Chapter 5 Torts Affecting Business.docx

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Management (MGS)
Professor Rybak

Chapter 5 Torts Affecting Business Torts where the defendant causes an unlawful act and causes the plaintiff to suffer 1) Conspiracy • Occurs when two or more defendants agree to act together with the primary objective of causing the plaintiff to suffer a financial loss. • Tort of conspiracy is hard to prove. • If the defendants’ actions were lawful, then conspiracy is difficult to prove because the court will require proof that the defendant’s primary aim was to hurt the plaintiff. • However, if the defendants’ actions were unlawful then the court will merely require proof that the defendants should have known that their actions might hurt the plaintiff. 2) Intimidation • Tort of intimidation is concerned with unethical business practices. • Intimidation occurs when the plaintiff suffers a loss as a result of the defendant’s threat to commit an unlawful act against either the plaintiff or a third party. • The tort of intimidation has two branches: o Two Party Intimidation- the defendant directly coerces the plaintiff into suffering a loss. Ex. Manager of a supermarket might use threats of physical violence to frighten the owner of a small convenience store into closing down. o Three Party Intimidation- The defendant coerces a third party into acting in a way that hurts the plaintiff. • Whether intimidation involves two or three parties the basic rules remain the same. • First, the plaintiff must prove that the defendant threatened to commit an unlawful act such as crime, tort, or even breach of contract. • Second, the tort does not occur unless the threatened party gives in to the intimidation. • Third, as long as the other elements of the tort are established, there is no need to prove that the defendant intended to hurt the plaintiff. For instance, intimidation may occur even if the tortfeasor was motivated by a desire to benefit itself rather than injure the plaintiff. 3) Interference with Contractual Relations • Occurs when the defendant disrupts a contract that exists between the plaintiff and a third party. • A direct inducement to breach of contract occurs when the defendant directly persuades a third party to break its contract with the plaintiff. Liability requires four factors o 1) The defendant must know about the contract between the third party and plaintiff. The defendant does not have to know all the details of the contract. o 2) The defendant must intend to cause the third party to breach that contract. However, the defendant does not have to intend to hurt the plaintiff. The tort may be committed if the defendant is motivated by a desire to benefit itself. o 3) The defendant must actually cause the third party to break its contract with the plaintiff. For instance, the defendant might hire the third party for a job that makes it impossible for that person to work for the plaintiff. o 4) The plaintiff must suffer a loss as a result of the defendant’s conduct. Most cases that requirement is satisfied by the fact that the third part does not perform its contract with the plaintiff. • The plaintiff can also sue the third party for contract in breach as well. However, the plaintiff cannot recover full damages under both actions. • An indirect inducement to breach of contract occurs when the defendant indirectly persuades a third party to break its contract with the plaintiff. Ex. The defendant may physically prevent the third party from going to work by taking tools needed to perform the contract for the plaintiff. • Liability depends on the same four factors plus proof that the defendant’s actions themselves were unlawful. • 4) Unlawful Interference with Economic Relations • Occurs if the defendant commits an unlawful act for the purpose of causing the plaintiff to suffer an economic loss. • There must be intent to injure. • The act must be an unlawful or illegal act. • The plaintiff must suffer an economic loss. All these torts are referred to as “business torts”. They all deal with situations in which one business may try to gain an advantage over another. These torts must deal with two important questions: 1) Must the tort involve behaviour that is otherwise unlawful? 2) Must the defendant intend to harm the plaintiff? Deceit • Occurs if the defendant makes a false statement which it knows to be untrue, with which it intends to mislead the plaintiff, and which causes the plaintiff to suffer a loss. • The defendant must make a false statement which may be satisfied in several ways o Defendant may be held liable for half truth o Defendant may be held liable for failing to update information. o Defendant must also warn about hidden defects of their product. • The defendant must also know at the time of making a statement, that it is false. It is not enough if the defendant was merely careless. • The defendant must make the statement with the intention of misleading the plaintiff. • The plaintiff must suffer a loss as a result of reasonably relying upon the defendant’s statement. The plaintiff’s reliance is reasonable if a reasonable person might have reacted to the defendant’s statement in the same way. This rule has several consequences o The defendant’s statement normally has to refer to a past or present fact. Liability is usually no possible if the defendant offered an opinion, predicted the future, or made a boastful claim. Reasonable people do not rely on these claims. • In terms of remedies, the plaintiff is entitled to the amount that will put him or her in the position that he or she was before the incident occurred. Torts Involving the Use of Land 1) Occupiers’ Liability • Requires an occupier of premises to protect visitors from harm. • Occupier is any person who has substantial control over promises. • Visitor is any person who enters into the premises. • Premises include more than land. Can include elevators, vehicles, ships, trains, and airplanes. Scope of occupier’s liability is wide and potentially very dangerous for business people. • Law of occupier’s liability is complicated because it differs between jurisdictions. • Common Law Rules recognize four categories of visitors: trespassers, licensees, invitees, and contractual entrants. Each type of visitor is offered a different obligation. • Trespasser- A person who does not have permission to enter the premises. Occupier’s obligation is not to intentionally or recklessly injure a trespasser. • Licensee- A person who has permission to enter the premises, but who does not further the occupier’s economic interest. Occupier’s obligation is to protect a licensee from hidden dangers that were actually known to the occupier. • Invitee- A person who has permission to enter the premises and who furthers the occupier’s economic interests. Occupier’s obligation is to take reasonable care to protect an invitee from unusual dangers that the occupier knew or should have known about. • Contractual Entrant- A person who enters into a contract to use the premises rather than to receive services that are offered on the premises, like a hotel guest. Occupier has a contractual obligation to make sure that the premises were as safe as reasonably possible. • 2) Nuisance • Occurs when the defendant unreasonably interferes with the plaintiff’s use and enjoyment of its own land. • Interference can happen in a number of ways. Simple cases involve physical damage to the plaintiff or its property • A nuisance can also occur if the defendant creates a smell or sound that impairs the enjoyment of the plaintiff’s property. o Defendant may operate a pig farm that causes a stench to waft over the plaintiff’s outdoor cafe. • May be even possible to commit a non-intrusive nuisance without causin
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