Chapter 3

Define the word "tort"

A tort generally consists of a failure to fulfil a private obligation that was imposed by law. A tortfeasor is a person who has committed a fort.

Distinguish between intentional torts, negligence torts, and strict liability torts

Intentional tort occur when a person intentionally acts in certain ways. Negligence torts occur when a person acts carelessly. Strict liability torts occur when a person does something wrong without intending to do so and without acting carelessly.

Describe the nature of liability insurance and explain why it is important to business people

Liability insurance is a contract in which an insurance company agrees, in exchange for a price, to pay damages on behalf of a person who incurs liability. It also comes with a duty to defend, this requires the insurance company to pay the expenses that are associated with lawsuits brought against the insured party. Liability insurance contributes to the compensatory function, which aims to fully compensate people who are wrongfully injured. It undermines the law's deterrence function, which aims to discourage people from committing torts by threatening to hold them liable for the losses they cause.

Describe two important types of alternative compensation schemes and explain why they have been created

An alternative compensation scheme is a system that allows a person who has suffered an injury to receive compensation without bringing an action in tort. The two main reason for alternative compensation schemes: First, tort law provides compensation only if a person is injured as a result of a wrongful act. Second, tort law is inefficient. Since it is base on an adversarial system in which lawyers compete on behalf of clients, it requires a great deal of time and expense. Worker's compensation: This scheme involves a series of trade-offs, workers generally lose their right to sue in tort for workplace injuries but in exchange they gain the right to claim compensate from a fund without having to prove that anyone was at fault for their injuries. Likewise, while employers are required to contribute to the compensation fund, they escape the risk of being held liable in tort for workplace injuries. Furthermore, while the employer's compulsory contributions undoubtedly are substantial, they generally can be passed onto consumers in the form of higher prices. no-fault tolerance: This applies to injuries that are caused by automobile accidents. One disadvantage of alternative compensate schemes is that while they provide compensation more often, they also provide less of it. The compensation level is almost always capped.

Use the concept of risk management to explain how the difference employees and independent contractors is important to the doctrine of vicarious liability.

As a matter of risk management it is sometimes preferable for a business to have work performed by an independent contractor rather than by an employee. A business may be required to contribute to a worker's compensation scheme if it employs an employee but not if it retains an independent contractor. A court is more likely to find that a person is an employee if i) The employer generally controls what is done, how it is done, when it is done and where it is done. ii) The workers uses the employer's equipment and premises iii) The workers is paid a regular wage or salary rather than a lump sum at the end of each project iv) the worker is integrated into the employer's business and does not own their own business

Outline the types of remedies that are generally available in tort law.

Compensatory damages- The defendant is required to pay for the losses that they caused the plaintiff to suffer. Remoteness- Compensation is not available for every loss that the plaintiff suffered. First, the defendant is responsible only for the losses that they in fact caused. Second, even if the defendant's tort caused the plaintiff to suffer a loss, the court will not award damages if the connection between the tort and the loss is too remote. A loss is remote if it would be unfair to hold the defendant responsible for it. The judge will ask whether a reasonable person in the defendant's position would have realised that a particular activity might cause the sort of harm that the plaintiff suffered. Mitigation-occurs when the plaintiff takes steps to minimise the losses that result from the defendant's tort. First, the plaintiff is responsible only for taking reasonable steps to mitigate a loss. Second, although lawyers sometimes refer a "duty to mitigate" there is not really a duty. The plaintiff will just be denied for losses that they could have reasonable avoided. Third, damages are denied only to the extent the plaintiff unreasonable failed to mitigate. Finally, the plaintiff can recover the costs associated with mitigation. Punitive damages- They are intended to punish the defendant. Nominal damages- symbolically recognise that the defendant committed a tort even though the plaintiff did not suffer any loss. Injunctions- Is a court order that requires the defendant to do something or refrain from doing something

Explain the similarities and differences between torts and contracts

Similarities: Structure- Both tort and contract involve primary and secondary obligations. Primary obligations tell people how they ought to act. Secondary obligations are remedial, they tell people how they must act after primary obligations have been broken. Differences: Source of Primary Obligations: In torts the source of primary obligation is the law while in contracts it is created by the parties involved. Privity: When two people enter into a contract they create a special relationship, the doctrine of privity states that the only people who can sue, or be sued on a contract are the parties themselves. However in obligations of tory there is no need for a special relationship between parties. Calculation of Compensation: In a breach of primary obligation in tort you are required to put the person back into the position they enjoyed in the outset. However in the breach of primary obligation in a contract you are required to put the person into the position they expect to be in once you fulfilled your promise.

Explain the similarities and differences between torts and crimes

Similarities: The two concepts often arise from the same facts. Differences: A tort is when a person breaks a private obligation, a crime occurs if a person breaks a public obligation.

Explain the circumstances in which tort law will adopt a rule of strict liability

Strict liability is therefore limited to situations in which the defendant is involved in some extraordinarily dangerous activity. It allows the defendant to engage in that activity, but it also requires the defendant to pay for any damage that occurs. Eg a farmer's livestock damaging someone's property.

Describe the concept of vicarious liability and explain how it affects business people.

Vicarious Liability- occurs when one person is held liable for a tort that was committed by another person. Vicarious liability serves tort law's compensatory function by allowing the plaintiff to claim damages from both an employee. Vicarious liability serves tort law's deterrence function by encouraging employers to avoid unusually hazardous activities and to hire the best people available. As a matter of fairness it may be appropriate to require business to bear responsibility for the losses its activities create, even if those losses are caused by misbehaving employees. Important notes about vicarious liability: First, an employer is not liable every time an employee does something wrong. Second, an employer may be held vicariously liable for employees, but not for independent contractors. An independent contractor is a worker who is not as closely connected to the employer's business as is an employee. Third, Vicarious liability does not relieve the employer of responsibility. Rather, it allows the plaintiff to sue both the employer and the employee, and to recover all or some of its damages from either defendant. Fourth, an employer may be both vicariously liable and personally liable in the same situation. Vicarious liability occurs if the employer is responsible for an employee's tort. Personal liability occurs if the employer is responsible for their own tort.