BUSINESS LAW TEXT AND CASES Fourteenth Edition CLARKSON MILLER CROSS © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Tort: A civil wrong, not arising from a breach of contract or other agreement or a breach of a legal duty, proximately causing another person harm or injury. Purpose of Tort Law: To provide a remedy (damages) for injury to a protected interest. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2 Damages Available in Tort Actions: Compensatory: Reimburse plaintiff for actual losses. • Special: For quantifiable losses, such as medical expenses, lost wages, and benefits. • General: For nonmonetary aspects, such as pain, suffering, and reputation. 3 © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Damages Available in Tort Actions: Punitive: Punish the wrongdoer and deter similar conduct in the future. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 Legislative Caps on Damages: More than twenty-five U.S. states have caps on the amount of damages—both punitive and general—that can be awarded to the plaintiff. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 Classification of Torts: Two broad classifications of torts: intentional torts and unintentional torts (those involving negligence). Classification of a tort depends largely on how the tort occurs and the surrounding circumstances. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 Defenses: The defendant can raise a number of legally recognized defenses. A successful defense releases the defendant from partial or full liability for the tortious act. Available defenses vary depending on the tort involved. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 Intentional Tort: The tortfeasor (person committing the tort) must “intend” to commit the act: He intended the consequences of his act; or He knew with substantial certainty that certain consequences would result. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8 Transferred Intent: Intent of tortfeasor is transferred when he intends to harm person “A” but unintentionally harms person “B” as well. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9 Assault: Any intentional and unexcused threat of immediate harmful or offensive contact—whether words or acts—that create a reasonably believable threat. No physical contact is necessary for an assault to occur. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10 Battery is the completion of the assault: It is unexcused and harmful or offensive physical contact intentionally performed. The contact can be made by the defendant or by some force set in motion by the defendant. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11 False Imprisonment: The intentional confinement of another person or restraint of another person’s activities without justification. The confinement may occur through the use of physical barriers, physical restraint, or threats of physical force. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 Infliction of Emotional Distress: An intentional act that amounts to extreme and outrageous conduct resulting in severe emotional distress to another. The act must be extreme and so outrageous that it exceeds the bounds of decency accepted by society in order to be actionable. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13 Infliction of Emotional Distress: The First Amendment’s guarantee of freedom of speech limits emotional distress claims when the outrageous conduct consists of speech about a public figure. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14 Defamation: Defamation involves wrongfully hurting a person’s good reputation. Law imposes duty to refrain from making false statements of fact about others. Orally breaching this duty is slander; breaching it in print or media (and Internet) is libel. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15 To establish defamation, the following elements must be proved: The defendant made a false statement of fact. The statement was understood as being about the plaintiff and tended to harm the plaintiff’s reputation. The statement was published to at least one person other than the plaintiff. If the plaintiff is a public figure, she or he must also prove actual malice. 16 © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Defamation: Published statement must be a fact. Statements of opinions are protected speech under the First Amendment and not actionable. Publication Requirement: The false statement must hold an individual up to hatred, contempt, or ridicule in the community and be “publicized” (communicated) to a third party. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17 Damages for Libel: General damages are presumed and the plaintiff does not have to prove actual injury. Damages include compensation for disgrace, dishonor, humiliation, injury to reputation, and emotional distress. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18 Damages for Slander: The plaintiff must prove special damages (actual economic loss). Slander Per Se is an exception and no proof of damages is necessary when the statement involves a loathsome communicable disease; business improprieties; serious crime; or serious sexual misconduct. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19 Defenses to Defamation: Truth is generally an absolute defense for defamation. Privileged (or Immune) Speech. • SEE MCKEE V. LAURION (2013). Absolute Privilege. Qualified Privilege. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20 Defenses to Defamation: Absence of Malice: False and defamatory statements made about public figures are privileged unless they are made with actual malice (knowledge of falsity OR reckless disregard of the truth or falsity). © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21 Invasion of Privacy: Common law recognizes four acts that qualify as improperly infringing on another’s privacy. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22 Invasion of Privacy: Intrusion on individual’s affairs or seclusion. Publication of information that places a person in false light. Public disclosure of private facts. Appropriation: Use of another’s name, likeness, or other identifying characteristic for commercial purposes without the owner’s consent. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23 Fraudulent Misrepresentation (Fraud): Intentional deceit, usually for personal gain. This tort has several elements. Misrepresentation of material fact. Intent to induce another to rely on the misrepresentation. Justifiable reliance by innocent party. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24 Fraudulent Misrepresentation (Fraud): Damages suffered as a result of reliance. A causal connection between misrepresentation and the injury suffered. Fraud is more than just puffery (“seller’s talk”). © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25 Abusive or Frivolous Litigation: Torts related to abusive or frivolous litigation include: • Malicious prosecution. • Abuse of process. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26 Wrongful Interference with a Contractual Relationship Occurs When: Defendant knows about contract between A and B; Intentionally induces either A or B to breach the contract; and Defendant benefits from breach. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27 Wrongful Interference with a Business Relationship Occurs When: Established business relationship; The defendant uses predatory methods to cause the relationship to end; and Plaintiff suffers damages. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28 Defenses to Wrongful Interference: The interference was justified or permissible. Bona fide competitive behavior (such as marketing) is a permissible interference even if it results in the breaking of a contract. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29 © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 30 Trespass to Land: Occurs when a person, without permission: Physically enters onto, above, or below the surface of another’s land; or Causes anything to enter onto the land; or Remains—or permits anything to remain—on the land. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 31 Liability for Harm: A trespasser is generally liable for damage caused to the property and generally cannot hold the owner liable for injuries sustained on the premises. Many jurisdictions use a reasonable duty of care rule that varies depending on the status of the parties. Property owners may be liable for objects that attact children under the attractive nuisance doctrine. 32 © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Defenses to Trespass to Land: The trespass is warranted (necessary) to assist some in danger. The trespasser is a licensee (such as a utility service person). © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33 Trespass to Personal Property: Intentional interference with another’s use or enjoyment of personal property without consent or privilege. • Conversion. • Failure to return property. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 34 Conversion: Wrongful possession or use of property without permission. Failure to Return Goods: Even if the rightful owner consented to the initial taking of the property, a failure to return the property may still be conversion. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 35 Disparagement of Property: Occurs when economically injurious falsehoods are made about another’s product or property rather than about another’s reputation. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 36 Disparagement of Property: Slander of Quality: Publication of false information about another’s product (trade libel). Slander of Title: Publication falsely denies or casts doubt on another’s legal ownership of property, resulting in financial loss. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 37 © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 38 Unintentional Tort: A wrongful act the tortfeasor committed without knowing its wrongfulness or without intending to commit the act. Negligence: Failure to live up to a required duty of care that a reasonable person would exercise in similar circumstances. Intent is not required, only the creation of risk of the consequences experienced by the plaintiff. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 39 The plaintiff must prove the following: Duty: Defendant owed plaintiff a duty of care. Breach: Defendant breached that duty. Causation: Defendant’s breach caused the injury. Damages: Plaintiff suffered legal injury. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 40 Duty of Care and Breach: The courts consider the following factors when determining whether a duty of care was breached: The nature of the act. The manner in which the act was performed. The nature of the injury. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 41 Reasonable Person Standard: The degree of care expected of a hypothetical “reasonable person;” not necessarily how this person would act, rather how this person should act. Degree of care varies and depends on the defendant’s occupation or profession, her or his relationship with the plaintiff, and other factors. 42 © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Duty of Landowners: Landowners must exercise reasonable care to protect persons on their property from harm—even trespassers. Business owners must warn invitees of potential harm on their premises. Obvious risks require no warning. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 43 Duty of Professionals: Professionals may owe higher duty of care based on special education, skill, or intelligence. Breach of duty is called professional malpractice. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 44 Causation: Even though a tortfeasor owes a duty of care and breaches the duty of care, the act must have caused the plaintiff’s injuries. Courts ask two questions: Is there a causation in fact? Was the act the proximate (or legal) cause of the injury? © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 45 Causation in Fact: Did the injury occur because of the defendant’s act, or would the injury have occurred anyway? Usually determined by the “but for” test. Proximate Cause: When the causal connection between the act and injury is strong enough to impose liability. SEE PALSGRAF V. LONG ISLAND RAILROAD CO. (1928). © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 46 Forseeability: Defendant owes duty to protect plaintiff from foreseeable risks that defendant knew or should have known about. • A foreseeable risk is one in which the reasonable person would anticipate and guard against it. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 47 The Injury Requirement and Damages: To recover, plaintiff must show legally recognizable injury. Compensatory damages are designed to reimburse plaintiff for actual losses. Punitive damages are designed to punish the tortfeasor and deter others from wrongdoing. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 48 Good Samaritan Statutes: Protects someone who renders aid to an injured person from being sued for negligence. Dram Shop Acts: Liability for injuries may be imposed upon bartender and bar owner. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 49 Assumption of Risk: A plaintiff that knows the risk and voluntarily engages in the act anyway may not recover from the alleged tortfeasor. Risk may be assumed by express agreement or be implied by the plaintiff’s knowledge and conduct. CASE 6.3 TAYLOR V. BASEBALL CLUB OF SEATTLE, LP (2006). © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 50 Superseding Cause: An unforeseeable, intervening act that breaks the causal link between defendant’s act and plaintiff’s injury, relieving defendant of liability. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 51 Contributory Negligence: Under common law doctrine of contributory negligence, if the plaintiff caused his injury in any way, he was barred from recovery. Comparative Negligence: Most states have replaced contributory negligence with the doctrine of comparative negligence. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 52 Comparative Negligence: Comparative negligence computes liability of plaintiff and defendant and apportions damages. Pure comparative negligence allows plaintiff to recover even if his liability is greater than that of defendant. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 53 Comparative Negligence: Modified Comparative Negligence: Percentage of damages that the plaintiff causes are subtracted from the total award. • 50 Percent Rule: Plaintiff recovers only if liability is less than 50%. • 51 Percent Rule: Plaintiff recovers nothing if liability is greater than 50%. © 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 54
