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MIDTERM Sheet #6.docx

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Law and Business
LAW 122
Sari Graben

Chapter 6: Negligence • Negligence: the most common tort. • Negligence in business context. • Flexible balancing of social values:  Compensation for carelessly caused harm  Encouragement of socially useful activities o Flexibility arises at each stage of analysis. Elements • For a plaintiff to bring a successful negligence action, the plaintiff must prove that: o the defendant owed a duty of care to the plaintiff o the defendant breached the standard of care o the breach caused the plaintiff’s damage. • The defendant may prove: o defences 4 elements a plaintiff has to prove: • owe a duty of care • Plaintiff suffered a loss. • Causation • Damage Duty of Care (pg 130) • An obligation to use reasonable care to avoid harm to plaintiff. • You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbor (Donoghue v. Stevenson). • Criteria for duty of care: o Reasonable foreseeability: Was it reasonably foreseeable that the plaintiff could be injured by the defendant’s carelessness? o Proximity: Did the parties have a relationship of sufficient proximity? o Policy: Are there any social policy reasons to deny liability? (E.g. pg 131) • Mother has no duty of care to her unborn child. • Father has duty of care to protect unborn child. Reasonable Foreseeability (pg 132) • This is an objective test o Would reasonable person have foreseen risk of loss? • Not whether the defendant personally foresaw the risk, but whether a reasonable person in defendant’s position would foresee. Proximity (pg 133) • Is there a close and direct connection between the parties? • Proximity may arise in various ways: o Physical o Social o Commercial o Causal o Reliance Professional Liability (pg 133) • Importance increases as information and advice become our economic driver more than more historic goods production. • Rules for careless statements as opposed to careless actions may be more complicated. • Hercules case is very important in establishing guidance for finding a duty of care where there is economic loss. Hercules case (Supreme Court of Canada, 1997) pg. 134 • Court stated that duty of care is more likely if: o Defendant possesses special knowledge, i.e. expertise; o Statement made in a business (not social) setting; o Statement made in response to inquiry; o Defendant received financial benefit in exchange for the statement; o Statement of fact (or opinion based on fact) rather than purely personal opinion. • Liability is less likely if: o Statement accompanied by disclaimer. • Although the facts of the case satisfied these criteria, the Court was concerned about indeterminate liability which would cause the price of services to rise unduly. • The Court found no liability because the plaintiff, as a shareholder used the statement as investment advice, rather than to assess the management of the company. • The Court stated that a duty of care for careless statements causing economic loss would be recognized only if: o The defendant knew that the plaintiff might rely on the statement, o And the plaintiff relied on the statement for its intended purpose. Policy Considerations (pg 135) • Hercules case is a good example of the court’s use of public policy to limit liability. • Policy = overriding considerations (legal, social, political concerns). • Effect of policy: even if reasonable foreseeability, even if close proximity, duty of care rejected for external reasons. • Many professions are regulated by regulatory bodies, e.g. Law Society. • Is a case against a regulatory body l
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