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Chapter 5

Management and Organizational Studies 2275A/B Chapter Notes - Chapter 5: Liability Insurance, Misfeasance, Strict Liability


Department
Management and Organizational Studies
Course Code
MOS 2275A/B
Professor
Susan Toth
Chapter
5

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Negligence, Professional Liability and Insurance
I. The A, B, C and D of Negligence
Negligence: An unintentional, careless act or omission that cause injury to another
person or their property
The most important area of tort liability for business people
Requires 4 elements to be established in order for a plaintiff to succeed on a
negligence action
1. A: A Duty To Exercise Care Must Exist
Duty of Care: An obligation to take steps to avoid foreseeable harm
The court must determine whether the defendant owed a duty of care to the plaintiff
The court uses the Reasonable (Plaintiff) Foreseeability Test: A test of whether a
duty of care is owed, based on what a person should have anticipated would be the
consequences of his action
This Test Asked:
A. Proximity: Nearness in place, time, occurrence or relation
-There must be injury to the plaintiff that was reasonably foreseen
-There was a relationship between them such that the plaintiff was of a class of
“persons who are so closely and directly effected by my act” that the defendant
should have thought of them
B. Was there a reason a reasonable standard should not of been upheld, part two
allows the courts to look at social policy, not just strict rule
Misfeasance and Nonfeasance
-Law imposing a duty on people to carry out their activities careful so as to not cause
harm to others
-Misfeasance: Wrongful conduct
-Courts are ready to impose liability to the wrong doer
-Nonfeasance: Failure to act; such failure us actionable in tort only where there is a
specific duty to act
-A person who sees something bad happening to another person is not obligated to
help them UNLESS there is a special relationship between the two
-Bars are seen to have special relationships with their customers (They must attempt
to get them home safely)
-The courts have limited the liability for people attempting to help in any situation
2. B: Breach of The Standard of Care
Once the existence of duty is established the second issue is whether the defendant
demonstrated sufficient care
Reasonable Person Test: The judicial standard of locally acceptable behaviour
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Having the issue of deciding what conduct is socially acceptable, they ask “What
would a reasonable prudent person, in possession of all the facts of this case,
have done?”
Costs and expenses are also taken into consideration
The elderly are held to the same average person standard, while children are not
Res Ipsa Loquitur: A principle of establishing negligence based on facts that “speak
for themselves”, this no longer applies in Canadian tort law
Prima Facie: A judicial finding that circumstantial evidence establishes a case “on the
face of it” which prevails until contradicted and overcome by evidence to the contrary
-Once this is established, the defendant must provide evidence he wasn't negligent
3. C and D: Causation and Damages
Negligence requires some sort of loss to person or property be suffered
Economic loss or physical injury are both accepted
A. “But For” Test: Physical Causation
“But For” Test: A test for causation used to determine whether the injury would have
occurred had it not been for the act of the defendant
-The general test for causation: Theft of being the cause of something happening
B. Remoteness Test- Legal Causation
Problems arise in cases in which negligence is proven because the argument is made
the negligence did no directly cause the injury or loss
Liability will only be placed on the defendant if they could have reasonably anticipated
the general nature of the injuries or damaged suffered
Remoteness Test: Determining whether the damages were too far removed from the
original negligent act
Difference Between Remoteness Test and Reasonable Foreseeability: RFT is
used to determine whether the danger to the plaintiff should be antiquated, while the
RT tests if the type of injury itself could have been foreseen
Thin Skull Rule: A principle of torts that we take our victims as we find them, even
those with unique physical or mental conditions
Crumbling Skull Rule: A tort law principle that the defendant is not liable for losses
that were inevitable; used in conjunction with the Thin Skull Rule
-The court recognizes the pre-existing frailties and the award of damages aims at
resorting the plaintiff to the poison pre-incident
II. Defences
A. Voluntary Assumption of Risk
Volenti Non Fit Injuria (Volenti): A defence in torts based on the plaintiff’s voluntarily
assuming a clear legal risk This will arise only where there can truly be said to be an
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understanding on the part of both parties that the defendant assumed no responsibility
to take due care of the plaintiff
Very rare to see a successful Volenti Defense
B. Contributory Negligence
Last Clear Chance Doctrine: A largely outdated principle of torts that the last person
capable of avoiding the accident is wholly responsible
-Largely outdated and is never used in todays courts
When two parties are both responsible for the loss, the court must decide what
proportion to assign the damages
A rescuer can not be held to Volenti, because it is not right to assume they accepted
all danger and legal risks
C. Illegality (Ex Turpi Causa)
“An action does not arise from a base cause” or courts should refuse to entertain a
lawsuit brought by a party who engaged in unlawful activity
Basically, an incident that arises from acting illegally or immorally may be denied
recover in tort law
Very rare way to win a negligence case
III. Legislation Impacting Duty of Care
Acts may apply obligations for people, but violations do not results in a tort unless
stated so by a statute
No-Fault Program: Insurance programs compensating people for their injuries
whether they were at fault or not
Ontario has passed legislation setting a threshold for physical injury that must be met
before Non-Pecuniary Damages (Damages based on non-monetary factors such as
pain and suffering) can be give
The duty to exercise care applies in relation to:
1. The condition of the premises
2. The activities on the premises
3. The conduct of third parties on the premises
The Foreseeability test is not necessary if legislation describes it
A. Innkeeper’s Liability
In common law an innkeeper was responsible for all negligence, even if it was not
committed by him or his staff, legislation has since changed that
IV. Strict Liability
Liability even in the absence of fault
The act of doing something and having no idea that it would cause harm to somebody
does not make them negligent, but it does however make them liable
Strict Liability will not be imposed unless the use of property is unusual
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