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Lecture 8

MGMT 3100 Lecture Notes - Lecture 8: Contributory Negligence, Manchester Small-Scale Experimental Machine


Department
Management
Course Code
MGMT 3100
Professor
Peter Mac Donald
Lecture
8

Page:
of 2
“BUSINESS ADMINISTRATION AND THE LAW” (MGMT 3100A)
York University, Schulich School of Business – Fall 2015
SAMPLE ANSWERS TO “CASE PROBLEMS DISCUSSED IN CLASS
Chapter 6, Case #4 (SSEM 14th Edition, p. 140)
Discussed in class: September 23, 2015
The issue here is whether, based on the special facts of this case, the car owner’s
silence can be construed as acceptance of the insurance agent’s offer to renew the
insurance contract. The general legal principle applicable here is that acceptance of an
offer must take some positive, unequivocal form. Of all possible methods of
acceptance, an offeree’s silence is the most equivocal and unsatisfactory; in most
situations, it could as readily mean rejection as acceptance.
The textbook states that “silence can be a sufficient mode of acceptance only if the
parties have habitually used this method to communicate assent in previous
transactions, or have agreed between themselves in advance that silence shall be
sufficient…” (p. 109). We do not know, based on the facts presented, whether the car
owner has had any past dealings for renewal of insurance on similar terms with the same
agent. (Perhaps, she had in connection with another car, but we are not told.)
Therefore, we cannot make a conclusive determination based on the application of this
principle alone.
As discussed in class, general legal principles can, in appropriate cases, be qualified by
special circumstances. In this case, the wording of the offer has invited the very
response that it has received should the insurance company therefore be permitted to
deny the implications of its agent’s offer to renew? One could argue, on the basis of
equity, that the wording of the insurance agent’s offer to renew amounted to an
undertaking on his part to accept silence as an effective mode of acceptance until such
time as the car owner returned from vacation. In further support of this approach, one
could emphasize that the arrangement proposed by the agent was quite unusual as
agents normally send out renewal notices well in advance of the expiry of the current
policy, precisely for the purpose of avoiding complications of this kind.
Based on the special facts of this case, the car owner is likely to have a strong argument
that the insurance coverage had been renewed by agreement until her return from
vacation. However, if the accident had occurred after she had returned to the City and
she had not then taken any positive steps such as making payment as suggested in
Drake’s letter, her argument would be very much weakened.
Chapter 9, Case #3 (SSEM 14th Edition, p. 201)
Discussed in class: September 30, 2015
This case involves the principle of undue influence. The text asks for an explanation of
how the onus of proof will operate in the resulting legal action and what the probable
outcome will be based on the facts of the case.
As always, the onus begins with the plaintiff, but later it may shift to the defendant. As
discussed at page 191 of the text, Hull must persuade the court that the circumstances
of this case placed Smart in a dominant position and that Hull relied on Smart. Since
the relationship between Smart and Hull is that of lawyer and client, Hull can satisfy his
onus as plaintiff quite easily: the courts will initially presume that undue influence exists
where a lawyer makes a contract with his client of the type referred to in this case.
Accordingly, the onus of proof then shifts to Smart to show that he did not exercise
undue influence (i.e., “to rebut the presumption of undue influence”). To do so, Smart
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must persuade the court that the terms of the contract were objectively “fair, just and
reasonable” the only circumstance in which Smart would appear not to have exercised
undue influence. A finding that $8,500 was significantly below the fair market price for
the boat, for example, would result in a conclusion that Smart failed to meet the onus of
proof. If this were so, the terms of the contract would not be considered objectively fair
and Hull’s action to recover the boat would therefore succeed.
Chapter 4, Case #7 (SSEM 14th Edition, p. 99)
Discussed in class: October 7, 2015
Examining each of the elements of a negligence action:
(1) Did Chauncey owe a duty of care to Brown? In other words, should he have
foreseen that his action would cause harm to persons in Brown’s situation? It is
“reasonably foreseeable” that, by driving a tall vehicle on the shoulder of the road, it
might hit power lines and that, if it did so, damage might result to people residing in
the vicinity whose homes are served by such power lines.
(2) Did Chauncey breach that duty of care by failing to abide by the appropriate
standard of care? Chauncey clearly did so by driving without paying proper attention
and allowing his truck to wander onto the shoulder of the road.
(3) Did Chauncey’s conduct cause the damage suffered by Brown? The destruction of
Brown’s chicks was due to the interruption of the oxygen supply, which was a direct
result of Chauncey hitting the power lines.
(4) Was the damage suffered by Brown too remote? It is likely that a court would find
that the interruption of the power supply was reasonably foreseeable, as was the
damage of the type in question (i.e., the loss of livestock, which lived in barns
located along the edge of the highway, supplied by the power lines in question).
[Please note that an alternate conclusion regarding element #4 would be acceptable,
if argued compellingly based on relevant factual observations.]
Another issue that arises in this case is whether Brown’s actions amounted to
contributory negligence? If Brown’s power failure detector had been operational during
the night in question, the loss of the chicks would probably not have occurred. The
ultimate question here is: did Brown abide by the appropriate standard of care in failing
to replace the battery in the alarm detector in his bedroom? The fact that about 50% of
all chicken breeders in the area used power failure detectors indicates that the detectors
were widely regarded as a sensible precaution, as was clearly recognized by Brown
himself [again, a contrary conclusion would be acceptable here, if supported by
compelling factual analysis]. In the end: what would a “reasonably prudent chicken
breeder” living in the area in question be expected to have done each night before going
to bed? It would likely be sufficient for such a chicken breeder to check the battery in his
bedroom alarm detector before going bed each night, but he would not be expected to
wake-up periodically throughout the night to continuously re-check the battery.
The third issue in this case involves the question of vicarious liability. Presuming that
Chauncey’s tortuous conduct (i.e., his negligent driving) occurred during the “ordinary
course of his regular job responsibilities”, Gardiner Transport Ltd. would be vicariously
liable for Chauncey’s conduct in this case.
Professor Peter Macdonald
Mgmt 3100A (Fall 2015)
Schulich School of Business, York University
October 7, 2015
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