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LAW 122 (625)
Chapter 3

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Law and Business
LAW 122
Theresa Miedema

CHAPTER 3 – INTRODUCTION TO TORT LAW (TEXT PG:62) TORT – wrong doing in private law - Generally consists of a failure to fulfill a private obligation that was imposed by law - IMPORTANT IDEAS on Torts: • Breach of PRIVATE OBLIGATION – obligation owed to a person TORT FEASER – one who has committed a tort TORT VS. CRIME TORT CRIME • PRIVATE • PUBLIC • Breaking a private obligation • Breaking a public obligation • Particular person owed • Society as a whole is owed • Claim by INDIVIDUAL PLAINTIFF • Prosecuted by CROWN • TYPICAL REWARD: Compensatory • TYPICAL REWARD: Punitive Damages $ Damages OVERLAP • Punching someone; TORT of battery, CRIME of assault • Stealing car TORT of conversion, CRIME of theft • Sneak into house; TORT of trespass to land, CRIME of breaking & entering TORT VS. CONTRACT (TEXT PG: 64) TORT CONTRACT • Obey the law, Obligated by LAW • Keep your promises, OBLIGATION created by parties • No special relationship, no specific parties • Obligations imposed by promises created by parties; contractual • COMPENSATION: pay back to return promise me to state before loss; before tort committed • Creates relationship privately • COMPENSATION: to return me to state I expected to enjoy once you fulfilled your promise OVERLAP • PRIMARY & SECONDARY OBLIGATIONS • Enforceable by law TORTS & CONTRACTS: STRUCTURE: Primary Obligations: • Tell people how they should act • EX – law against you hitting me in the face, tort of battery o If you have violated your primary obligation… Secondary Obligations: • How people must act after primary obligations have been broken • EX – after you have hit me, I need $5000 in medical expenses o Your secondary obligation is to return me to the state I was in before Tort was committed DOCTRINE OF PRIVITY – only people who can sue are those WITHIN a contract COMPENSATION: Differs from Tort and Contract; • Tort Compensation; (looks BACKWARD) o Return me to state enjoyed before tort was committed o EX: Compensatory Damages in the amount of $5000 for medical expenses I had to pay after you hit me • Contract Compensation; (looks FORWARD) o Put me in the position I would have enjoyed if you had fulfilled your promise o EX: I gave you $10,000 to buy your car; if you do not, you have violated your primary obligation and must compensate me. If the car was really worth $13,000, you owe me $13,000 in compensatory damages RISK MANAGEMENT Torts – often take people by surprise because they are imposed by law Contracts – should not take party by surprise because they entered into the contract, they should never enter a contract with potential compensation that requires more than parties believe they can actually provide TYPES OF TORTS 3 TYPES OF TORT LAW: TWO FUNCTIONS OF TORT LAW: - To compensate victims for loss - To deter people from committing a wrong doing 1. INTENTIONAL TORTS a. Person intentionally acts in a certain way, intended to hurt plaintiff b. Some torts require proof of intention to hurt plaintiff c. Examples: i. Battery, assault ii. False imprisonment iii. Trespass to land iv. Conspiracy v. Deceit 2. NEGLIGENCE TORTS a. Person acts carelessly, unintentionally commits tort, acting ‘negligent’ b. Examples: i. Occupier’s liability ii. Nuisance iii. Professional negligence iv. Product liability (STRICT LIABILITY TORTS NEXT PAGE) 3. STRICT LIABILITY TORTS a. Person does something wrong without intending to hurt plaintiff b. Involvement and responsibility enough to prosecute c. Unusual and often misunderstood d. ***Creates problems with risk management e. Rare; unfair in some situations to impose liability on one who did not intend to do wrong f. EX: Defendant was responsible for the situation that resulted in the plaintiff’s injury g. EX: Animals, RYLANDS VS. FLETCHER BALANCE IN TORT LAW: Allows party to engage in activity; but pay damages if at fault LIABILITY INSURANCE - A type of CONTRACT - Enhances compensatory damages; “deep pockets” insurance company more likely to have money to pay while individual likely wouldn’t have amount - CREATES TENSION BETWEEN TORTS: • Undermines deterrence function of tort law; people will commit a tort knowing they won’t have to pay but instead insurance will pay compensation for plaintiff, care less about doing something wrong - Duty to defend; insurance company must also pay legal fees and expenses associated with lawsuits brought against insured party - Indemnity insured for loss if liable - “Deep Pockets” - RISK MANAGEMENT • Shifting risk – transferring the risk to someone else • Insurer insures you for that risk VICARIOUS LIABILITY (ex. Between employee and employer) - Being held responsible for another’s tort - Common business risk • Enhances compensatory function • May enhance deterrence function - EX: Contract workers; employer not vicariously liable, shifting the risk - Employers & Vicarious Liability • Not held liable every time; harmful activities can occur outside employment relationship • Can be held vicariously liable for employees but not independent contractors • Independent Contractors: worker not so closely connected to company, matter of risk management for employer - Employee vs. Contract Worker • EE; ER controls what, how, when, where something is done • EE uses ER’s equipment and premises • Paid wage or salary, not a lump sum @ the end of the job • Integrated into ER’s business - Vic. Liability does not relieve EE of responsibility - Plaintiff can sue EE AND ER - ER more likely to have the $$$ - ERs can be vicariously liable and personally liable DOCTRINE OF VICARIOUS LIABILITY Justifiable when: - Serves tort laws compensatory function – allows plaintiff to claim damages • EX: sue employee and employer; employer more likely to have $$$
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