themselves”  Unless defendant can prove otherwise, the most likely cause was the negligent conduct of the defendant • The Plaintiff’s Own Co
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