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Midterm

BU231 Midterm Reading Notes.docx

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Department
Business
Course
BU231
Professor
Valerie Irie
Semester
Fall

Description
The Law and Business Administration in Canada Reading Notes Chapter 3: The Law of Torts The Scope of Tort Law  The purpose of tort law is to compensate victims for harm caused by the activities of others o Punishment is left to criminal law, if the conduct in question regards a crime  A tort identifies a set of circumstances that creates a right to claim compensation Development of The Tort Concept  In early days tort law was simple in the way that anyone that caused direct injury to another had to pay compensation o This type of liability is called strict liability  Over time it developed to the idea that a person shouldn’t be responsible for harm caused to another if he acted without fault o The court also began to recognize indirect or consequential injuries such as careless actions resulting in injury  Tort law evolved overall to take into account both fault, and causation The Basis for Liability  Fault o In the context of tort law this refers to blameworthy or culpable conduct o This is used as a deterrent since people will be more careful if their actions have consequences o Even though many activities involving liability are covered by insurance claims will usually increase premiums o Compensation based systems have many faults however since victims who cannot find fault in another’s actions go uncompensated  Strict Liability o Modern day attitudes about fairness mean that most liability is based upon fault o Strict liability exists in vary few areas of law because of the evolution of tort law over time  Ex: If a manufacturer stores dangerous chemicals on his land and a visitor punctures the tank with his truck it is the responsibility of the manufacturer to repay all damage  Note: the driver may be liable to the company  This is done because companies can charge higher prices due to the risk, and are insurable for the possible harm o In many cases involving dangerous materials companies are held to high standards of care which in most cases are nearly impossible to maintain and therefore they are essentially strict liability cases  Public Policy o Public Policy provides a basis in which cases should be judged (fault vs. strict liability) o The objectives of public policy change as the social standards change  These standards force the law to adapt whether it be from direct government legislation intervention or influences on judge and jury in determining liability and compensation  An example of this is workers compensation because accidents are seen as the price of doing business and therefore fault is eliminated o Vicarious Liability  An example of strict liability as a result of social pressures looks at torts committed by employees in the course of their employment  Employers will usually he held liable for a fault committed by an employee  This principle is called vicarious liability and results in an employer being held liable to compensate persons for torts committed by an employee during the course of employment  This principle is around largely because even if an employee is personally liable they have limited assets in which to compensate the victim/victims, secondly it is seen as fair that the person who makes the profit from the activities should be liable for losses as well Intentional Torts  Torts are divided into two types: intentional and unintentional o Intentional torts are those where the activity is done deliberately, unintentional is where the behaviour itself is accidental o In both cases the harm may be unexpected and the intention only relates to the behaviour o Harm must occur for any tort to be actionable o Most common intentional tort involves trespassing however in most cases there is very little damage from people walking on your land  Assault and Battery o Two separate torts but are usually found together o Assault is the threat of violence, battery is the actual physical contact o Manny battery charges are involved in medical and sports contexts from the aspect of being over aggressive or operating without consent  Nuisance o There are two types of nuisance torts: public nuisance and private nuisance  Public nuisances include actions such as blocking public roads, interfering with the use of public amenities such as parks, or emitting a dangerous substance in a public place  Actions may be brought about by the government on behalf of the public  Private nuisances include any actions that interferes with a person’s right to the normal use and enjoyment of their land such as noxious fumes and excessive noise  This does not give the occupier absolute freedom from annoyances since the court weighs competing interests based on the degree of interference with the occupiers enjoyment of their land and the economic importance of the offending activity  They compare with the entire community to find the reasonableness of the actions  False Imprisonment and Malicious Prosecution o This law is largely based on the idea of citizens confronting another person without strong evidence of a crime having occurred o There is liability in false imprisonment such as making any attempt to stop a person from leaving where they are both verbally and physically without VERY STRONG proof  This is usually used in the terms of false arrest since this is simply false imprisonment with the intention of turning them over to police for prosecution o If the person they are imprisoning is found guilty and arrested there is no liability o It is therefore much safer to report suspicious activity to the police if you have an honest belief that is has occurred and let them choose whether to arrest them or not  However if you don’t have an honest belief that a crime has occurred you can be charged with malicious prosecution  Defamation o The tort of defamation is usually referred to as libel and slander o By definition defamation is any statement that causes injury to the private, profession, or business reputation of another person o The court will not award damages unless the plaintiff can demonstrate that the defendant made serious, false allegations about their character or ability that caused real and significant injury to their reputation o This requires proof (publication) of defamation either written or verbal to someone other than the defamed o Defences to Defamation  The alleged defamatory statements are truthful, and in this case the onus falls on the defendant to prove the truthfulness o Words spoken in parliamentary debate, law courts, and before royal commissions are subject to absolute privilege and are therefore immune from liability to encourage discussion o In some other cases qualified privilege applies where a person is exempt from liability provided they make a statement in good faith  This applies largely when a person if making a statement and may not give a completely honest opinion for worried of being charged with defamation if they cannot prove it in court or the statements turn out to be false o Journalists are specifically worried about defamation and so the responsible communication on matters of public interest creates an exemption from this law if the information is reported with research and is the truthful belief or the publication was done responsibly and in the public interest  Other Torts Related to Business (Economic Torts) o Inducing breach of contract involves a third party convincing someone or a company to breach their contract with another and it usually goes in hand with an unlawful interference with economic relations since in many cases unlawful terms are used to convince the party to breach of contract o Product defamation is committed when one company makes a false statement about the products of another person or company o Passing off is usually used to cash in on an established reputation Unintentional Torts  Unintentional torts involve behaviour that is not done deliberately and the incidents happen unexpectedly  Negligence o This is the biggest category of unintentional torts since it involves any action that carelessly causes injury to another o Three Elements are required for proof:  Duty of Care  A duty of care is established if the relationship between the plaintiff and defendant was close enough that a reasonable person owed a duty of care to the plaintiff  Standard of Care  This looks at what level of care is owed, and in most cases is based off what a reasonable person would do  This varies from different situations, and always has to be defined for each case and proven  In some cases there is a written standard of care that is considered to be the minimum acceptable level  Causation of Damage  The defendant must prove that they were injured AS A RESULT of the breach in the standard of care o They must show that but for the negligent conduct of the defendant that the injury wouldn’t have occurred  Regardless of how blameworthy a person sometimes even if they breached the standard of care they will not be held liable o In the case where a but for test cannot be proven the court will use a material contribution test in which the behaviour of the defendant is tested to see if it created an unreasonable risk and it would be unfair to deny recovery o This test is specifically helpful when there is more than one party that can be held liable and it is unclear which one should be they will both be held liable by the fact that they both failed the material contribution test  A person WILL NOT be held liable if they can prove their actions to be remote, that is they were not closely related enough that they are considered unrelated o The law of negligence draws the line for damages not at perfection but is based off of the defendants reasonable foreseeability o If the type of damage is deemed to be reasonably foreseeable then all damages are recovered  Defences to Negligence o The easiest defence is based off the premise that the plaintiff may have some or all fault for the injury o If the defendant can establish that this is true then there is contributory negligence  If this is established then damages are based on degree of fault  This only applies within tort law  If the plaintiff does not take steps to limit the injury these damages are unrecoverable  This is called mitigating o Voluntary assumption of risk is a complete defence to negligence since the plaintiff was fully aware of all risks involved in the activity and chose to take part anyways  The exact risks must be described otherwise the defence is not applicable  Relevance of Insurance o In most tort cases the damages fall on an insurance company o When a person goes to insurance to recover their damages the right to claim against the wrongdoer shifts to the insurance company, this is called subrogation Product Liability  Product liability is around to impose liability on manufacturers for harm done as a result of their products  A buyer of a defective good can always sue the vendor for breach of contract even if the buyer is not the injured party  This incorporates the same ideas as negligence (duty of care and standard of care)  It is based off the idea that manufacturers owe a duty of care to the final consumer of the product regardless of it that consumer bought it from them or was given it  The circumstantial evidence principle provides consumers with a way of proving that the manufacturer fell below the standard of care and was negligent in doing so since it places the burden on the manufacturer to prove that the defect was not a result of their production o This means that the plaintiff can reach their burden of proof using this principle since they may not be able to identify the exact reason for why they fell below the standard of care o Companies are held to higher standard of care now because of the advancement in technology that allows them to monitor defects more easily  Inherently Dangerous Products o It is the responsibility of the manufacturer to provide clear warnings about the dangers of a product o Additionally they are under a duty to warn consumers if at any point after the product has been manufactured if there is a new danger they have been made aware of  Plaintiffs claiming that the duty to warn was breached must prove that the duty was owed, the warning was deficient, AND that had a satisfactory warning been given it would have altered their use of the product Occupiers Liability  Occupiers liability is a large part of tort law since it looks at the liability for occupiers of land with regards to those on the land o The highest duty of care was due to invitee`s (those coming onto the property for business)  They were required to make invitee`s aware of all hazards that they knew off and that a reasonable person should have been aware of o The second highest duty of care was due to licensee`s (those invited onto the property as visitors)  All concealed dangers that the occupier was aware of had to be removed o These are now combined so that an equal duty of care is due to anyone entering the property with consent o Trespassers however have a much lower standard of care in the way that the owner can`t deliberately harm them o Similar to negligence if they are made aware of risks and still engage in the activity they are liable for any damages not you Remedies o Typically the remedy for tort law cases are damages in the form of monetary compensation for injuries or losses o Damages are extended to restore the plaintiff to the state they would have been in had the injury not occurred, or the best extent possible o There are three types of damages o Punitive damages are paid to punish the wrong doing party o Special damages are paid to compensate for quantifiable injury o General damages are paid to compensate for injuries that can`t be put into monetary terms o In some cases there are remedies other than damages, however they are very rarely awarded o Restitution is the order to restore property to the rightful owner o Injunction: An order restraining someone from continuing to do something o Mandatory Injunction: An order requiring someone to do a particular act Strategies to Manage the Legal Risks o Since businesses are constantly exposed to legal risks there are some steps to minimize the risk o Legal risks regarding businesses are typically foreseeable and can be minimized by taking all actions to reduce them  This includes taking professional legal advice to minimize risks o Tort risks however are unpredictable  Managing risk by either avoiding, reducing or transferring the risk (insurance) are the most common ways to avoid tort lawsuits  Obvious warnings on all products create a defence in the case of a lawsuit  Internal quality control creates a lower chance of a defective product reaching the public Key Terms Tort: The wrongful act causing harm to the person or property of another Strict Liability: Liability that is imposed based upon causation regardless of fault Fault: Unjustifiable injurious conduct that intentionally or carelessly disregards the interest of others Public Policy: considerations or objectives that are considered beneficial to society as a whole No-Fault Insurance: A system of compulsory insurance that eliminates fault as a basis for claims Worker’s Compensation: A scheme in which employers contribute to a fund used to compensate workers injured in industrial accidents regardless of how the accident occurred Vicarious Liability: the liability of an employer to compensate for torts committed by an employee during the course of his or her employment Trespass: Unlawfully entering or remaining on the land of another without permission Assault: The threat of violence to another person Battery: Unlawful physical contact with a person Public Nuisance: interference with the lawful use of public amenities Private Nuisance: Interference with an occupiers use and enjoyment of their land False Imprisonment: Unlawfully restraining or confining another person False Arrest: Causing a person to be arrested without reasonable cause Malicious Prosecution: Causing a person to be prosecuted for a crime without an honest belief that the crime was committed Defamation: Making an untrue statement that causes injury to the reputation of another person Libel: Written defamation Slander: Spoken defamation Absolute Privilege: Complete immunity from liability for defamation Qualified Privilege: Immunity from liability for defamation provided a statement was made in good faith Responsible Communication on Matter of Public Interest: A defence to defamation when the publication of the statement is in the public interest and was done responsibly Inducing Breach of Contract: Intentionally causing one party to breach his contract with another Unlawful Interference with Economic Relations: Attempting by threats or other unlawful means to induce one person to discontinue business relations with another Product Defamation: Making false and damaging statements about the products of another person Passing Off: Representing your goods as those of another Negligence: The careless causing of injury to the person or property of another Duty of Care: A relationship so close that one must take reasonable steps to avoid causing harm to the other Standard of Care: The level of care that a person must take in the circumstances Causation: Injury resulting from the breach of the standard of care Remote: Unrelated or far removed from the conduct Contributory Negligence: A partial defence to a negligence action when the plaintiffs conduct also contributed to the injury, then the loss will be apportioned according to degree of fault Mitigate: Duty to act reasonable and quickly to minimize the extent of damage suffered Voluntary Assumption of Risk: A defect to negligence where the plaintiff was aware of the risks associated with the activity and continued to take part anyways 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 Circumstantial Evidence Principle: A case of negligence may be established by drawing reasonable inferences from the circumstances surrounding the product manufacture and failure Res Ipsa Loquitur: Translates to the facts speak for themselves Duty to Warn: Manufacturers responsibility to make users aware of the risks associated with the use or misuse of the product Occupier’s Liability: A tort imposing liability on occupants of land for harm suffered by visitors to the property Invitee: A person permitted by an occupier to enter premises for business purposes Licensee: A visitor other than an invitee who enters the premises with the consent of the occupier Trespasser: A person who enters the premises without the permission of the occupier Damages: A sum of money awarded as compensation for loss or injury Punitive or Exemplary Damages: Damages awarded with the intention of punishing the wrongdoer Special Damages: Damages awarded to compensate for quantifiable injuries General Damages: Damages to compensate for injuries that cannot be expressed in monetary terms Restitution: An order to restore property that was wrongfully taken Injunction: An order restraining a person from doing or continuing to do a particular act Mandatory Injunction: An order requiring a person to do a particular act Chapter 4: Professional Liability, the Legal Challenge Liability of Professionals o Liability arises from three different relationships: o The contractual relationship leads to a breach of contract cause of action  The case of most professionals is involved in this kind of relationship with their client  The agreement between client and professional in this case is to perform service competently  Any breach of this contract is grounds for a lawsuit o The fiduciary relationship leads to breach of fiduciary duty AND OR  This is a special relationship of trust between a professional and client, and it is a special duty imposed on the professional  The client in this situation is at the mercy of the fiduciary  Lawyers and doctors are inherently fiduciary however other relationships can be fiduciary depending on the situation  Many professional relationships are not fiduciary including financial advisors and clients  If fiduciary duty exists then they must act ONLY in the best interest of the client,
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