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University of Toronto Scarborough
Management (MGS)
Jeff Rybak

FINAL EXAM NOTES Torts - Fault – conduct that intentionally or carelessly disregards interests of others  Requires person harmed to prove the fault of the person who caused the harm - Strict Liability – does not require fault  If A causes harm to B, A may be strictly liable, even if A was not trying to harm B or careless - No Fault Schemes –  Ontario automobile insurance: driving considered a sufficient social good that the inevitable harm it will cause should be compensated without fault – but compensation is limited  Worker’s compensations: industrial accidents are compensated without employer fault, even if employees are careless - Vicarious Liability – employers are vicariously liable for harm caused by employees in the course of employment - Negligence – A causes injury to B through a careless act 1. Duty of Care: A has duty of care to B if A could reasonably have foreseen that A’s conduct could cause harm and that B would suffer that harm 2. Standard of Care: Is there a sufficiently close relationship between the parties so that in the reasonable contemplation of the defendant carelessness on its part might cause damage to the plaintiff? (Duty may extend beyond the person directly injured – family members, spouse or spouse to be) 3. Causation: Plaintiff must be injured as a result of the breach of duty if care owed (Breach must cause injury) (If there are intervening causes that law apportions fault to both defendants if both have harmed the plaintiff) - Extent of damages – - If A is liable in negligence to B, B is liable for all direct damages (damages that flow from breach without intervening cause), even damages that could not be expected - Thin skull victim – suffers extensive injuries from a small accident (take you victims as they come) - Economic Loss – - Law compensates for economic loss if there is physical injury to persons or property - “Pure loss” (loss without injury to property or person) can be recovered – loss resulting from inability to use damaged property or need to repair property is recoverable, IF there is a sufficiently lose relationship between the property damage and the person suffering the economic loss as a result of that damage - Burden of Proof – - Plaintiff needs to prove causation  Sometimes plaintiff may not be able to demonstrate how the harm occurred so they must please “res ipsa loquitur” (the thing speaks for itself) based on the idea that the most likely cause of the plaintiff’s injury is the negligence of the defendant - Defendant must prove that they were not at fault, or owed no duty to the plaintiff, or the damage was too remote - Contributory Negligence and the Apportionment of Loss – - Courts will apportion the fault and reduce the amount of the loss in proportion to the plaintiff’s fault - If the plaintiff’s subsequent action aggravate the loss, the amount of recovery will be lower - Products Liability – Liability of manufacturers for injury or loss arising from defects in products - Defective individual item (product)or - Defective design 1. Duty of Care: Products liability extends duty of care by the manufacturer to all those use products are injured as a result Manufacturer must prove that the cause of defect is not something for which it should be liable (IE: product caused an injury that was no foreseeable (one that is not normally associated with the product) 2. Standard of Care: Manufacturer must prove that they took all reasonable precautions to prevent the defective product from reaching customer 3. Causation: The customers must prove that the product cause harm 4. Duty to Warn: *** - If there are dangers, the manufacturer must warn of them - Manufacturer must warn even after the fact - If the duty to warn is the ground of the suit, plaintiff must show the she would not have used the product after warning - Strict Liability on the Manufacturer – - If the manufacturer can, under the present state of technology, be aware of the defect, the manufacturer will be liable for damage from that defect - If the product can be produced at all in a manner that eliminates the defect, the manufacturer is liable for the defect - Occupier’s Liability - Duty of owner or occupier of land to visitors – - Owner or occupier must not be negligent concerning dangers on property (keep premise safe) - Duty applies to trespassers – the duty is generally not to harm the trespassers or be reckless in doing something that might harm the trespasser Other Torts - Private Nuisance – right of occupier to enjoy land free from interferences (fumes, noise, contaminant in soil or water) (only for land owners) Remedy: Can sue to get them to stop doing what they’re doing - False Imprisonment – unlawfully constraining or confining a person - Malicious prosecution – causing someone to prosecuted for a crime without an honest and reasonable belief that the person had committed it - Defamation – making an untrue statement that injures the reputation of a person - 2 Kinds  Libel (written) and Slander (spoken in public) - 2 Defences: statement is true (usually the case) or person has no reputation to defend - Immunity from defamation suits - Qualified Privilege – Statements made in good faith with an honest belief in accuracy (usually used by newspaper) - Letters of reference, reports of Parliamentary and legal proceedings, fair comment and criticism in matters of public interest - Remedies: sue for damages of loss of reputation (celebrities and media) - Intentional interference with contractual relations – Inducing a breach of contract  Luring away an employee or inducing breach of supply agreement - Product defamation – making false or damaging statements about the products of another - Passing off – representing your goods as the goods of another - Remedies in Tort – Normal remedy is damages for losses - Damages are calculated to put the injured party in the same position that party would have been in had the tort not occurred -  Special damages: damages to compensate for quantifiable losses (lost wages or specific expenses) -  General damages: damages at large, for losses or injury caused by the harm that cannot strictly be quantified - Other Remedies (but not often used) - Restitution of property - Injunction against activity - Mandatory injunction requiring defendant to do something, such as remove a fence Liability of Professionals Contract – professional –client relationship created by a contract  “Contractual Duty” - Duties set out in contract in return for a fee - Professionals under a contract impliedly promises to perform the services required in accordance with the standard of his/her profession - Failure to do so is a breach of contractual promises gives rise to liability (for any foreseeable loss that the client suffered as a result of the professional’s breach of the contract) - The professionals profit from giving advice so they should bear the risk - Fiduciary Duty – Place the interests of the client above his/her own and to avoid any conflicts of interests with those of the client  Duty of highest good faith Basis for Potential Liability – - Fiduciary duty can exercise power unilaterally (exercise will affect beneficiary’s interest) - Fiduciary duty can exercise discretion (beneficiary particularly vulnerable to fiduciary) - No conflict of interest where fiduciary has conflicting duties or interests of fiduciary conflict with duties to the client - No benefit to fiduciary at expense to client, unless client gives informed consent - Tort Duty of Care – the professional must exercise the degree of care in the conduct of his or her duties that the profession normally imposes on its members - Possible to sue in tort for negligence even if there were a contractual agreement - Successful negligence suit must measure the performance or duty of the particular practitioner with that prescribed by the profession in general, and must show in the evidence that the practitioner failed to meet that standard - Key is that third parties may rely on advice of professional – how far does liability extend, and in what circumstances? Liability for Inaccurate Statements - Deceit – - Case 1: A makes a false statement and knows the statement is false with the intention to mislead B - Case 2: A conceals or withholds information with the intention to mislead B - In either of the two cases, B can sue A for the tort of deceit (*must prove intention) - Negligent Misrepresentation – A statement that is incorrect and made without due care for its accuracy - Must prove that the statement is made negligently, without suitable care and skill concerning its validity (did not research enough) Tort Standard of Care – Standard of the competent professional (at the time of the engagement, not at some later time) Tort Causation – - Did the advice/service of the professional actually cause the harm - Key question becomes the reliance of the client on the advice Contracts Elements of a valid contract 1. An intention to create a legal relationship 2. Offer 3. Acceptance 4. Consideration 5. Capacity to contract 6. Legality - In addition, must be free from mistake, misrepresentation or undue influence 1. Intention to create a legal relationship – - An agreement is struck by two parties and is based upon the premise that the end results will be a meeting of the parties’ minds on the terms and the conditions that will form their agreement with each other - Consensus ad idem – agreement as to the subject of object of the contract  the parties must be of one mind and their promises must relate to that subject or object 2. Offer – tentative promise  once accepted; the two parties have a contract - Invitation to make an offer are not offers (advertisements) - Offers must be communicated in writing or by conduct - Person must be made aware an offer has been made (no contract if you learn afterward there was an offer and you performed) Standard Forms - Terms are printed on offer or posted - Terms are not negotiated - Purchaser is bound by terms - Purchaser must have notice of general terms and clear opportunity to refuse - Purchaser must have special notice of unexpected terms (unusual clauses – something you cannot reasonably expect) - Lapse of offer (offer dies) 1. Not accepted within time specified 2. Not accepted in reasonable time (reasonable to assume things have changed) 3. Either party dies or becomes mentally incompetent (court has judged the party to incompetent) - Lapsed offer is void and cannot be accepted - Any “acceptance” is itself a new offer - Revoked offer- revocation must reach offer before acceptance - Options (keeping an offer open) - Enter into a separate contract to keep offer open (ex. pay more), and not contract with anyone else, for specified time, or until specified event Rejecting the Offer - Once rejected, the offer is void - Any subsequent reply may constitute a counteroffer, and the process starts all over - As soon as you change the terms, the offer is rejected and a counter offer is made - Special forms of offers - Tenders – seeking offers from suppliers. A party sets out what kind of offers will be considered. The tender constitutes and offer, and the party can accept a tender to create a contract - Standing Offers – open offer to supply services (only pay for actual services – ex. snow removal) 3. Acceptance - Usually a positive act by offeree (signing an agreement) - Should be communicated to offeror, but following a course of conduct may constitute acceptance - Any lack of certainty in the offer – in general, there is no contract is there is no certainty (matter of interpretation) - Contracts to contract, agreements to agree, are unenforceable (“if you don’t agree, we will agree to another agreement”) - Rules *** If mail is the ordinary means of communication, then: - An offer is accepted when the acceptance is posted in the mail (post mark), unless the offer specifies some other time or process - Revocation by mail is effective when the letter is received If mail is not the ordinary means of communication, then: - An offer is accepted when the letter is received (NOT the post mark date) - Revocation by mail is effective when the letter is received 4. Consideration – requirement of enforceability (the amount paid, or the promises made, by each party for the actions of the other) - Gratuitous Promises (no consideration) – Unilateral promise, without corresponding promise or payment - Generally unenforceable (IE: no legal remedy if the person does not perform – but once performed, the person may not ask for the service or property back) - Courts don’t consider the adequacy of a bargain - Reasons to void a contract: fraud, duress, undue influence - Generally, consideration for a promise must exist for the contract to be legally binding - A moral duty is not sufficient to found a contract - Good consideration – mutual love and affection (contrast of law and equity) - If A is bound to perform X for B, a subsequent promise by B to pay more to A to perform X is not enforceable - If pay is for something that conflicts with public duty, it will be unenforceable - If pay is for something that does not conflict, it will be enforceable - Estoppel*** (You can’t mislead – “gotcha”) - A says X to B, and B can prove A said it. A is then stopped from denying X. - If there is an oral agreement and there is no witness, courts will judge based on who they believe - Promissory/Equitable Estoppel – A way to make gratuitous promise enforceable - Loss or harm suffered by B, who, to his detriment, relied reasonably on a gratuitous promise by A - A make a gratuitous promise by to B. Relying on that promise reasonably, B begins to perform, or does something else that results in expenses or other detriment to B - Can be used as a shield, not a sword – can only be a defence against a claim, not the foundation of a claim - Can use as a small sword – when there is a prexisting contract between parties and the parties have rights, they can use estoppels to sue - Request for Goods and Services - If A requests B to provide good or services, A is bound to pay B a reasonable price if B supplies - If A and B agree upon a price, the court will enforce that price - If not, B can sue for the reasonable value of the goods or services under a quantum merit claim (the amount you deserve – reasonable price for the services rendered) - The Seal - Once seal, a document does not require consideration - Indentures – became contracts (agreements between two parties) - Deeds poll – became deeds of gift, or powers of attorney 5. Capacity to Contract Minors: - Can sue on a contract, but cannot be sued - If contract continues and minor become a major: - If contract is in land or partnership, minor must repudiate promptly on coming of age, or will be responsible for it - Other contracts will be enforceable only if ratified - Some contracts cannot be ratified (perform/accept the benefits by conduct, verbal or written), and are void from the beginning Corporations: - Now completely able to contract without limits Others under disability: (drunk, mentally incapable) - As soon as you learn of the contract, you must repudiate it immediately (when you are sober) that way, your contract will no longer be enforceable - Special persons, such as labour unions aboriginal people - Contracts contrary to law is either void(never formed at all) or illegal Void – (no rights are passed under a void contract) - Put parties in the positions they were in before the void contract was allegedly created - Return of monies paid, or property transferred - No further performance required Illegal – (rights are passed but they may not be enforceable) - Courts will not assist in any recovery - Contracts contrary to statute: - Terms contrary to statute are void – as in contracting out of rights --> property does not pass - Betting contracts are not enforceable - Contracts are illegal by statute: - A contracts with B, then contracts with C for the same thing, and C knows of B. C cannot then sue A for breach of contract because the contract between A and C was illegal - Contracts can be illegal as against public policy: - Paying a witness to fail to appear - Restraint of trade – restrictive covenants not to compete (vendor and purchaser and/or employer and employee Mistake - Mistakes about the terms of the contract and what they mean - Mistakes in assumptions underlying the agreement Kinds of Mistake: - Unilateral – - A makes a mistake, B knows of it  can’t take advantage of it - (Equitable fraud) - Mutual – - A and B make a mistake  don’t understand each other - (In general the contract will be void) - ? – A makes a mistake and B doesn’t know  both parties understand each other but not the circumstances - (party making the mistake is stuck with it) 1. Mistake About Contractual Terms - If not unreasonable to rely on terms written, they will be enforceable - If unreasonable to rely on terms written, and if one party must have made a mistake, you cannot take advantage of the other party, especially if mistaken party has taken steps to correct the mistake - In general, courts will not allow a party to seize a mistake to its advantage - Courts will balance the hardship to the parities in deciding whether to relieve a party from its mistake - Changing the contract to rectify the mistake - Rectification is available when the written contract does not reflect the agreement of the parties - 2. Mistake in Assumptions - Scenario: subject matter of the contract exists, but its value fluctuates - Determination of who will bear the risk  Ask: what is the reasonable expectation of the parties in such circumstances? - If parties know of risks  they must bear them - If unusual risk appears courts must ask: - What is the reasonable expectation of parties in the circumstances? - What would be the fair result of enforcing the contract or granting recession (putting parties back into the position they were before the contract)? - If it was an honest mistake, relief will be available if unjust, unfair, or unconscionable not grant it (IE: you’ll get it as long as it would be NOT fair to NOT get it) 3. Mistake and Innocent Third Parties *** - In general, titles are passed as soon as an agreement to sell is made (not when the payment is made) - If contract is void from the beginning then you can’t transfer titles – 3 party can’t keep the goods - Common law and void contract: - If a contract is void, then it never existed, and no rights passed under it rd - If contract is void from the beginning, then you can’t transfer titles and thus, 3 party cannot keep the goods - If contract is NOT void, then 3 party can keep the goods - Equity and voidable contract: - Court may set aside a contract, even if otherwise valid – can be set aside on the basis of deceit - If third party is innocent in the scheme and paid value for the goods, they can keep them Contract void: - Mistake in identity renders contract void - Third party purchaser must return the goods Contract voidable: - No mistake in identity - Contract only voidable and innocent third party protected Non Est Factum (It’s not my doing) - Document is presented as X, but is in fact Y. Signer does not know that (is unable to read it) “they have been deceived”  they signed based on another assumption - Restricted defence because it has a limited application since everyone can read UNLESS you were vulnerable and/or made to sign in a hurry - Signer is not bound and document is void - Now highly restricted as a defence Breach of Contract Breach and its Effects Breach of contract (2 ways) - A party repudiates its obligations  “not going to do it anymore” - A party does not carry out one or more of the terms of the agreement (not doing what is required and doing less than what is required)  “doesn’t show up” Types of breaches 1. Minor breach - “breach of warranty”: - Breach of a minor or subsidiary term, - Breach of major term in minor way - EX: Contract at the sale of the house states “leave chandelier in the house.” - Remedy: Parties may elect to cease performing and sue for damages - OR continue performing and sue for damages - EX: You still have to buy the house and you sue for the value of the chandelier 2. Major breach - “breach of condition”: - Breach of an essential term so that purpose of contract is defeated - EX: If the person does not deliver the house and backs out of the deal that’s considered a major breach - Remedy: parties MUST continue performing and may sue for damages - EX: IF they don’t deliver the key then you don’t have to pay them and if you buy another house and it costs more, you can sue for the difference (damages) Repudiation – If A tells B he will not perform as promised, A has repudiated the contract 1. B can accept the repudiation, treat the contract at an end - B does not have to perform further - Remedy: B can sue A for the damages 2. B can continue to perform and insist A perform, even though A may then be excused by other events from performing - Remedy: ? Anticipatory breach – A repudiates before the time for performance - B can sue immediately, and need not wait until the time for performance passes (don’t have to wait to see if they change their mind) - Once repudiation has been accepted, innocent party also treats its obligations to perform, and its limitations under the agreement, as at an end  innocent party can sue for damaged as well (EX, if it’s in the contract explicitly that you can walk if there is no chandelier, then you can walk) - If repudiation is only of a minor term, other party must continue to perform and sue for damages (EX. last minute tells you they won’t leave the chandelier) Failure to perform Complete failure to perform Partial failure to perform - Part performance - EX: Delivery of goods in instalments, where quantity delivered is lower than contractual requirement - Remedy: Entitled to give part performance back and terminate the whole contract - General rule: If you accept less than full performance, you must notify the other party that you may not let them do it again and that you will have the right to walk away next time - Counter argument: Defendant can argue the amendment of the contract “by conduct” when lower than contractual requirement was delivered - Purchaser may be free to seek the goods elsewhere and treat the contract as at an end if: - There is good reason to think that future performance will also be defective - The actual, or expected deficiency is significant relative to the required performance - Doctrine of Substantial Performance - If A has substantially performed the contract, and failed only in a minor way, A can continue to enforce the contract - B still has a suit for any damages caused by A’s lack of full performance - EX: Service contract for snow removal – always late and doesn’t do a good job  can sue for the difference but can’t walk away from the contract Failure to perform major/key term - Gives right to treat contract as repudiated Failure to perform minor/collateral term - Gives right to damages and requires continued performance When a party must
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