Business Law 1: Tort Liability Overview
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Questions and Answers

What is strict liability?

Liability that requires neither an intent to harm, or harm through negligence.

What are the requirements of strict liability?

  • Neither A nor B
  • Abnormally dangerous activity
  • The abnormal danger caused the harm
  • Both A and B (correct)

What are the requirements of strict product liability?

  • Product is sold in unreasonably dangerous condition
  • Seller expects product to reach consumer unchanged
  • Consumer is injured
  • All of the above (correct)

Define negligence.

<p>Failure to exercise care that a reasonable person would exercise where said failure causes injury to another.</p> Signup and view all the answers

What are the requirements of negligence?

<p>All of the above (E)</p> Signup and view all the answers

Define negligence duties, and differentiate between the common law statuses of visitors.

<p>Negligence duties are obligations imposed on a party to act with reasonable care. The common law statuses of visitors are invitees, licensees and trespassers. Invitees are invited for the owner's benefit and have the highest standard of care, licensees have a duty of care for known defects, and trespassers only have a duty to avoid harm.</p> Signup and view all the answers

Differentiate between the two types of causation.

<p>Actual causation is the direct link between an action and harm, while proximate causation considers whether the harm was foreseeable and directly attributable to the action.</p> Signup and view all the answers

What are the requirements of product liability (product specific negligence)?

<p>All of the above (D)</p> Signup and view all the answers

What are the requirements of intentional torts?

<p>An intentional tort requires an act, intent, and cause.</p> Signup and view all the answers

What are the requirements of tortious interference with contract?

<p>Tortious interference with contract requires knowledge of the contract, intentional interference with the contract, causation of the breach, and resulting damages.</p> Signup and view all the answers

What are the requirements of trademark infringement?

<p>All of the above (D)</p> Signup and view all the answers

What are the elements of trademark dilution?

<p>All of the above (E)</p> Signup and view all the answers

What are the elements of an unenforceable contract? Also give an example.

<p>A contract that cannot be enforced. Example: An oral contract.</p> Signup and view all the answers

Define a voidable contract.

<p>A contract that gives the party/right to void/cancel the contract. Example: a contract entered into with a minor.</p> Signup and view all the answers

Define an express contract.

<p>A contract that states unequivocally, (expressly) the following: 1. intent of the contract, 2. the terms of the contract.</p> Signup and view all the answers

Define an implied contract.

<p>Legally binding agreement through action/conduct, and does not need to be written... Indicated through conduct presence of an existing agreement.</p> Signup and view all the answers

What makes a contract executory?

<p>Not all acts in contract have been completed.</p> Signup and view all the answers

What is a unilateral contract?

<p>One party makes a promise, and the other party returns favor through an action. Example: Offering a reward for finding a lost pet.</p> Signup and view all the answers

What are the elements of an offer?

<p>All of the above (D)</p> Signup and view all the answers

What is the difference between a subjective offer and an objective offer?

<p>A subjective offer assesses the offer based on feelings at the time, whereas an objective offer assesses the offer based on what a reasonable person would understand about the agreement.</p> Signup and view all the answers

What are the elements of an invitation to make an offer?

<p>Both A and B (C)</p> Signup and view all the answers

What are the elements of definiteness of an offer?

<p>All of the above (E)</p> Signup and view all the answers

What are the elements of revocation of offers?

<p>Revocation must be received before it is effective.</p> Signup and view all the answers

What are the elements of option contracts?

<p>Both A and B (B)</p> Signup and view all the answers

What are the requirements of acceptance?

<p>All of the above (D)</p> Signup and view all the answers

What's the difference between an inquiry and a counter offer?

<p>An inquiry seeks clarification or suggests modifications without rejecting the initial offer, whereas a counter offer proposes alterations to the initial offer and effectively rejects the original offer.</p> Signup and view all the answers

When is acceptance through silence allowed?

<p>All of the above (F)</p> Signup and view all the answers

Define consideration.

<p>Legally sufficient value (freedom to contract), bargained for exchange.</p> Signup and view all the answers

What is nominal consideration?

<p>Consideration is NOT legally sufficient. Example: A porch sold for 1 penny, which is still legal but is nominal and raises questions like 'were they threatened'?.</p> Signup and view all the answers

Define forbearance.

<p>Not exercising a right that you could exercise.</p> Signup and view all the answers

Define legal detriment.

<p>Not doing something you have the legal right to do (example: smoking).</p> Signup and view all the answers

Define a conditional promise.

<p>Severity of issue X probability of event (example: if pigs fly, I give Sally 100$, if there's a 50% chance pigs fly in my magical world, then I have an exposure of $50), some amount of exposure can be a legal detriment.</p> Signup and view all the answers

Define past performance.

<p>Things done in the past do not satisfy as consideration.</p> Signup and view all the answers

Explain the pre-existing duty rule and its exception.

<p>The consideration rule is not necessary when you promise to do something you are obligated to do anyway (example: agreeing to build a fence, and then changing the price later to build the same fence), exception: debtor owes money that is subject to dispute, if lesser money than owed is accepted by person who is owed the debt, the lesser money counts as consideration that the debtor will pay the full amount.</p> Signup and view all the answers

Define rescission and reformation.

<p>Rescission is when parties to a contract agree to destroy the contract. Reformation is when they make new terms or even just correct a spelling error.</p> Signup and view all the answers

What are the rules for rescinding and reforming contracts?

<p>Both A and B (B)</p> Signup and view all the answers

When is consideration unnecessary?

<p>Promissory estoppel - A promise, promiser knows their promise will induce action by the other party, promise actually induces action, injustice results.</p> Signup and view all the answers

Define quantum merit (restitution)

<p>As much as one deserves', only needed when the contract is unenforceable.</p> Signup and view all the answers

What institutes incapacity?

<p>All of the above (D)</p> Signup and view all the answers

What are the exceptions to violability of minorities?

<p>Good required for a reasonable standard of living not provided by parent or legal guardian (can pay less than agreed but still must pay something).</p> Signup and view all the answers

What are the exceptions to violability (ratification)?

<p>After 18, minority can reinstate a previous contract only when contract is expressed or implied through conduct, retaining and using goods after reaching majority (C)</p> Signup and view all the answers

What are the requirements of disaffirmance by minors?

<p>Both A and B (D)</p> Signup and view all the answers

Define mental incompetence.

<p>Unable to Understand the nature of the contract and the terms of the agreement, adjudicated incompetence before contract means all contracts made by the said person is Void ab initio, addicted after the contract means the contract is Voidable at the option of the incompetent.</p> Signup and view all the answers

What are the requirements of disaffirmance by an incompetent individual?

<p>Must return any consideration given (in whatever state it exists), must be done within a reasonable time after regaining competence.</p> Signup and view all the answers

Define lucid intervals and regained competence.

<p>Allows the previously incompetent person to ratify their previous agreement and make it enforceable.</p> Signup and view all the answers

Define intoxication.

<p>Unable to comprehend a contract is being made and/or the terms.</p> Signup and view all the answers

What are the types of drunkards?

<p>All of the above (D)</p> Signup and view all the answers

What are the requirements of disaffirmance for drunkards?

<p>Must return consideration in whatever state it exists, must be done within a reasonable time after sobering up.</p> Signup and view all the answers

What are the two common ways contracts can be illegal?

<p>Violates a statute, violates public policy.</p> Signup and view all the answers

Define severability of contracts.

<p>Both parties must create a specific severability clause, otherwise if illegal condition is found or created due to law change the entire contract is void.</p> Signup and view all the answers

Define contracts in violation of licensing statues.

<p>If done in order to raise revenue, contract is valid, and operator may be punished. If done to protect public, contract is voidable at option of non-offending party, and operator maybe punished.</p> Signup and view all the answers

Define supervening illegality.

<p>When an otherwise valid contract is created, and the law later changes to make the contract illegal, contract will be void, quantum merit comes into play when 1 party has fulfilled their duty before the contract is made void.</p> Signup and view all the answers

Flashcards

Strict liability

Legal responsibility for harm caused by an activity, regardless of negligence or intent.

Requirements of strict liability

  1. Abnormally dangerous activity: activity with high risk of serious harm, even with reasonable care.
  2. The abnormal danger caused the harm: the harm must be a direct result of the dangerous activity.

Strict product liability

Liability for defective products, regardless of negligence. The manufacturer/seller is responsible for harm caused by the defect.

Requirements of strict product liability

  1. Product sold in an unreasonably dangerous condition: the product is faulty due to design, manufacturing, or warning.
  2. Seller expected the product to reach the consumer unchanged: the defect wasn't introduced after sale.
  3. Consumer is injured by the product: the harm must be directly caused by the product.
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Negligence

Failure to exercise the care that a reasonable person would exercise in similar circumstances, causing harm to another.

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Requirements of negligence (DBCH)

  1. Duty: the defendant had a legal duty to act reasonably towards the plaintiff.
  2. Breach: the defendant's conduct failed to meet the required standard of care.
  3. Cause: the defendant's action/inaction directly caused the plaintiff's injury.
  4. Harm: the plaintiff suffered actual physical, financial, or emotional harm.
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Negligence duties

Legal obligations to act reasonably towards others. Duties vary based on the visitor's status on the property.

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Invitees

Visitors invited by the owner for the owner's benefit. The owner has the highest duty of care, requiring them to make all defects safe or warn of them.

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Licensees

Visitors invited by the owner for their benefit. The owner has a duty to take all KNOWN defects safe.

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Trespassers

Visitors not invited by the owner. The owner has a limited duty to avoid intentional harm.

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Actual causation

Direct and single-factor causation. The harm directly results from the defendant's action.

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Proximate causation

Legal causation. Was the resulting harm foreseeable? It asks about the connection between the defendant's action and the outcome.

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Product liability negligence: design defects

The product's design is faulty, making it unreasonably dangerous even when manufactured correctly.

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Requirements of design defect

  1. The design defect is proven through the DBCH analysis (Duty, Breach, Cause, Harm): demonstrating negligence in designing the product.
  2. Safer alternative design is hypothetical, economically feasible, producible, and maintains the same degree of functionality: showing a safer alternative that the manufacturer could have used.
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Product liability negligence: manufacturing defects

The product is defective due to an error during the manufacturing process. The design itself is not faulty, but the product was made incorrectly.

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Product liability negligence: warning defects

The product is dangerous in normal use, and the seller has a duty to warn consumers about the risks. The warning must adequately communicate the danger.

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Requirements of adequate warnings

  1. Reasonable person would notice the warning: it must be clearly visible and prominent.
  2. Warning is comprehensible to the average user: the language should be simple and easy to understand.
  3. Warning adequately conveys the danger: it should clearly state the risks and how to use the product safely.
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Elements of intentional torts

  1. Act: the defendant must take a specific action.
  2. Intent: the defendant must have intended to cause the harm or act with reckless disregard for the potential harm.
  3. Cause: the defendant's action must cause the harm.
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Tortious interference with contract

Intentionally interfering with a valid contract between two parties, causing harm to the third party.

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Requirements of tortious interference with contract

  1. Defendant knows about the contract: aware of the agreement between the plaintiff and the third party.
  2. Defendant intends to cause the third party to breach the contract: targeted action to break the agreement.
  3. Defendant's conduct causes the third party to breach the contract: the interference leads to the contract being broken.
  4. Plaintiff suffers damage due to the breach: the plaintiff experiences harm as a result of the broken contract.
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Trademark infringement

Unauthorized use of another's trademark or a mark that is similar enough to cause confusion.

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Requirements of trademark infringement

  1. Unauthorized: the use is not permitted by the trademark holder.
  2. Use of another's mark or similar mark: the mark used is the same as or very similar to the protected mark.
  3. Likely to cause confusion of the origin of the goods marked: consumers are likely to be misled about the source of the goods.
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Trademark dilution

Using a famous mark or a similar mark in a way that weakens the distinctive quality of the famous mark.

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Elements of trademark dilution

  1. Unauthorized: the use is not permitted by the trademark holder.
  2. Use of a famous mark or a similar mark: the mark used is the same as or very similar to the protected famous mark.
  3. Mark associated with another enterprise (blurring): diluting the distinctiveness of the original mark by using it for unrelated goods or services.
  4. Mark associated with unsavory enterprise (tarnishment): using the mark in connection with low-quality or offensive products or services, damaging the reputation of the original mark.
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Unenforceable contract

A contract that lacks the essential elements to be legally binding and cannot be enforced in court.

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Voidable contract

A contract that is valid but can be canceled at the option of one or both parties.

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Void contract

A contract that is considered legally invalid from the beginning and has no legal effect.

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Express contract

A contract where the terms of the agreement are explicitly stated, usually in writing, and the parties clearly understand their obligations.

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Implied contract

A contract that is not explicitly stated in words but is created by the actions of the parties involved.

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Executory contract

A contract where the terms are agreed upon, but some or all of the obligations have not yet been fulfilled.

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Executed contract

A contract where all of the obligations have been performed by the parties involved.

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Unilateral contract

A contract where one party makes a promise in exchange for an action by the other party.

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Bilateral contract

A contract where one party makes a promise in exchange for a promise from the other party.

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Elements of an offer

  1. Intent: the offeror must have a serious intention to enter into a contract.
  2. Definiteness: the offer must have clear and definite terms.
  3. Communication: the offer must be communicated to the offeree.
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Objective offer vs. subjective offer

Objective: based on how a reasonable person would understand the offer. Subjective: based on personal feelings and intent at the time.

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Elements of invitation to make an offer

  1. Generally published to the public: not addressed to a specific person.
  2. Lacks specific terms: lacks details needed for a binding agreement.
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Elements of a definite offer

  1. Complete terms: all essential parts of the agreement are included.
  2. Made for a specific person: clearly identifiable offeree.
  3. Language indicating an offer: words suggesting a willingness to be bound if accepted.
  4. Award for an act: a reward or consideration for performing a specific action.
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Study Notes

B-Law 1

  • Tort liability in business generally arises from product liability, negligence, and intentional torts. Liability requires either intent to harm or harm through negligence.
  • Strict Liability:
    • Defined as liability without intent to cause harm.
    • Two criteria for strict liability:
      • Abnormally dangerous activity.
      • The abnormal danger caused the harm.
  • Strict Product Liability:
    • Three criteria for determining strict product liability:
      • Product is sold in an unreasonably dangerous condition.
      • Seller expects the product to reach the consumer unchanged.
      • Consumer is injured.
  • Negligence:
    • Definition: Failure to exercise the care a reasonable person would in similar circumstances, causing injury to another.
    • Key elements of negligence:
      • Duty: Defendant had a duty to act as a reasonable person.
      • Breach: Defendant's conduct failed to meet the standard of care.
      • Cause: Defendant's action/inaction caused the injury.
      • Harm: Plaintiff suffered physical, financial, or emotional harm.
    • Types of visitors and their duties:
      • Invitees: Invited for the property owner's benefit; owner must make all defects safe or warn of them. (e.g., store customer)
      • Licensees: Invited for the benefit of the visitor; owner must take all known defects safe (e.g., social guest)
      • Trespassers - Not invited and the owner's duty is to avoid harming them. (e.g., shooting or trapping)

Intentional Torts

  • Requirements for intentional torts:

    • Act
    • Intent
    • Cause

  • Tortious Interference with Contract:

    • Defendant aware of the contract between plaintiff and a third party
    • Defendant's conduct intended to cause the third party to breach the contract.
    • Defendant's conduct caused the breach of contract.
    • Plaintiff suffered damage as a result.

Trademark Infringement and Dilution

  • Trademark Infringement:
    • Unauthorized use of another's mark, or a similar mark.
    • Likely to cause confusion about the origin of the goods.
  • Trademark Dilution:
    • Unauthorized use of a famous mark, or a similar mark.
    • Mark is associated with another enterprise. (blurring)
    • Mark is associated with an unsavory enterprise (garnishment).

Unenforceable Contracts

  • A contract that cannot be enforced.

Voidable and Void Contracts

  • Discuss voidable and void contracts
  • Voidable: contract that can be canceled by one party.
  • Void: Contract that is not enforceable in the first place.

Contract Types:

  • Express contracts: unequivocally state intent and terms.
  • Implied contracts: legally binding agreement through action/conduct.
  • Executory contract: act of performance is yet to be completed.
  • Executed contract: all acts of performance have been fulfilled.
  • Unilateral contract: one party makes a promise, and the other fulfills the contract.
  • Bilateral contract: both parties make promises.

Offer and Acceptance

  • Describe elements of an offer and acceptance for a valid contract

Option Contracts

  • Option contract describes requirements.

Acceptance and Inquiry Requirements

  • Explain requirements for acceptance and inquiry from a legal standpoint

Consideration, Nominal or Adequate Consideration

  • Discussion of adequate or nominal consideration and examples.

Severity of Issue X Probability

  • Discuss issues of severity of the issue and probability of the event.

Promissory Estoppel

  • Explain concepts relating to promissory or estoppel

Quantum Merit and Restitution

  • Definition for Quantum Merit and Restitution

Capacity and Minority Contracts, etc.

  • Overview of when contracts may be voidable from a minority's perspective (minors, drunkards, mental incompetents).
  • Discuss related concepts like disaffirmance and exceptions where contracts are voidable.

Illegal Contracts

  • Describe reasons contracts may be illegal/invalid.
    • Violate statutes.
    • Violate public policy.
    • Severity of a contract and whether it is permissible.
  • Contracts in violation of licensing statutes.

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B-Law 1 PDF

Description

This quiz covers the fundamental concepts of tort liability in business, including strict liability, strict product liability, and negligence. Understand the criteria and elements that constitute these legal terms and their implications for businesses and consumers. Test your knowledge on how these legal principles apply in real-world scenarios.

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