Chapter 4 Guided Notes: Torts and Business - Business Law PDF

Chapter 4 Guided Notes Questions: 1. What are the different categories of torts? 2. How do torts affect businesses? A tort is a wrongful act that results in harm on injury to another and leads to civil liability Compensatory Damages: Plaintiffs are awarded compensatory damages to compensate o...

Chapter 4 Guided Notes Questions: 1. What are the different categories of torts? 2. How do torts affect businesses? A tort is a wrongful act that results in harm on injury to another and leads to civil liability Compensatory Damages: Plaintiffs are awarded compensatory damages to compensate or reimburse the, for actual losses with the goal of making the plaintiff whole by placing her in the same position she would have been had the tort not occurred - Special Damages compensate plaintiffs for quantifiable monetary loses such as medical expenses, lost wages/benefits, and extra costs - General Damages compensate individuals for the nonmonetary aspects of the harm suffered such as pain and suffering Classifications of Torts - Intentional torts result from the intentional violation of persons or property (fault with intent) - Unintentional torts which are torts that involve negligence Defenses 1. Even if a plaintiff proves all the elements of a tory, the defendant can raise a legally recognized defense (a reason why the plaintiff should not obtain damages) 2. Available defenses vary depending on the specific tort involved. A successful defense releases the defendant from partial or full liability for the tortious act 3. Common defenses to torts include consent and comparative negligence 1. An intentional tort requires intent. The tortfeasor, which is the person committing the tortious act, must intend to commit an act, the consequences of which interfere with the personal or business interests of another in a way not permitted by law 2. In tort law, intent means only that the person intended the consequences of the act or knew with substantial certainty that certain consequences would result from the act 1. Assault is any intentional and unexcused threat of immediate harmful or offensive contact words or acts that create in another person or reasonable apprehension of harmful contact - The contact can be harmful, or it can be merely offensive or unwelcomed. Physical injury does not need to occur - The contact can be made by the defendant or by some force set in motion by the defendant, such as a rock thrown by the defendant - Whether the contact is offensive or not is determined by reasonable person standard Example: Pointing a gun at a person is assault. Firing the gun and hitting a person is battery False Imprisonment The intentional confinement or restraint of another person's activities without justification 1. The confinement can be accomplished through the use of physical barriers, physical restraint, or threats of physical force 2. Businesspersons may face suits or false imprisonment after they have attempted to confine a suspected shoplifter for questioning 3. Under the privilege to detain granted to merchants in most states, a merchant can use to detain or delay a person suspected of shoplifting the merchant's property 4. Although the details of the privilege vary from state to state, generally laws require that any detention be conducted in a reasonable manner and for only a reasonable length of time Example: Barney (defendant), an undercover security guard suspects Wilma (plaintiff) has stolen a blouse because she is wearing a different blouse when she comes out of the dressing room. When he approaches Wilma, she begins to run. He runs after her and tackles her to the ground before she is able to leave the store/ She is knocked out and is unconscious. Barney calls the police and 911 Privilege to Detain: A merchant can use reasonable force to detain or delay a person suspected of shoplifting the merchant's property Intentional Infliction of Emotional Distress The tort of intentional infliction of emotional distress can be defined as extreme and outrageous conduct resulting in severe emotional distress to another. To be actionable, the conduct must be so extreme and outrageous that it exceeds the bounds of dependency accepted by society - NC has alienation of affections tort - Defendant can be sued for ruining a marriage Example: While arguing over the telephone with Michelle (plaintiff) an airline reservations operator about a full refund for a cancellation, Phil (defendant) calls her a liar and say that he would punch her in the mouth if he were there. Michelle is emotionally distressed Alienation of Affection is unique to NC Defamation 1. A factual statement, not an opinion (a true statement is not defamation) 2. The statement is false 3. The statement is communicated or published to at least one person 4. The statement causes injury, damage, or harm 5. If the victim is a public figure, it must also be shown that the defendant acted with malice Libel: Writing or another permanent form (digital) -- Special and General Damages Slander: Spoken -- Special Damages Example: Bill and Reilly are having a conversation while walking to class. Reilly (defendant) tells Bill that Carl (plaintiff) their classmate has more than two wives. Stella (defendant 2) overhears the conversation and gets her phone out and posts this on Facebook. Carl has never been married. Invasion of Privacy     1.    Intrusion into Another's Private Affairs          Searching private property or records, eavesdropping, etc.     2.    False Light          Publication of information that makes a person or people appear bad.     3.    Public Disclosure of Private Facts          Sharing of true, yet private, facts that could be embarrassing.     4.    Appropriation of Another's Identity, Name, Image, or Likeness (NIL)          Using a person's name, image, or likeness without permission for commercial gain. Fraudulent Misrepresentation (Intentional deceit for personal gain)          Misstatement of a material fact.          Knowledge that the information is false.          Intent to persuade the other party to rely on the false information.          Plaintiff's justifiable reliance on the material misstatement.          Damages. Business Torts Wrongful (Tortious) Interference with a Contract (Contractual Relationship) Required elements:          A valid contract exists between the plaintiff and a third party.          The defendant knows the contract exists.          The defendant intentionally persuades the third party to breach the contract.          The plaintiff experiences injury or damages as a result of the defendant's actions. Example: Jax, an accounting consultant, is helping Eliyah, the owner of a pool distributorship, structure the purchase of another business. Part of the consulting project is to review financial records of the business. During the review, Jax discovers how much Eliyah pays his current accounting firm for his audits. Jax persuades Eliyah to breach his multi-year contract with his current auditor by criticizing the quality of the work and also offering to do the work for a lower price. Jax has interfered with that contract if Eliyah decides to breach the contract. Wrongful (Tortious) Interference with a Developing Economic Relationship Example: Bob and Harold are two roofing subcontractors in the same city. Bob knows that Harold has been developing a relationship with several of the contractors in the area. Bob spreads false rumors about Harold being in poor health and having financial problems to drive business from Harold's business to his own. Several contractors decide to give their business to Bob. Harold could sue Bob for wrongful interference with a business relationship (tortious interference with a prospective advantage). Intentional Torts Against Property Trespass to Land          Intentionally entering another's land.          Remaining after being asked to leave. Conversion          Wrongful taking or using of another's personal property. Example: Foster (defendant) steals Julie's laptop and sells it to Harry (defendant 2). Harry spills coffee on the laptop and it is destroyed. Negligence The Duty of Care and Its Breach          The tort of negligence occurs when someone suffers injury because of another's failure to fulfill a required duty of care.          In torts involving negligence, the tortfeasor neither wishes to bring about the consequences of the act nor believes that they will occur. The person's conduct merely creates a risk of such consequences.          Many of the actions giving rise to the intentional torts discussed earlier in the chapter constitute negligence if the element of intent is missing or cannot be proved. Elements (Need all):     1.    Duty -- The defendant owed a duty of care to the plaintiff.     2.    Breach -- The defendant breached that duty.     3.    Causation in Fact -- The plaintiff's injury would not have occurred without the defendant's breach.     4.    Proximate Causation -- The connection between the defendant's breach and the plaintiff's injury is foreseeable and therefore justifies imposing liability.     5.    Damages -- The plaintiff suffered a legally recognizable injury. Note: Emotional harm is not enough for negligence. How do we know when a duty has been breached?          The Reasonable Person Standard -- Courts ask how a reasonable person would have acted in the same circumstances.          The reasonable person standard is said to be objective.          It does not assess how a particular person would act. It is society's judgment on how people should act.          If the so-called reasonable person existed, that person would be careful, conscientious, even-tempered, and honest. The Duty of Landowners          In NC, the duty of reasonable care not to unnecessarily expose lawful visitors to a dangerous situation and to warn lawful visitors of any hidden dangers.          Known and should have known dangers.          If the condition would be obviously apparent to a reasonable person, the landowner may not even have a duty to warn.          In NC, the duty owed to trespassers is to refrain from willfully harming a trespasser. Example: Landmines placed in front lawn. The Duty of Professionals          Persons who possess superior knowledge, skill, or training are held to a higher standard of care than others.          Professionals, such as physicians, dentists, architects, engineers, accountants, and lawyers, are required to have a standard minimum level of special knowledge and ability.          If a professional violates the duty of care toward a client, the professional may be sued for malpractice, which is essentially professional negligence. Example: Jana leaves her truck's motor running while she enters a Kwik-Pik Store. The truck's transmission engages, and the vehicle crashes into a gas pump, starting a fire that spreads to a warehouse on the next block. The warehouse collapses, causing its billboard to fall and injure Lou, a bystander. Can Lou recover from Jana? Good Samaritan Statutes          Most states now have what are called Good Samaritan statutes. Under these statutes, someone who is aided voluntarily by another cannot turn around and sue the "Good Samaritan" for negligence. Dram Shop Acts          Many states have also passed dram shop acts, which hold a bar owner or bartender liable for injuries caused by a person who became intoxicated while drinking at the bar.          The owner or bartender may also be held responsible for continuing to serve a person who was already intoxicated.          Some states' statutes also impose liability on social hosts for injuries caused by guests who became intoxicated at the hosts' homes. Defenses to Negligence          Defendants often defend against negligence claims by asserting that the plaintiffs failed to prove the existence of one or more of the required elements for negligence.          Assumption of Risk -- A plaintiff who voluntarily enters into a risky situation, knowing the risk involved, will not be allowed to recover. Example: Seattle Mariners Case          Your employer "requests" you to carry a huge, heavy box up a flight of stairs.          Superseding Cause -- An unforeseeable intervening event may break the connection between a wrongful act and an injury to another. Example: While riding his bike, Derrick negligently hits Julie, who is walking on the sidewalk. As a result of the impact Julie falls and fractures her hip. While she is waiting for help to arrive, a small plane crashes nearby and explodes and some of the fiery debris hits her causing her to sustain severe burns. His bike was foreseeable. Normally though Derick will not be liable for the burns caused by the plane crash because the risk of a plane crashing nearby and injuring Julie was not foreseeable Contributory Negligence: A plaintiff who was also negligent could not recover anything from the defendant, NC follows this Comparative Negligence: In most states, the doctrine of contributory negligence has been replaced by a comparative negligence standard. Under this standard both the plaintiff and the defendant's negligence are computed and the liability for damages is distributed accordingly Strict Liability          Abnormally Dangerous Activities (liability without fault) Example: At the end of the haying season, farmer Fred needs to dispose of dry straw spread over much of his 50 acres. He therefore initiates a controlled burn, with the fire to stay within the appropriate confines. He adopts all reasonable precautions, including placing various types of obstacles at the property's boundary. However, even when all reasonable precautions are adopted, such fires escape the farm approximately 10 percent of the time. Because the likely harm when fires escape the farm is substantial, the neighboring property is likely to be substantial. When Fred's fire is in progress, the wind unexpectedly picks up. The fire spreads to the property of Emily, Fred's immediate neighbor, causing harm. Other Applications of Strict Liability          Persons who keep wild animals are strictly liable for any harm inflicted by the animals.          An owner of domestic animals may be strictly liable for harm caused by those animals if the owner knew, or should have known, that the animals were dangerous or had a propensity to harm others. Product Liability Those who make, sell, or lease goods can be held liable for physical harm or property damage caused by those goods to a consumer, user, or bystander. Product Liability Claims          Negligence          Due Care Must Be Exercised -- If a manufacturer fails to exercise "due care" to make a product safe, a person who is injured by the product may sue the manufacturer for negligence.          The manufacturer must exercise due care in all six specific areas of production.          Privity of Contract Not Required          You do not have to be the person who bought the product in order to sue. Example: You borrow neighbor's lawnmower and are injured.          Fraudulent Misrepresentation          Misrepresentation must have been made knowingly, or with reckless disregard for the facts.          The misrepresentation must be of a material fact, and the seller must have intended to induce the buyer's reliance on the misrepresentation. Example: Mislabeling          Strict Product Liability          Requirements for Strict Product Liability -- should be applied to sellers of goods.          These sellers include Manufacturers, processors, assemblers, packagers, bottlers, wholesalers, distributors, retailers, and lessors.          The plaintiff must prove that the product was defective at the time it left the seller, and that this defective condition made it "unreasonably dangerous" to the user or consumer.          Unreasonably Dangerous Products          The product is dangerous beyond the expectation of an ordinary consumer, or          A less dangerous alternative was economically feasible for the manufacturer, but the manufacturer failed to produce it. How can a product be defective? The product is dangerous beyond the expectation of the ordinary consumer and a less dangerous alternative was economically feasible for the manufacturer but the manufacturer failed to produce it. Manufacturing Defects. A product "contains a manufacturing defect when the product departs from its intended design even though all possible care was exercised in the preparation and marketing of the product." Example: Using inferior materials          Design Defects. A product with a design defect is made in conformity with the manufacturer's design specifications.          The design itself is flawed          Must show two things:          A reasonable alternative design was available; and          As a result of the defendant's failure to adopt the alternative design, the product was not reasonably safe. Example: An action figure that is designed for children under 4 years of age may be fine right out of the package, but two weeks later, after the toy has been played with in the manner in which it was designed to be, the arm breaks off because the movable shoulder joint was too weak. This broken part now becomes a choking hazard.          Inadequate Warnings -- A product may also be deemed defective because of inadequate instructions or warnings.          A product is defective "when the foreseeable risks of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warnings \[...\] and the omission of the instructions or warnings renders the product not reasonably safe."          A seller must also warn consumers of harm that can result from the foreseeable misuse of its product.          Obvious Risks -- Note that there is no duty to warn about risks that are obvious or commonly known. Example: Knife is sharp          Almost all courts extend the strict liability of manufacturers and other sellers to injured bystanders.          Strict liability also applies to suppliers of component parts. Defenses to Product Liability          Statute of limitations          Preemption          Assumption of Risk          Product Misuse          If misuse is not foreseeable          Comparative Negligence          Commonly Known Dangers