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Midterm

BU231 Textbook notes for the MIDTERM.docx

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Department
Business
Course
BU231
Professor
Shelley Mc Gill
Semester
Fall

Description
Chapter 3  Tort = a wrongful act causing harm to the person or property of another o Purpose: to compensate victims for harm caused by the activities of others o Identifies a set of circumstances that creates a right to claim compensation  At first, courts only recognized direct injuries  not the ones that were indirectly caused  Fault o Unjustifiable conduct that intentionally or carelessly disregards the interests of others o Therefore, people will be more careful if they must pay for the consequences of their carelessness o But the compensation system also has faults  Victims who cannot establish fault go uncompensated  Those who can establish fault of a large corporation tend to be over compensated o In most areas of tort law, liability is imposed on a fault basis  Strict liability o liability that is imposed based upon causation regardless of fault o some activities are dangerous no matter the amount of care taken  ex. Transporting high explosives  therefore, strictly liable for damages regardless of fault o they can charge for their services according to the degree of risk and carry adequate insurance to compensate the possible harm  Public policy o Considerations or objectives that are considered beneficial to society as a whole o Changes as our social standards change  No-fault insurance o A system of compulsory insurance that eliminates fault as a basis of claims o Ex. Car accident claims  Workers’ compensation o A scheme in which employers contribute to a fund used to compensate workers injured in industrial accidents regardless of how the accident was caused  Vicarious liability o An employer will normally be held liable when at fault for an act committed by an employee o Reasons  The employee usually doesn’t have enough assets to compensate  It seems only fair to have the person who is making a profit from the activity to be liable for any losses Intentional torts  Intention relates only to the behaviour, not the resulting damage  Trespass o Unlawful entering or remaining on the land of another without permission o However, cannot sue unless there is a loss  ie. damaged garden, fence etc  Assault and battery o Assault = the threat of violence to a person o Battery = unlawful physical contract with a person o May also be a criminal offence o Ex. A surgeon who operates on a patient without consent = battery  Nuisance o Public nuisance = interference with the lawful use of public amenities  Ex. Blocking public roads, interfering the use of public amenities such as parks o Private nuisance = interference with an occupiers use and enjoyment of their land  Ex. Excessive noise, noxious fumes, contaminated liquids poured into rivers/ soil  But there isn’t absolute freedom  Court must consider the degree of interference and the economic importance of the offending activity  There are govt regulations to try and control the annoyances  False imprisonment and malicious prosecution o False imprisonment = intentionally restraining a person, without lawful justification, either by confinement or by preventing him from leaving the place  Significant important to shoplifting  Does not have to be physical restraint  “stop, thief”  There is a risk in confronting a member of the public without strong evidence that a crime has actually been committed  False arrest = causing a person to be arrested without reasonable cause o Malicious prosecution = causing a person to be prosecuted for a crime without an honest belief that the crime was committed  Defamation o Making an untrue statement that causes injury to the reputation of another person o Courts will not award damages unless the plaintiff can demonstrate that the defendant has made serious allegations about their character or ability, causing significant injury to their reputation o Requires publication  communication of the offending statement to a third party o Libel = written o Slander = spoken o One defence = the alleged statement was true  defendant must prove this o Absolute privilege = complete immunity from the liability of defamation  Words spoken in parliament debates, in law courts and before the royal commissions o Qualified privilege = immunity from liability from defamation provided that the statement was made in good faith  But once they find out it is wrong, they have to correct themselves  Responsible communication on matters of public interest = a defence when the publication of a defamation statement is in the public interest and was done responsibly  Induced breach of contract o Intentionally causing one party to breach his contract with another  Unfaithful interference with economic relations o Attempting, by threats or other unlawful means, to induce one person to discontinue business relations with another o Actual breach of contract is not necessary but there must be unlawful means used  Product defamation o Making false and damaging statements about the products of another person o Passing off = representing one’s goods as those of another Unintentional torts  Negligence o The careless causing of injury to the person or property of another o Elements of proof = 3 requirements  The defendant owes the plaintiff a duty of care  Should the defendant have been aware of the risk of harm to this victim?  Duty of care = a relationship so close that one must take reasonable steps to avoid causing harm to the other  Plaintiff must establish that the defendant owed a duty of care to her  Generally, a duty only arises where the defendant could reasonably have foreseen a risk of harm to the plaintiff or to something in the plaintiffs position  Sometimes, the duty is owed to someone other than the individual who is directly injured o Ie. the shock a parent feels when they witness their child being run over by a car  The defendant breached the required standard of care  Did the defendants conduct fall below the standard of behaviour required in the circumstances?  The level of care a person must take in the circumstances  Standard of care varies according to the activity  Sometimes, legislation sets out the appropriate standard of care for particular activities = considered as the lowest acceptable standard of care o Ex. Safety standards for the food industry  The defendants conduct caused injury/ damage to the plaintiff  Did the conduct “cause” the injury?  “but for” test = the plaintiff must show that “but for” the negligent conduct of the defendant, the injury would not have occurred  “material contribution” test = finds causation when the type of injury is that for which the behaviour of the defendant created an unreasonable risk and it would offend notions of fairness to deny recovery  Remoteness of damage = a person will not be held liable for consequences for his acts that are considered too remote (far removed from the conduct) or unrelated o Defence  contributory negligence = plaintiff’s own conduct provides a partial or full defence to negligence  Their conduct also contributed to the injury  The loss will be apportioned according to degree of fault  Voluntary assumption of risk = plaintiff was aware of the risk and continued with the activity anyways  Defendant will not be found liable  Ie. “slippery when wet” signs  Failure to mitigate damages  after the injury, they didn’t do things that would have made them better  ie, after breaking a leg, they leave it infected which results in their leg being amputated Insurance  Courts do not admit evidence about the existence or amount of insurance coverage in negligence actions because their decisions must be based strictly on the merits of the dispute being tried and be free from any suspicion that their judgement has been biased b a knowledge of the amount of insurance protection that the plaintiff has chosen to purchase  Cannot be compensated by the insurance company and the defendant  Then an insured party recovers first from their insurance company, their right to claim against the wrongdoer passes to the insurance company  Subrogation = where one person becomes entitled to the rights and claims of another Product liability  A tort imposing liability on manufacturers for harm caused by defective products  Form of negligence customized to the manufacturing context  A buyer of defective goods may sue the vendor for breach of contract even if they are not the injured user  Circumstantial evidence principle = a prima facie case of negligence may be established by drawing reasonable inferences from the circumstances surrounding the product manufacture and failure o Up to the manufacturer to show that the cause of the defect was not something for which it should be held responsible for, or that it had taken all reasonable precautions to prevent it Burden of proof  In most tort actions, plaintiff must prove all the elements of the cause of action  But for product liability cases, there are different steps o Plaintiff must meet their burden of proof using circumstantial evidence o But does not have to identify how the manufacturer fell below the standard of care  They need to prove that the malfunction of the product is the likely reason of their injury  Up to the manufacturer to show that it was not at fault  Res ipsa loquitur = “the facts speak for themselves”  But if the inspection process was foolproof, the one of the employees must have been negligent  still responsible under vicarious liability Inherently dangerous products  Manufacturers owe a duty to consumers to give proper warning of dangerous products  Duty to warn = manufacturer’s responsibility to make users aware of the risks associated with the use or misuse of the product  If the product has been placed on the market, and the manufacturer becomes aware of the potential dangers in its use, it must issue appropriate warnings to the public  A plaintiff whose claim is based on a breach of duty must prove that the duty was owed, the warning was deficient AND that had a proper warning been given, they would not have used the product or would not have it in the way they did  failure to warn influenced their behaviour Occupier’s liability  Imposes liability on occupants of land for harm suffered by visitors to the property  Highest duty of care is owed to an invitee = a person permitted by an occupier to enter premises for business purposes o Then licensee = a visitor who enters premises with the consent of the occupier o Trespasser  Now, a common duty of care is owed by an occupier to all expected visitors  same standard of care is applied to these 2 groups  A duty is still owed to a trespasser, but the level of care is minimal o The occupier must not set out deliberately to harm the trespasser or recklessly disregard the possibility that his acts might injure a trespasser  Occupier must not set traps Remedies  Usual remedy is an award of a sum of money, known as damages to compensate for physical and economic losses o Physical losses = costs of repairing damaged property or treating people o Economic losses = losses in monetary value such as lost wages or profits  Purpose of damages = restore the plaintiff  Rare: punitive or exemplary damages = damages awarded with the intention of punishing a wrongdoer  Special damages = damages to compensate for quantifiable injuries o Ie. medical bills, cost of repairing a car, actual lost wages  General damages = damages to compensate for injuries that cannot be expressed in monetary terms o Ie. future losses of earnings due to disability, pain and suffering of losing a limb  Restitution = an order to restore property wrongfully taken  Injunction = an order restraining a person from doing a particular act under the threat of jail  Mandatory injunction = an order requiring a person to do a particular act  positive action Chapter 4  Professionals = people who have specialized knowledge and skills that their clients rely on and are prepared to pay for o Usually belong to a professional organization and licensed Liability of professionals  liability may arise from 3 relationships, generating 3 diff. causes of actions  Contractual relationship  breach of contract  most often  Fiduciary relationship  breach of fiduciary duty  Duty of care owed in tort  tort cause of action Contractual obligations  An agreement to provide professional services to a client contains a promise to perform those services competently o Breach of this promise = breach of the contract  Sometimes, there is no contract between the professional and the injured party  so fiduciary or tort liability are the only alternatives Fiduciary duty  A duty imposed on a person who stands in a special relation of trust to another  Can arise even when the professional donates services free of charge so that no contract exists  Not every professional relationship is a fiduciary one  Steps to imposing liability for breach of fiduciary duty o Establish that the relationship is one to which the duty applies (3 characteristics)  The fiduciary (usually the professional) has scope for the exercise of some discretion/ power  The fiduciary can unilaterally exercise that power or discretion to affect the beneficiary’s legal or practical interests  The beneficiary is particularly vulnerable to/ is at the mercy of the fiduciary holding the discretion/ power  Ex. Lawyer-client, doctor-patient o Determine if the professional’s behaviour breaches the fiduciary obligations  They must act honestly, in good faith, and only in the best interests of the client  A fiduciary should not place themselves in a conflict of interest and has a duty not to profit or attempt to profit at the client’s expense  Conflict of interest = a situation where a duty is owed to a client whose interests conflict with the interests of the professional or other clients  Liability for breach of fiduciary duty may arise without any negligence  Defendant may be under a duty to account = the duty of a person who commits a breach of trust to hand over any profits derived from the breach Tort liability  When a professional deliberately or carelessly causes damage to a client o their contract may also have been breached  expands the possible plaintiffs beyond clients who have paid for the advice o ie. auditors who express an opinion on the accuracy of the client firm’s financial papers o when doctor A gives a professional opinion to doctor B concerning doctor B’s patient o known as third parties o third-party liability = liability to some other person who stands outside a contractual relationship Choosing a cause of action  court will now award double or triple the damages because there were many causes of actions  but might affect the amount of damages awarded Tort liability for inaccurate statements Misrepresentation  deceit = an intentional tort imposing liability when damage is caused by false statement made with the intention of misleading another person o also when a person deliberately conceals or withholds information  fraudulent misrepresentation = an intentional tort imposing liability for an incorrect statement made knowingly with the intention of causing injury to another  negligent misrepresentation = an unintentional tort imposing liability when an incorrect statement is made without due care for its accuracy, and injury is cased o purely economic loss, rather than physical injury  Deceit or fraudulent misrepresentation requires at least some guilty knowledge or disregard for the falseness of the information. Negligent misrepresentation does not. The Hedley Byrne Case  Disclaimer = an express statement to the effect that the person making it takes no responsibility for a particular action or statement The duty of care  2 part test o Requires an inquiry into whether there was a sufficiently close relationship between the plaintiff and the defendant that carelessness on the defendant’s part may cause damages to the plaintiff o Test considers limiting the duty for public policy reasons – the extent of liability must be predictable  If the number of plaintiffs or magnitude of their losses are undeterminable, public policy concerns may cause a court to restrict the duty owed  eligible participants must be reasonable “foreseeable” and be using the information for the purpose actually “foreseen” by the defendant  indeterminate liability = inability to be determined so that the magnitude of liability cannot be reasonably predicted  not a component of the statutory duty of care  negligent misrepresentation  not only about financial information o salespeople may be liable for representations made about the products they sell Proving negligent misrepresentation  must be a duty of care based on a “special relationship”  the representation in question must be untrue, inaccurate or misleading  the representor must have acted negligently in making the misrepresentation – fell below the standard of care required of a professional making such a representation  the representee must have relied on the negligent misrepresentation  reliance must have been detrimental to the reprsentee  damages must have resulted Accuracy of the statement  value judgements/ opinions are considered facts when expressed by an expert but are more difficult to prove wrong  the accuracy is assessed at the time the information was given o the fact that the statement becomes untrue later does not establish that it was untrue at the time it was made o this rule does not apply to opinions about the future, such as saying whether a stock is a good investment or not  future events will establish its truthfulness  inaccuracy = not enough to establish liability o must prove that the professional did not meet the required standard of care The standard of care for professionals  a professional must exercise the same degree of skill and possess the same level of knowledge as generally expected of others in that profession o ie. accountants who fail to comply with GAAP = below standard of care  a court may also hear from practitioners who state what they consider is a proper standard  sometimes, simply complying with normal standards is not an adequate defence o established standards should not be a mean for protecting members from liability  Omissions: the standard of reasonable care includes not omitting essential info o Or it will be negligent misrepresentation (where the professional has a duty to them) Reliance and detriment  Reliance = acting in a certain way because one believed the information received  must be reasonable  Detrimental reliance = worsening one’s situation after acting upon the false information The role of professional organizations Responsibilities and powers  Most major professions are governed by professional organizations est. under provincial statues o Usually has a governing council composed of elected reps. of the profession o May also have external reps appointed by the govt to represent the public interest  2 consequences o The right to discipline gives the organizations greater power over individual members  Expulsion or suspension for a long period of time may destroy a member’s means of livelihood o Exclusivity gives these self-governing professions greater power over the quality and cost of their services to the public Codes of conduct  Rules of a professional organization setting out the duties and appropriate standards of behaviour to be observed by its members  Required by many professional bodies  Can help determine the extent of the duty owed by members to their clients  Can impose ethical standards on their members above any legal requirements Discipline  Responsible for maintaining and improving standards  Discipline unprofessional, unethical or illegal-mannered members  Punish by expulsion or suspension Conflict of duty towards clients, the profession, and the courts  A member faces a dilemma when required to testify in court proceedings affecting a client  Privilege = the right of a professional to refuse to divulge information obtained in confidence from a client Chapter 5 Contracts = voluntary legal relationships  not legal obligations forced upon everyone like tort or criminal liability  A set of promises that the law will enforce  Begins with a promise, but not all promises become contracts  4 basic requirements that form a legally enforceable contract: offer, acceptance, consideration, and intention Contract law = empowers parties to create legal obligations that would not otherwise exist Offer  A description of a promise one party (offeror) is willing to make, subject to the agreement of the other party (offeree)  When the offeree accepts = contract  An invitation to do business = NOT a contract o The display of a coat in a store window does not amount to an offer to sell o These are just advertising devices to start negotiations for a contract of sale  The form of an offer is not important as long as its heard and understood  An offeree cannot accept an offer until they are aware of it  Businesses that sell to the general public usually present their terms of offers in written documents handed to their customers o Ie. movie tickets, credit card agreements, online purchases  An offeree cannot change any terms of a standard form of contract  so there is no real element of bargaining  must accept the offer as is or not at all o 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 o Protection from this inequality in bargaining  If the business falls within an area regulated by a govt board, the terms of contracts are subject to board approval  Some segments of the public (ie. consumers) are offered special protection  Public receives only as much protection as the courts can find in the general law of contracts Required notice of terms  Courts presume that an unqualified acceptance of an offer is an acceptance of every term of that offer o Ie. if the offeree did not know that the offer contains a certain term, and the court finds that the steps taken to bring the term to the attention to the offeree was insufficient, then they will have a remedy  as if the term has never been on their contract  However, if they can prove that they had done what was necessary in the circumstances to bring the term to the notice of the offeree, then they are bound by the contract Unusual or unexpected terms  Unexpected terms need to be brought directly to the attention of the offeree  their decision may change  If an offeree sign a document, a stronger presumption arises that they accept all the terms it contains harder to avoid the consequences The lapse and revocation of an offer Lapse  The termination of an offer when the offeree fails to accept it within a specified or reasonable time o Also, when either of the parties dies or becomes insane prior to acceptance o An offeree can no longer accept it even if they are unaware that it has lapsed Revocation  An offeror may revoke/ withdraw an offer at any time before acceptance, even when it has promised to hold open for a specified time  Offeror must provide notice of revocation to make it effective  The court will consider the offer revoked if it would be unreasonable for the offeree to suppose that the off
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