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Business Law Midterm Study Notes.docx

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Wilfrid Laurier University
Laura Allan

Business Law Midterm Study Notes Introduction to Law – Common Law vs. Civil Law o Civil law has three different meanings – in this context we are referring to the system of law o The difference between the Civil and Common Law is largely based on whether the law is codified  Civil law – the law is written down, the court interprets it  Common law – has codified laws, usually made by judges  Lawyers look at precedents that have a similar factual basis, both supporting and negating the case in question. They then try to convince the judge that the precedents that support the case should be followed. – Federal vs. Provincial o Constitution Act, 1982  The Constitution Act is the highest legislation in Canada – nothing can violate it, everything must abide by it  Charter of Rights and Freedoms  Sets out who has the powers to legislate in which areas – Statute: A piece of legislation that is created by the government. It has the power to trump judge-made laws, however judges can they interpret the statue. – Stare Decisis: Judge-made law – Law has an organic nature because it evolves over time o Changes to the moral and ethical values of the society change over time, influencing how legislators and judges make their decisions (Their own morals and ethics help inform the decisions that they make). – Action: The lawsuit – Cause of Action: The type of lawsuit (e.g. Tort) – Plaintiff/Defendant: Parties to the action – Claim: The reason for the lawsuit – Damages: A monetary reward to compensate an injured party for the loss caused by the other party’s breach – Prima Facie: On the face of it Tort Law – Tort: A wrongful act causing harm to the person or property of another, creating a right to claim compensation o Harm (Personal Injury) is a required element of any tort – the wrongful act must cause physical harm to the person or property, or economic harm in the form of (ONLY) economic loss o Compensation must be awarded for the harm that is done  Simply punishing the defendant is not enough because it leaves the plaintiff to deal with the hardships resulting from the circumstances in question – Tort law is between individuals o The police charge you and the crown tries to find you guilty, but this does not have anything to do with Tort Law, which looks for liability and seeks compensation for damages  May be found liable in a civil action for injuries even if found not guilty of committing the crime in a criminal court – There are different standards of proof required for Tort and Criminal Law: o Tort – balance of probabilities  Only have to prove a 51% chance or higher that the defendant committed the action in a civil action – much smaller burden of proof on the plaintiff when proving liability o Criminal – beyond a reasonable doubt  The criminal action must be proven to beyond a reasonable doubt before someone can be convicted of a criminal offense to avoid throwing an innocent person in jail The Object of Tort Law Example: Farmer Brown’s cows ate Farmer Green’s wheat crops. In Medieval times Farmer Brown may have been punished cruelly but this would not help Farmer Green who is now with no food or means of livelihood. Tort Law was designed to provide a more reasonable punishment and compensation for such crimes. – The object of Tort Law is to place the injured party back in the position s/he would’ve been, had the tortious act not occurred – According to the previous example, Farmer Brown would compensate Farmer Green for the wheat crops that were consumed by his cows o Would look at historical and present crop yields and prices to figure out how much money Farmer Green would have received after harvesting his crops that year, and that is what Farmer Brown would pay to him as damages – Age, occupation, etc.… determines the value of various limbs that may need to be compensated o A ballerina’s leg is more valuable than a computer programmer’s leg, whereas a computer programmer’s fingers are very valuable Strict Liability – A History – Strict Liability: Liability that is imposed based upon causation regardless of fault o Anyone who causes direct injury to another must to pay compensation without any inquiry into the reasons for the injury or whether the conduct of the injurer was intentional or unintentional – Writ: An ancient form required in order to take a grievance to court o If Farmer Green could not find a writ, or failed to find a writ that was better suited to his situation than the one he selected, his claim would be outright denied – You can’t sue for things that do not belong to a recognized category of tort o For example, you cannot sue someone who stole your boyfriend – If you want to sue someone there must be a legitimate cause of action to sue under – you must prove that there is an element of fault Vicarious Liability – Vicarious Liability: The liability of an employer to compensate for torts committed by an employee during the course of his or her employment – The employee is still also liable to the injured party and may be liable to the employer as well – Two reasons that justify this form of liability: 1. Employees often have limited assets available to pay compensation for the potential harm they can cause 2. It seems only fair that the person who makes profit from an activity should also be liable for any loss – Insurance: o The role of insurance in the business environment:  Minimizing the risk of loss due to tortious actions on the part of the employer or employees (vicarious liability)  Cost of business Tort Law Evolved – Our current Tort system is fault based o Fault: Unjustifiable injurious conduct that intentionally or carelessly disregards the interests of others – The conduct of the injurer must be taken into consideration – The wrong committed must still be one recognized in law – The wrong committed must cause harm to the injured party *Some torts do not require an element of fault Conduct Scale – Accidental – lightning incinerated the fence between Farmer Brown and Farmer Green (No Tort) – Negligent – biggest impact in business, the careless causing of harm – not an intentional act but there is fault – Intentional – the person in question did it on purpose, Farmer Brown intentionally opened the gate because he is a hippy Strict Liability Torts – Some torts by statute are still considered to be strict liability and therefore, no fault element is required – Some activities are inherently dangerous regardless of the amount of care taken – For example, transporting high explosives Elements of a Cause of Action – Example, Trespass to property: 1) Intention; 2) Entering property; 3) Without consent; and 4) Causing harm – All elements must be present for the claim to go forward – The onus is on the plaintiff to prove the elements of the cause of action Intentional Torts 1. Trespass: The act of entering someone else’s land without consent o If a trespasser has caused damage to the property, then the land owner can bring an action in court o A landowner can prevent trespass by erecting a fence but you cannot do anything aggressive (i.e. setting a trap) o Can physically remove trespassers with appropriate force if asked first o A potential defense is necessity 2. Nuisance – Public Nuisance: Interference with the lawful use of public amenities o This is often quasi-criminal in nature with action taken against the injuror by the government o Interference with public operations – Private Nuisance: Interference with an occupier’s use and enjoyment of his/her land o An occupier is someone who is occupying the land at the time of the nuisance o Decided by the court that it shouldn’t have to be tolerated by the ordinary occupier o No issue of fault – issue of liability 3. Assault and Battery – Considered to be a trespass of the person – Two distinct torts, but usually found together o Assault: The threat of violence to a person o Battery: Unlawful touching of a person without consent  An example of battery may be a doctor who operates without consent – when he cuts into your skin that is battery  If someone is unable to give consent and there is no one able to give consent for them then this is an exception to medical battery  It is battery if the doctor is aware that consent has been withheld  Mallet vs Shulman – Jehovah’s Witness refused a blood transfusion but her doctor proceeded anyway because he deemed it to be necessary – did not have that right 4. Intentional Infliction of Mental Distress – Intent to cause harm – Recognizable physical or psychopathological harm must occur o Example: two guys hated each other, one went away on a sea voyage and the other told his wife that her husband and son had died during the voyage  Caused the wife to become sick – now recognized as a tort 5. False Imprisonment: unlawfully restraining or confining another person – Does not need to be physical restraint – can be psychological o Even yelling “stop, thief” when someone robs your store is considered restraint (emotional and physical) o Retail type environment – security catches someone shoplifting  If someone has been restrained for shoplifting but have not actually committed the crime then they can sue for false imprisonment  If they did actually commit the crime it is NOT false imprisonment  It is not false imprisonment if charges are laid by the police – False arrest: Ordinarily includes false imprisonment but has the additional feature of holding the victim with the intention of turning him over to the police for prosecution 6. Malicious Prosecution: Reporting a person to the police when there is no good reason to believe that person committed a crime 7. Defamation: Making an untrue statement that causes injury to the reputation of another – Slander: Spoken defamation – Libel: Written defamation – The elements of defamation are as follows: 1. Intent (maliciousness); 2. Statement made; 3. Statement is false; rd 4. Statement is published, i.e. made to a 3 party; and  It cannot simply be said to the plaintiff 5. Statement must cause “genuine and significant injury” to the reputation of the plaintiff. – The source is important – is the source capable of causing significant injury to the reputation of the person? o For example, one professor saying something about another professor, or Steve Jobs defaming another computer person – Defences to Defamation: 1. The statement was true; or 2. Qualified Privilege: statement made in good faith and with honest belief in its truthfulness 3. Absolute Privilege: Complete immunity from liability for defamation (i.e. things spoken in Parliament, in law and inquest proceedings and before royal commissions) 4. Responsible Communication on Matters of Public Interest: A defence to defamation when the publication of the statement is in the public interest and was done responsibly  This defense is most applicable to journalists  It is a broad defense – the truth of the statement is not important, it is important that it was made and of substantial concern to a segment of the public  (Grant v. Torstar Corp. 2009 SCC 61)  A company was building a golf course despite a lack of support from the neighbourhood  Political influence was used to push the project through  Torstar declined to comment to the reporter when asked  The defaming information was included in the article because it was from statements made by the neighbours, not because it was true  The court found that the matter was of public interest and the reporter demonstrated responsibility by trying to find the other side of the story Defenses to Intentional Torts 1. Consent – Where the injured party consented to the act that caused the harm, there is no Tort – This is an absolute defence – The consent must be genuine and informed o The plaintiff cannot be coerced and they must be aware of the risks they are exposing themselves to in order to provide consent o No one is allowed to consent to grievous bodily harm 2. Self-Defence – The party asserting the defence needs to show that the self defence was necessary – Can use equal but not excessive force 3. Necessity – This is a defence to trespass, where the right of way is impassable – Or no other option but to destroy property – e.g. knocking down a building to prevent the spread of fire 4. Volition – Act must be voluntary o Smith v. Stone (1647), Sty. 65, 82 E.R. 533 KB o Gilbert v. Stone (1648), Sty. 72, 82 E.R. 539 5. Capacity – Mental capacity is required to form intent. The absence of mental capacity forms a complete defense. o For example, if a child cannot make intent, you cannot sue them o If someone with epilepsy has an attack and strikes you, you cannot sue because it is not a voluntary act (volition) o Sleepwalking case:  A man was under incredible financial stress, which was eventually relieved when his in-laws paid his bills for him. There was prior documentation that suggested the man suffered from sever sleepwalking. In his sleep, the man drove to his in-laws house, where he stabbed his mother-in-law and severely injured his father-in-law. After this, he drove to the police station and confessed. The man was acquitted of the crimes because he was not conscious when they were committed. Unintentional Torts Negligence – Negligence: The careless causing of injury to the person or property of another. – The elements of a Negligence Action are as follows: 1. The defendant owed the plaintiff a duty of care; 2. The defendant breached that duty of care by falling below the standard of care; 3. The defendant’s actions caused the injury Duty of Care – Duty of Care: a relationship so close that one must take reasonable steps to avoid causing harm to the other – The duty of care will arise only where the defendant could reasonably have foreseen a risk of harm to the plaintiff or to someone in the plaintiff’s position (reasonable foreseeability) o Would reasonable person have foreseen that those actions would likely cause harm? – Moderated by policy concerns o Policy concerns consider the effect that recognizing a duty of care will have on other legal obligations, the legal system, and society more generally o I.e. the proliferation of lawsuits – To whom do you owe a duty of care? The Good Neighbour Principle o Neighbours include physical proximity but are not limited to it o Neighbours in Law: Persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions that are in question  Everyone has a duty not to injure his or her neighbour. You must take reasonable care to avoid acts or omissions, which you can reasonably foresee would be likely to injure your neighbour. o Donaghue v. Stevenson [1932] A.C. 562  Two women go to a café together, where one woman buys for the other woman a ginger beer. The bottle is dark and as such, conceals the contents. The woman drinks part of the bottle and then becomes violently ill. It is later discovered that at the bottom of the ginger beer is a half-decayed slug. The injured lady sued the manufacturer. The Court decided that the manufacturer was the lady’s neighbor in law. – Test for Duty of Care: 1. Is there a sufficiently close relationship between the parties so that, in the reasonable contemplation of the defendant, carelessness on his or her part might cause damage to that person? 2. Are there any considerations which ought to negative or limit a. The scope of the duty b. The class of persons to whom it is owed c. The damages to which a breach of it may give rise Standard of Care – Standard of Care: The level of care that a person must take in the circumstances o It is a subjective standard. You must look at the situation and ask how a reasonable, ordinary person would have acted in that situation. o The reasonable, ordinary person on the Younge Street subway – You cannot determine if a person has fallen below the standard of care if you do not first determine what the appropriate standard is in any given situation – Special standards of care: o The professional standard of care: holds you to the standard of a competent, diligent member of your occupation  The reasonable and competent person in a specific profession where someone requires specialized skills and knowledge  You will be held to the standard that a person with your skills should be o Fiduciary duty: A duty imposed on a person who stands in a special relation of trust to another o Children: The standard of a reasonable child of the same age, unless engaged in an adult activity  For example, 16 year olds can drive a car so they will be held to the standards of a reasonable person while driving  Failure to Supervise Tort – A parent/guardian/person with authority over the child who is responsible for supervising the child. If the child’s actions lead to harm, their supervisor can be held liable – Other factors the court will consider in determining the standard of care: o Degree of likelihood that harm would occur o The potential severity of the harm o The social utility of the action involved o The feasibility of eliminating the risk Causation of Damage – Causation: Injury resulting from the breach of the standard of care – “But For” Test: The plaintiff must show that “but for” the negligent conduct of the defendant, the injury would not have occurred o If you can prove the plaintiff would not have been harmed if the defendant had not acted, then you can prove that they are responsible o Loophole to “but for” – if there are two arsonists, you cannot make one liable but for the other  The courts have decided that in this instance both arsonists would be held liable  The defendant does not have to be the sole cause of the harm, if is sufficient for the plaintiff to show that the defendant’s conduct was a cause of the harm/loss – Remoteness: The conduct of the defendant cannot be too removed/remote from the harm caused o The harm had to be reasonably foreseeable at the time of the tort  Example: A faulty electrical wire caused a house fire. A woman tripped over an abandoned tricycle when she noticed the fire. In this case, it is unlikely that the woman’s injuries would be relatable back to the manufacturer of the wires because it was not reasonably foreseeable.  Example: Overseas Tankship (U.K.) Ltd. v. Morts Dock and Engineering Co. (The Wagon Mound), [1961] A.C. 388  Charters of a boat in Sydney Harbor carelessly spilled oil in the water for a number of weeks. During this period, reparations were being made to the docks, a process that included welding. Cotton wadding from the reparations were floating in the water, absorbing the pol that was spilled. Sparks from the welding caught the cotton wadding, causing the entire harbor to go up in flames and causing immense damage. The defendants were found not to be liable for the damage because it was not reasonably foreseeable; the oil was not believed to be flammable under the existing circumstances. In Canada we have accepted a broader conception of what is foreseeable – today this would be viewed as a foreseeable event. o It is possible to create a chain of “but for” statements that make someone liable who really does not have much to do with the action that caused the harm Defenses of Negligence Defenses – Contributory Negligence: A partial defence to a negligence action when the plaintiff’s conduct also contributed to the injury – the loss will be apportioned according to degree of fault o The plaintiff can contribute to the incident that caused the injury  It is not a defense to say that “I may have done something but he has done more”  Must say that the injury was primarily the fault of the defendant, despite some negligence on the part of the plaintiff  Example: Not wearing a helmet when riding a bike – Voluntary Assumption of Risk: A defence to a negligence action when the plaintiff was aware of the risk and continued with the activity anyway o This is a complete defense o Example: Slippery when wet signs, medical consent forms  The challenge is that the exact risk must be described or the defence is not applicable o You cannot assume something that you do not know, for example, if the girth snaps due to old age while riding a horse. You have not accepted the risk of using old, worn out equipment. – Mitigate: Duty to act reasonably and quickly to minimize the extent of damage suffered o This is only a partial defense o Failing to attend to an injury is a type of negligence o Plaintiff has an obligation to act reasonably to minimize the damage o If they do not then the defendant may not have to pay as much damages  The court will apportion damages in proportion to the degree of fault or negligence on the part of the defendant – Illegal Act: Where the plaintiff is harmed while engaged in an illegal activity o The purpose of tort law is to compensate the injured party and therefore the injured party is not profiting from the illegal activity  If you are doing something illegal you should not be allowed to profit from any injuries that occurred while committing that activity o Example: Hall vs. Herbert  Driving home drunk, try to do a push start after the car stalls, the car rolls into a ditch and the plaintiff is seriously injured. • The plaintiff is not trying to profit from the activity of drinking and driving, but should be compensated for the injuries that he sustained. Damages – Damages seek to put the plaintiff back in the position they were in before the tort action occurred – There are three types of damages: 1. Special damages: Damages to compensate for quantifiable injuries  This includes anything that you can quantify, such as medical bills, the cost of repairing a car, or actual lost wages o General damages: Damages to compensate for quantifiable injuries  This includes more speculative items, such as future loss of earning due to disability and awards for the “pain and suffering” of losing a limb  Things that are irreplaceable o Punitive Damages: Damages awarded with the intention of punishing the wrongdoer  Punitive damages are rarely awarded because Tort is not about punishment, it is about compensation  It is usually awarded when the defendant’s behaviour is so reprehensible that the courts find it suitable to punish them  For example, if an insurance company refuses to pay for damages despite insurance premiums being paid. There is no reason to deny the claim. Burden of Proof – Burden of Proof: The requirement that, unless a party can establish facts and law to prove its case, it will lose – The plaintiff has the onus of demonstrating that the elements of a Tort exist – Once the plaintiff has shown that the defendant has committed the tort – that is, that the elements are present – the burden shifts to t he defendant to show that they did not commit the tort, or that they have a valid defense – At times it may be difficult for the plaintiff to demonstrate the negligent act o Res Ipsa Loquitur: The thing speaks for itself  This is a claim that the plaintiff can submit when there is no other obvious explanation for the harm causes than the defendant’s negligence  It is established for bizarre situations in which there are no other explanations. It puts the burden on the defendant to prove that he did not do it.  A defendant can defend against Res Ipsa Loquitur by offering reasonable alternative explanations other than their own negligence  It almost never works in modern society because we can always come up with an alternate explanation. Only one alternate explanation is necessary. The alternate does not have to be likely. o Res Ipsa Loquitur is now merely viewed as an application of the Circumstantial Evidence Rule Circumstantial Evidence Rule – Circumstantial Evidence Rule: a prima facie case of negligence may be established by drawing reasonable inferences from the circumstances surrounding the product manufacture and failure – There are going to be situations in which we have no direct evidence to demonstrate the elements of negligence – A plaintiff can meet the burden of proof by using circumstantial evidence to show that the defendant’s negligence was most likely the cause of the injury – The defendant then has the burden of showing that they were not negligent – Example: I purchased this product, I used this product correctly, I was injured by this product, therefore the product is defective o You do not have to prove what went wrong in the manufacturing process o This shifts the burden of proof from the plaintiff to the defendant Other Unintentional Torts – Product Liability: a tort imposing liability on manufacturers for harm caused by defective products o Donaghue v Stevenson [1932] A.C. 562  There was no business or contractual connection between the plaintiff and the manufacturer  The manufacturer must recognize their duty to the ultimate user o It is often difficult to demonstrate negligence on the part of the manufacturer of goods. It therefore becomes necessary to demonstrate that the product was defective and caused harm, thus switching the onus/burden of proof to the defendant  This is done by applying the Circumstantial Evidence Rule o Ongoing Duty to Warn: (Inherently Dangerous Products) Manufacturer’s responsibility to make users aware of the risks associated with the use or misuse of the product  Inherently Dangerous Products  Even though a product is not defective in any way, harm may be caused if the product is not used appropriately  Products that are discovered to be defective  Scientific and technological advancements  What may be fine today may be later discovered to have some kind of dangerous side effect that was not earlier known  Negligence because they did not know there was something wrong with the product  Example: Toxins found in the materials used to make a water bottle  There must be a warning on the product itself, on the packaging, or in the instructions. Sometimes this duty can be met by issuing the warning to a “learned intermediary” such as a doctor, who must then convey the warnings to their patient. – Occupier’s Liability: A tort imposing liability on the occupants of land for harm suffered by visitors to the property o There are three different types of visitors, each of which is owed a different standard of care  Invitee: A person permitted by an occupier to enter the premises for business purposes The distinction  The occupier is required to take care to prevent injuries from between invitee hazards of which the occupier is aware of and also those of which, as and licensee have a reasonable person, he ought to be aware been abolished by  Example: Even though you were not aware that there was ice on statute and a common duty of your property, you ought to have been aware that it was there and care is now owed treated it accordingly by an occupier to  Licensee: A visitor (other than a licensee) who enters the premises with the all expected consent of the occupier visitors lawfully on  The occupier is required to remove concealed dangers of which they the premises have actual knowledge  Trespasser: A person who enters premises without the permission of the occupier  Is either unknown to the occupier, or if known, would be refused permission  A minimal duty of care is owed to a trespasser; the occupier must not set out deliberately to harm the trespasser or recklessly disregard the possibility that his acts might injure a trespasser  Owe the trespasser a duty of “common humanity”  Example: cannot set traps, must enact a fence or provide notice of a pool being dug o Where the use of the land is to encourage recreational activity, the user of the premises willingly assumes the risk  Occupiers’ Liability Act, R.S.O. 1990, c. O.2, s. 4  Schneider v. St. Clair Region Conservation Authority [2009] O.J. No. 3667 (OCA)  A professional skier went skiing with her family at a resort that, while open to the public, is not maintained during the winter. The woman went off the path, where her ski hit a concrete wall that was covered in snow. As a result, she was seriously injured. The court decided that under the Occupiers Liability Act there is an exception for recreational activity. If you use the land, you assume the risk. It would discourage people to be neighborly and allow the use of their land for recreational activities if they were liable for any accidents that occurred. Economic Loss in Tort Law – A tort requires that one party suffers some sort of harm, injury or loss to his/her person or property – Economic harm means that the harm sustained is purely economic (i.e. economic loss) and that no one and nothing has been physically harmed Professional Liability (Falls into Negligence) Liability may arise from three relationships, generating three different causes of action: 1. Professional Liability: Those with specialized knowledge or skills will be held to a higher standard than that of an ordinary person o Professionals with certification in their field will be held to the standard of their field expertise o The standard will be what a reasonably competent and diligent person within that field would do o Specialists within fields of expertise are held to a higher standard than generalists  The professionals (i.e. doctors, lawyers, accountants, etc.) may be held to an even higher standard and must avoid conflicts of interest 2. Fiduciary Duty: o This is the highest standard of care o It applies to those who stand in a special relationship of trust to another person  The most extreme example is between a parent and child  Children are totally dependent on their parents for everything – there is a deep trust  Some professionals are inherently considered fiduciaries – lawyer, doctor o A trust is a special type of relationship that is set up – the trustee, the beneficiary and the donor  This is always a fiduciary relationship  A donor provides some sort of asset (cash, stock, real estate) into what is called a trust  They will then assign a trustee to administer it. The trustee becomes the legal owner whose only job is to take care of the property for someone else.  Example: If a woman wanted to give money to her niece, she can make her brother the trustee. The money will be legally his, and his obligation will be to invest the money so that when the niece reaches the age of university, the money can be used to pay for her education. He is in a fiduciary relationship because he can affect his niece’s interests. o Fiduciary duty will also apply to some professions who are acting in a “trust” relationship with their clients  Example: Investment advisors have to give full disclosure, particularly when a client is inexperienced. They also cannot inadvertently benefit one client over another, they must disclose any conflicts of interest, they must respect client confidentiality and the client interest must always be at the forefront. o There are three characteristics to determine who is a fiduciary: 1. A fiduciary has the scope for the exercise of some discretion or power; 2. A fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests;  Unilaterally means that they do not need to get the other person’s opinion 3. The beneficiary is peculiarly vulnerable to, or at the mercy of, the fiduciary holding the power or discretion. 3. Tort Liability o When a professional deliberately or carelessly causes damage to a client, a tort has occurred o Third-party liability: Liability to some other person who stands outside a contractual relationship  This type of liability is common for real estate agents and insurance agents  While the commissions are paid by the insurance companies and property vendors, the “other” persons with whom these agents deal frequently rely on their advice Negligent Misrepresentation: A statement that is made that is untrue – This can be an oral or written statement, but it must be something that someone has said o Deceit: An intentional tort imposing liability when damage is caused by a false statement made with the intention of misleading another person o Fraudulent Misrepresentation: An intentional tort imposing liability for an incorrect statement made knowingly with the intention of causing injury to another. o Negligent Misrepresentation: An unintentional tort imposing liability when an incorrect statement is made without due care for its accuracy, and injury is caused. – The extension of liability to compensate for purely economic loss, as opposed to physical injury, is particularly important when considering negligent misrepresentation – There are five requirements for proving negligent misrepresentation: 1. There must be a duty of care based on a “special relationship” between the representor and the representee 2. The representation in question must be untrue, inaccurate, or misleading 3. The representor must have acted negligently in making the representation – that is, he or she must have fallen below the requisite standard of care required of a professional making such a representation 4. The represetee must have relied, in a reasonable manner, on the negligent misrepresentation 5. The reliance must have been detrimental to the representee in the sense that damages resulted – The duty of care in negligent misrepresentation: o Two part test:  An inquiry into whether there is a sufficiently close relationship between the plaintiff and the defendant that, in the reasonable contemplation of the defendant, carelessness on its part may cause damage to the plaintiff  Limiting the duty for public policy reasons – the extent of liability must be predictable o Accuracy of the Statement:  Value judgments and opinions are considered to be fact when expressed by an expert  The accuracy of the statement is assessed as of the time the information was given  To trigger the liability, the inaccuracy must result from the failure of the professional to meet the required standards of care o The Standard of Care for Professionals:  A professional must exercise the same degree of skill and possess the same level of knowledge as is generally expected of members of that professions  Standards are determined through the code of conduct or guidelines followed in a particular line of work  If a professional undertakes a task that is beyond the usual skills of her profession, they must maintain the degree of skill and knowledge that matches the task  Professionals are not allowed to omit essential information o Reliance and Detriment:  Did the client reasonably rely and act upon the advice of the professional?  Would the client have acted in that way if he had not received that advice?  Reliance: Acting in a certain way because one believed the information received  Detrimental Reliance: The worsening of one’s situation after acting upon false information Business Related Torts – Inducing a Breach of Contract: o Where one party induces another party to breach his contract with a 3 party o Example: If Bob is working for Karl, they have a contract. Andrew does not want Bob to work for Karl; it would be advantageous for Andrew if Bob stopped working for Karl. Andrew somehow convinces Bob to breach his contract, perhaps though offering a better contract. Bob can then sue Andrew. o It is not illegal if you give the right notice – Unlawful Interference with Economic Relations: o Where threats or other unlawful means are used to convince one party to cease doing business with another o Example: If one competitor bribes you to stop dealing with their competitor and deal only with them, the competitor that was excluded can sue for unlawful interference with economic relations because unlawful means were used. – Product Defamation: o Where one party intentionally makes untrue or disparaging remarks about another’s product in advertising their own product o Example: If Pepsi were to make an ad that said Coke tasted like crap. o The statement must either be false or disparaging for this to work o In today’s advertising environment, many companies skirt the line but are very careful not to cross it – Passing-off: o Representing one’s own product as that of another (Trademark Infringement) o Want to cash in on the goodwill created by the trademarked name o Example: Real product is called T’fal and a knock off is called Tefal to cash in on the famous brand name but offering terrible quality Contract Law – Contract: A set of promises that the law will enforce – Seven elements are necessary for the formation of a contract 1. Offer: A description of a tentative promise one party is willing to make, subject to the agreement of the other party – A mere invitation to do business is not an offer to make a contract (i.e. advertisements) – It is intended to be binding on both of the parties as soon as it is accepted – The communication of the offer: o The form of an offer is not important as long as it is heard and understood  May be written, verbal or non-verbal (actions) o If someone sends you goods without your request, you are not presumed to have accepted the offer and are not bound to pay for the goods (except credit cards) – Written Offers: o Standard Form Contracts: An offer presented in a printed document or notice, the terms of which cannot be changed by the offeree, but must be accepted as is or rejected  This is the most common type of contract  Often neither asked nor expected to read the terms  The offeror business is often strongly tempted to disregard the interests of its offerees, the general public, and give itself every advantage  If you have an inequality of bargaining power, you have to be fair. This means that there should be no taking advantage of people and no fine print.  Examples: Parking Tickets (terms may be found on a sign in the parking lot) and Phone Plans  Advantages: Highly efficient, Fast, Easy  Disadvantages: inequality of bargaining power, little or no room to negotiate terms o Required Notice of Terms:  The offeror must do what is reasonably necessary to bring the terms to the notice of the customer  Example: “See back” will prompt an offeree to look at the terms on the back of a ticket or “subject to the conditions as located on the premises” to tie a sign listing additional terms to the contract  Must give reasonably sufficient evidence at the time of making the contract o Unusual or Unexpected Terms:  The need to point out any unusual or unexpected terms to the person signing the contract at the time of contract formation or the term will be struck from the contract by the court  If you have to initial in certain areas in a contract, it is to bring an unusual term to your attention  The unusual term may also be bolded o Lapse and Revocation of an Offer:  Lapse: The termination of an offer when the offeree fails to accept it within a specified time, or if no time is specified, then within a reasonable time  The offeree fails to accept within a time specified in the offer  When the offeree fails to accept within a treasonable time, if the offer has not specified any time limit  When either of the parties dies or becomes insane prior to acceptance  Revocation: withdraw an offer  An offeror may be able to revoke an offer at any time before acceptance, even when it has promised to hold the offer open for a specified time  Must provide notice of revocation to make it effective  In order to be valid, the revocation must meet the offeree before they have accepted  Cannot revoke an offer if the offeree has paid money to keep the offer open or where the offer was made under seal  Option: A contract to keep an offer open for a specified time in return for a sum of money  The offer itself may specify that it is irrevocable  A subsequent contract called an option may be made to keep the offer open o The offeree agrees to pay a sum of money o In return the offeror agrees:  To keep the offer open for a specified time  Not to make contracts with other parties that would prevent the offeror from fulfilling its offer (give the offeree the exclusive right to accept the offer) 2. Rejection and Counter Offer by the Offeree – Until an offer by one side is accepted without altercation, modification, or condition by the other, there is no contract and the parties have no legal obligation to one another – When changes to the terms are made, a counter offer, amounting to a rejection, is made – If the offeror rejects the counter offer, the original offer does not revive – When an offeree merely inquires whether the terms offered are the best he can expect, it does not amount to a rejection 3. Acceptance – Acceptance must be certain and unconditional – an offeror cannot insist on silence as a mode of acceptance and so require the offeree to act in order to reject the offer o Must be communicated either by word or by conduct – Negative Option Billing: A practice of adding services and sending bills without request and relying upon the customer to chancel if they don’t wish the service – Some offers can be accepted without communication because the offeror asks only that the offeree perform an act, implying that the act will amount to acceptance – Modes of Acceptance: o If the offer states how acceptance must be communicated, then it must be completed in exactly that way o When the offer is silent and the parties are at a distances, an offeree may communicate acceptance in any reasonable way given the circumstances and the contemplation of the parties  An offer made by mail may reasonably be taken as inviting acceptance by mail  Acceptance by mail is communicated when a properly addressed and stamped letter is dropped in the mail  If response by mail is not reasonably contemplated, then the acceptance is communicated when the mail is received – Modes of Revocation: o Revocation by post is effective only when notice is actually received by the offeree, not when it is dropped in the mailbox – Jurisdiction: The province, state, or country whose laws apply to a particular situation o A contract is formed at the place where the acceptance becomes effective, which is determines by the moment in time when the contract is effective o If an offeror invites an acceptance by mail, the contract is formed at the place where the acceptance is dropped in the mailbox o If an instantaneous means of communication is used, the contract is formed wherever the offeror receives the acceptance 4. Consideration: The price for which the promise of the other is bought – The accepted offer must form a bargain, where each party pays a price or gives value for the promise obtained from the other party o In a unilateral contract, the price paid for the offeror’s promise is the act done by the offeree o In a bilateral contract, the price paid for each party’s promise is the promise of the other (consideration) – Consideration can also be the promise not to do something – Gratuitous Promise: A promise made without bargaining for or accepting anything in return o Even when accepted by the person to whom it is offered, the promise is not enforceable in law o If the promisor does not perform, the promise has no legal remedy (he cannot seek compensation for the benefit he was promised) o Charity’s can make a pledge for general finds legally binding if it uses a seal on its pledge cards or offers something to the donor in return, such as membership rights o Cannot demand a gift back because the property has been tran
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