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Chapter 4

BU231 Textbook Notes Chapter 4.docx

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Shelley Mc Gill

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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
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