Business Law Chapter 12 Study Guide

Causation in Fact

"but for" test; the injury would not have occurred but for the defendant's act. This test determines whether there was an actual cause-and-effect relationship between the act and the injury suffered.

Battery

1. An unexcused and harmful or offensive physical contact intentionally performed 2. Can be a civil or criminal offense

Assault

1. Any intentional or unexcused threat of immediate harmful or offensive touching; words or acts create a reasonably believable threat 2. Can be a civil or criminal offense

Two Kinds of Damages (money) available in tort actions:

1. Compensatory 2. Punitive

Defenses to Negligence

1. Defendant has burden of proof 2. Assumption of risk 3. Superceding Cause 4. Contributory and Comparative Negligence 5. Plaintiff has burden of proving defendant's negligence except in case of res ipsa loquitur when defendant is assuming to be negligent (because damage/injury does not occur without negligence) and must prove otherwise

To succeed in a negligence action the plaintiff must prove

1. Duty: the defendant owed a duty of care to the plaintiff 2. Breach: the defendant breached that duty 3. Causation: the defendant's breach caused the plaintiff's injury. Cause in fact and proximate cause. Both must occur 4. Damages: the plaintiff suffered a legally recognizable injury. Injury; physical or economical. Money; must be reward money

When a person suffers injury because of another person's failure to live up to a required duty of care

1. Intent is not required 2. Actor's conduct creates foreseeable risk of certain consequences

To establish defamation, a plaintiff normally must prove the following:

1. The defendant made a false statement of fact 2. The statement was understood as being about the plaintiff and tended to harm the plaintiff's reputation 3. The statement was published to at least on person other than the plaintiff 4. If the plaintiff is a public figure, she or he must prove actual malice

The Basis of Tort Law

1. Tort 2. Tort law is designed to compensate those who have suffered a loss/injury due to someone else's wrongful act 3. Two kinds of damages (money) available in tort actions: 4. Tort Reform

Intentional Torts Against Property

1. Trespass to Land 2. Trespass to Personal Property 3. Conversion 4. Disparagement of Property Real property is land and things permanently attached to the land, such as a house. Personal property consists of all other items, including cash and securities (stocks, bonds, and other ownership interests in companies).

Negligence

1. When a person suffers injury because of another person's failure to live up to a required duty of care. The tortfeasor neither wishes to bring about the consequences of the act nor believes that they will occur. 2. To succeed in a negligence action the plaintiff must prove 3. Duty of Care 4. The Reasonable Person Standard 5. The Duty of Landowners 6. Causation 7. Injury with damages must result from allegedly negligent act. 8. Negligence Per Se 9. Good Samaritan Statutes 10. Dram Shop Acts

Tort

A civil wrong that unfairly causes someone else to suffer loss or harm and resulting in legal liability for the person committing the tort

Invasion of Privacy

A person must have a reasonable expectation of privacy and the invasion must be highly offensive.

Defenses to Wrongful Interference

A person will not be liable for the tort of wrongful interference with a contractual or business relationship if it can be shown that the interference was justified or permissible.

Assumption of Risk

A plaintiff who voluntarily enters into a risky situation, knowing the risk involved. Requires: 1. Knowledge of the risk 2. Voluntarily assumption of the risk Affirmative Defense. Courts do not apply the assumption of risk doctrine in emergency situations. Assumption of risk can apply not only to participants in sporting events, but also to spectators and bystanders who are injured while attending those events.

Contributory Negligence

A plaintiff who was also negligent (failed to exercise a reasonable degree of care) could not recover anything from the defendant. Under this rule, no matter how insignificant the plaintiff's negligence, the plaintiff would be precluded from recovering any damages. Historically was an absolute bar to plaintiff's recovery.

Superseding Cause

An unforeseeable intervening event may break the causal connection between a wrongful act and an injury to another. If so, the intervening event acts as a superseding cause - that is, it relieves the defendant of liability for injuries caused by the intervening event.

Conversion

Any act that deprives an owner of personal property, or the use of that personal property, without the owner's permission and without just cause. Often, when conversion occurs, a trespass to personal property also occurs.

Dram Shop Acts

Bar owner or bartender may be held liable for injuries caused by a person who became intoxicated while drinking at a bar. The owner or bartender may also be held responsible for continuing to serve a person who was already intoxicated.

Defamation

Breach of the general duty to refrain from making false, public statements of fact about others. 1. Publication: communicating defamatory statement to others (required for tort to be actionable) 2. Slander: spoken (oral) defamation; plaintiff must prove that slander cost him actual economic/monetary harm 3. Libel: written defamation; plaintiff does not need to prove injury, general damages are presumed if defendant is found liable 4. Truth is a defense to defamation (McKee vs. Laurion) 5. Public Figures are " fair game"; to prove defamation public figure must show actual malice

Wrongful Interference with a Business Relationship

Businesses are prohibited from unreasonably interfering with another's business in their attempt to gain a greater share of the market. There is a difference between competitive practices and predatory behavior - actions undertaken with the intention of unlawfully driving competitors completely out of the market. 1. Ex: false claims/accusations are made about a business in order to drive away potential customers 2. Defenses: showing that interference was legitimate competitive behavior (ex: cola wars)

Negligence Per Se

Certain conduct, whether it consists of an action or a failure to act, may be treated as negligence per se ("in or of itself"). Occurs if an individual violates a statute or ordinance providing for a criminal penalty and the violation causes another to be injured. The statute must be designed to prevent the type of injury that the plaintiff suffered and must clearly set out what standard of conduct is expected. The statute must also indicate when, where, and of whom that conduct is expected. The standard of conduct required by the statute is the duty that the defendant owes to the plaintiff, and a violation of the statute is the breach of that duty.

Tort Reform

Does the tort system encourage frivolous lawsuits? 1. State legislation limiting amount of general damages 2. State legislation limiting or banning punitive damages

Comparative Negligence

Enables both plaintiff and defendant's negligence to be computed and liability to be distributed accordingly. Some jurisdictions have adopted a "pure" form of comparative negligence that allows the plaintiff to recover, even if the extent of his or her fault is greater than that of the defendant. Under pure comparative negligence, if the plaintiff was 80 percent at fault and the defendant 20 percent at fault, the plaintiff may recover 20 percent of his or her damages. May reduce or eliminate plaintiff's financial recovery.

Defenses

Even if a plaintiff proves all the elements of a tort, the defendant can raise a number of legally recognized defenses (reasons why the plaintiff should not obtain damages). The defenses available may vary depending on the specific tort involved. A common defense to intentional torts against persons, for instance, in consent. When a person consents to the act that damages her or him, there is generally no liability. The most widely used defense in negligence actions is comparative negligence. A successful defense releases the defendant from partial or full liability for the tortious act.

Slander Per Se

Exceptions to the burden of proving special damages in cases alleging slander are made for certain types of slanderous statements. If a false statement constitutes "slander per se", it is actionable with no proof of special damages required. In most states, the following four types of declarations are considered to be slander per se: 1. A statement that another has a particular type of disease (such as a STD or mental illness) 2. A statement that another has committed improprieties while engaging in a profession or trade 3. A statement that another has committed or has been imprisoned for a serious crime 4. A statement that a person (usually only unmarried persons and sometimes only women) is unchaste or has engaged in serious sexual misconduct

Proximate Cause

Exists when the connection between an act and an injury is strong enough to justify imposing liability. Proximate cause asks whether the injuries sustained were foreseeable or were too remotely connected to the incident to trigger liability. 1. Judges use proximate cause to limit the scope of defendant's liability to a subset of the total number of potential plaintiffs that might have been harmed by the defendant's actions 2. Palsgraf vs. Long Island RR: no proximate cause because it wasn't foreseeable Both of these causation questions (Is there causation in fact? and Was the act proximate, or legal, cause of the injury?) must be answered in the affirmative for liability in tort to arise.

The Duty of Landowners

Expected to exercise reasonable care to protect people coming onto their property from harm. 1. Retailers and other companies have a duty to exercise reasonable care to protect business invitees 2. Storeowners must warn business invitees of foreseeable (NOT obvious) risks

Intentional Infliction of Emotional Distress

Extreme or outrageous conduct resulting in severe emotional distress to another. 1. To be actionable (capable of serving as the ground for a lawsuit), the act must be extreme and outrageous to the point that it exceeds the bounds of decency accepted by society 2. Hustler vs. Falwell: First Amendment protection from claims of IIED for creators of parodies of public figures

Fraudulent Misrepresentation

False representation, through misstatement of facts or though conduct, with the intent to deceive another, and on which another person reasonably relies to his detriment. The tort includes several elements: 1. A misrepresentation of material facts or conditions with knowledge that they are false or with reckless disregard for the truth 2. An intent to induce another party to rely on the misrepresentation 3. A justifiable reliance on the misrepresentation by the deceiving party 4. Damages suffered as a result of that reliance 5. A causal connection between the misrepresentation and the injury suffered

The Injury Requirement and Damages

For a tort to have been committed, the plaintiff must have suffered a legally recognizable injury. To recover damages (receive compensation), the plaintiff must have suffered some loss, harm, wrong, or invasion of a protected interest.

Business Torts

Generally involve wrongful interference with another's business rights. 1. Wrongful Interference with a Contractual Relationship 2. Wrongful Interference with a Business Relationship

The Duty of Professionals

If an individual has knowledge or skill superior to that of an ordinary person, the individual's conduct must be consistent with that status. Professionals are required to have a standard minimum level of special knowledge and ability. The professional's conduct is judged not by the reasonable person standard, but by the reasonable professional standard. If a professional violates his or her duty of care toward a client, the client may bring a suit against the professional, alleging malpractice, which is essentially professional negligence. A patient might sue a physician for medical malpractice. A client might sue an attorney for legal malpractice.

Damages for Slander

In a case alleging slander, the plaintiff must prove special damages to establish the defendant's liability. The plaintiff must show that the slanderous statement caused him or her to suffer actual economic or monetary losses.

Privileged Communications

In some circumstances, a person will no be liable for defamatory statements because she or he enjoys a privilege, or immunity. Privileged communications are of two types: absolute and qualified. Only in judicial proceedings is an absolute privilege granted. In other situations, a person will not be liable for defamatory statements because he or she has a qualified, or conditional, privilege. Generally, if the statements are made in good faith and the publication is limited to those who have a legitimate interest in the communication, the statements fall within the area of qualified privilege.

Compensatory

Intended to compensate/ reimburse for actual losses. 1. Special Damages: compensate plaintiff for quantifiable monetary losses. Easy to quantify. 2. General Damages: compensate plaintiff for non-monetary losses, such as pain and suffering and loss of consortium (extremely difficult to quantify)

Punitive

Intended to punish wrongdoer and deter others from similar acts.

Intentional Torts Against the Person

Intentional tort requires intent. An evil or harmful motive is not required - in fact, the person committing the action may even have a beneficial motive for doing what turns out to be a tortious act. In tort law, intent means only that the person intended the consequences of his or her act or knew with substaintial certainty that specific consequences would result from the act. Intent can be transferred when a defendant intends to harm on individual, but unintentionally harms a second person is called transferred intent. 1. Tortfeasor 2. Assault 3. Battery 4. False Imprisonment 5. Intentional Infliction of Emotional Distress 6. Defamation 7. Invasion of Privacy 8. Fraudulent Misrepresentation 9. Abusive or Frivolous Litigation

Types of Reforms

Measures to reduce the number of tort cases can include any of the following: 1. Limiting the amount of both punitive damages and general damages that can be awarded 2. Capping the amount that attorneys can collect in contingency fees (attorneys' fees that are based on a percentage of the damages awarded to the client) 3. Requiring the losing party to pay both the plaintiff's and the defendant's expenses

State Reform

More than half of the states have placed caps ranging from $250,000 to $750,000 on noneconomic general damages (for example, pain and suffering), especially in medical malpratice suits. More than thirty states have limited punitive damages, with some imposing outright bans.

Appropriation Statutes

Most states today have codified the common law tort of appropriation of identity in statutes that establish the distinct tort of appropriation or right of publicity. Some courts have held that even when an animated character in a video or video game is made to look like an actual person, there are not enough similarities to constitute appropriation.

Trespass to Land

Occurs when a person, without permission: 1. Enters onto, or below the surface of the land that is owned by another 2. Causes anything to enter onto land owned by another 3. Remains on land owned by another or permits anything to remain on it 4. Do not need to prove actual harm to land to prevail A trespasser is liable for any damage caused to the property and generally cannot hold the owner liable for injuries that the trespasser sustains on the premises. This common law rule is being abandoned in many jurisdictions, however, in favor of a reasonable duty of care rule that varies depending on the statue of the parties.

Disparagement of Property

Occurs when economically injurious falsehoods are made about another's product or property rather then about another's reputation (as in the tort of defamation). Disparagement of property is a general term for torts that can be more specifically referred to as slander of quality or slander of title.

Statement-of-Fact Requirement

Often at issue in defamation lawsuits is whether the defendant made a statement of fact or a statement of opinion. Statements of opinion normally are not actionable because they are protected under the First Amendment.

Damages for Libel

Once a defendant's liability for libel is established, general damages are presumed as a matter of law. General damages are designed to compensate the plaintiff for nonspecific harms such as disgrace or dishonor in the eyes of the community, humiliation, injured reputation, and emotional distress - harms that are difficult to measure. To recover damages, the plaintiff need not prove that he or she was actually harmed in any specific way as a result of the libelous statement.

Public Figures

Public figures are considered "fair game", and false and defamatory statements about them that are published in the media will not constitute defamation unless the statements are made with actual malice. To be made with actual malice, a statement must be made with either knowledge of its falsity or a reckless disregard of the truth. Public figures have a greater burden of proof in defamation cases (to show actual malice) than do private individuals.

Foreseeability

Questions of proximate cause are linked to the concept of foreseeability because it would be unfair to impose liability on a defendant unless the defendant's actions created a foreseeable risk of injury. Probably the most cited case on the concept of foreseeability and proximate cause is the Palsgraf case.

Good Samaritan Statutes

Someone who is aided voluntarily by another cannot then sue that person for negligence. These laws were passed largely to protect physicians and medical personnel who volunteer their services in emergency situations to those in need.

Federal Reform

The Class Action Fairness Act (CAFA) of 2005 shifted jurisdiction over large interstate tort and product liability class-action lawsuits from the state courts to the federal courts. State courts no longer have jurisdiction over class actions under the CAFA. 1. A class action is a lawsuit in which a large number of plaintiffs bring the suit as a group.

Duty of Care

The basic principle underlying the duty of care is that people are free to act as they please so long as their actions do not infringe on the interests of others. Failure to live up to a standard of care may be an act (accidentally setting fire to a building) or an omission (neglecting to put out a campfire). Courts consider the nature of the act (whether it is outrageous or commonplace) and the manner in which the act is performed (carelessly versus cautiously). Courts look at the nature of the injury (whether it is serious or slight) in determining whether the duty of care has been breached.

The Publication Requirement

The basis of the tort of defamation is the publication of a statement or statements that hold an individual up to contempt, ridicule, or hatred. Publication here means that the defamatory statements are communicated (either intentionally or accidentally) to persons other than the defamed party. The courts have generally held that even dictating a letter to a secretary constitutes publication, although the publication may be privileged. Moreover, if a third party merely overhears defamatory statements by chance, the courts usually hold that this also constitutes publication. Defamatory statements made via the Internet are actionable as well. Any individual who repeats or republishes defamatory statements normally is liable even if that person reveals the source of the statements.

Abusive or Frivolous Litigation

The filing of a lawsuit without legitimate grounds and with malice. Alternatively, the use of a legal process in an improper manner. Tort law recognizes that people have a right not to be sued without a legally just and proper reason. Protects people from the misuse of litigation.

Invasion of Privacy Under the Common Law

The following four acts qualify as an invasion of privacy under the common law: 1. Intrusion into an individual's affairs or seclusion 2. False light 3. Public disclosure of private facts 4. Appropriation of identity

False Imprisonment

The intentional confinement or restraint of another person's activities without justification. False imprisonment interferes with the freedom to move without restraint. 1. An issue when business people detain customers on suspicion 2. Merchants have a privilege to detain: merchants can use reasonable force to detain or delay a person suspected of shoplifting and hold them for police.

Tortfeasor

The one committing the tort must intend the consequences of the act or know with substantial certainty that specific consequences will result from the act.

Slander of Quality

The publication of false information about another's product, alleging that it is not what the seller claims. Also known as trade libel. To establish trade libel, the plaintiff must prove that the improper publication caused a third person to refrain from dealing with the plaintiff and that the plaintiff sustained economic damaged (such as lost profits) as a result.

Causation

The tortfeasor's negligent act must have created the harm, to do so, must prove both: 1. Causation in Fact 2. Proximate Cause

Wrongful Interference with a Contractual Relationship

There must be: 1. A valid, enforceable contract must exist between two parties 2. A third party must know about the contract exists 3. Third party must intentionally induce a party to the contract to breach the contract 4. Ex: Ford Models vs. Men Women NY Model Management

The Reasonable Person Standard

To determine whether the duty of care to others has been breached courts look at how an objectively reasonable (hypothetical) person would have acted in the same circumstances. If the so-called reasonable person existed, he or she would be careful, conscientious, even tempered, and honest. 1. Determined on case by case basis looking at totality of the circumstances 2. Judge or jury typically decides how reasonable person in position of the defendant would have acted 3. Exceptions for those with certain limitation (children, disabled, etc.): courts look at how a reasonable person with the same limitations as the defendant would act 4. Elevated standard for those with certain skill set (the reasonable doctor, police officer, etc.)

Defenses to Defamation

Truth is normally an absolute defense against a defamation charge. If a defendant in a defamation case can prove that the allegedly defamatory statements of fact were true, normally no tort has been committed. Other defenses to defamation may exist if the speech is privileged or concerns a public figure. The majority of defamation actions are filed in state courts, and state laws differ somewhat in the defenses they allow, such as privilege.

Classifications of Torts

Two broad classifications of torts: 1. Intentional Torts 2. Unintentional Torts The classification of a particular tort depends largely on how the tort occurs (intentionally or negligently) and the surrounding circumstances. Intentional torts result from the intentional violation of person or property (fault plus intent). Negligence results from the breach of a duty to act reasonably (fault without intent).

Slander of Title

When a publication falsely denies or casts doubt on another's legal ownership of property, resulting in financial loss to the property's owner. Usually, this is an intentional tort in which someone knowingly publishes an untrue statement about another's ownership of certain property with the intent of discouraging a third person from dealing with the person slandered.

Trespass to Personal Property

When an individual wrongfully takes or harm the personal property of another or otherwise interferes with the lawful owner's possession and enjoyment of personal property.