Bus 240 Legal Environment of Business
Lecture 11 7/12/10 Week 4 Study Guide
Notes from the Professor: Today we going to be taking a look at tort law and negligence. Next week
will be Exam 4 this week is Wednesday 7/14/10, Professor will be out of town July 19, so there will
not be class Monday 7/19/10 Exam 5 will be next Tuesday 7/20/10.
TORT LAW INTENTIONAL TORTS
Tort law includes negligence’s, today we have plaintiff’s lawyers; plaintiffs are the victims of a tort
less action. In a business sense, there is business liability for the tortuous conduct of there employers.
Introduction: The Idea of Torts
What are torts/tort law?
 There are many different types of torts, libel, and nuisance for example. But by far the most
important form of tort today is the tort of negligence.
 Much of the discussion about the litigation explosion is concerned with negligence cases.
What is a tort?
 A tort is a breach of a duty imposed by law which results in injury to another. The law
imposes a general duty on everyone to refrain from injuring others, and to refrain from
violating the rights of others. When a breach of this duty causes injury, the party causing the
injury is held responsible, and is required to compensate the injured party.
o Imposed upon everyone, EX. let’s say that Cooper is tired of you asking stupid
questions every morning, and one morning you ask a question, and Cooper losses it,
he starts saying he’s tired of you asking such stupid questions in the morning and he
jumps across your desk and punches you in the face. In this case, Cooper would be is
liable for his courteous conduct.
o Different from contract law—its not imposed, if you don’t want to make the contract
then you don’t have to, if you do not have a contract you are not have an duties or
legal obligations.
 In contract law, society will not step in until there is a breach in the contract
Contract law
Tort law
Relationship Contractual parties (pre- both members of a
between
existing relationship) community/society
plaintiff and
defendant
Governing
contract, i.e., binding
duty shared by
legal concept agreement between two
members of a
or more parties
community/society
What
a breach of contract
a breach of duty
constitutes a
breach?
Methods of
- monetary
- specific
compensation
damages
damages
- specific
- general
performance
damages
- restitutionary
- punitive
damages
damages
1



On the contrary, tort law established a body of rights, obligations, and
remedies that is applied by courts in civil proceedings to provide relief for
persons who have suffered harm from the wrongful acts of others. The
person who sustains injury or suffers pecuniary damage as the result of
tortious conduct is known as the plaintiff, and the person who is responsible
for inflicting the injury and incurs liability for the damage is known as the
defendant or tortfeasor. (in other words tort law is more concerned with the
members of a community or a society)
The law of torts is derived from a combination of common-law principles
and legislative enactments. Unlike actions for breach of contract, tort actions
are not dependent upon an agreement between the parties to a lawsuit.
Unlike criminal prosecutions, which are brought by the government, tort
actions are brought by private citizens. Remedies for tortious acts include
money damages and injunctions (court orders compelling or forbidding
particular conduct). Tortfeasors are subject to neither fine nor incarceration
in civil court
The law of torts serves four objectives. First, it seeks to compensate victims
for injuries suffered by the culpable action or inaction of others. Second, it
seeks to shift the cost of such injuries to the person or persons who are
legally responsible for inflicting them. Third, it seeks to discourage
injurious, careless, and risky behavior in the future. Fourth, it seeks to
vindicate legal rights and interests that have been compromised, diminished,
or emasculated. In theory these objectives are served when tort liability is
imposed on tortfeasors for intentional wrongdoing, negligence, and
ultrahazardous activities.
What is an intentional tort?
 An intentional tort is a breach of the legal duty to refrain from committing intentional acts
which cause injury to others. Most intentional torts involve injury to the physical person of
another, injury to another’s reputation, injury to another’s property, or interference with
business relationships.
 An intentional tort is any deliberate interference with a legally recognized interest, such as the
rights to bodily integrity, emotional tranquility, dominion over property, seclusion from
public scrutiny, and freedom from confinement or deception. These interests are violated by
the intentional torts of assault, Battery, trespass, False Imprisonment, invasion of privacy,
conversion, Misrepresentation, and Fraud. The intent element of these torts is satisfied when
the tortfeasor acts with the desire to bring about harmful consequences and is substantially
certain that such consequences will follow. Mere reckless behavior, sometimes called willful
and wanton behavior, does not rise to the level of an intentional tort.
o Going back to Professor Cooper punching you in the face for asking stupid questions
every morning—violation of intentional torts—assault and battery Cooper had an
intention to punch you and cause bodily injury.
o In intentional tort includes protection of many different rights
o There is also unintentional tort-this is called negligence
 i.e. lets say you were driving to school this morning and talking on your
phone, while you were driving and talking and you rear ended Professor
Cooper—you were not driving like a reasonable person, although this was
an unintentional act, meaning you did not have a direct intent to rear end
Cooper, you would still be liable for your actions; you were not acting as a
reasonable person would (you were talking on your cell phone)
2
*Legal Environment of Business. Sixth (6th) Edition. Frank B. Cross, Roger LeRoy Miller. organizes
tort law into four categories:
1. Intentional Torts
 An intentional tort is any deliberate interference with a legally recognized interest, such
as the rights to bodily integrity, emotional tranquility, dominion over property, seclusion
from public scrutiny, and freedom from confinement or deception. These interests are
violated by the intentional torts of assault, Battery, trespass, False Imprisonment,
invasion of privacy, conversion, Misrepresentation, and Fraud. The intent element of
these torts is satisfied when the tortfeasor acts with the desire to bring about harmful
consequences and is substantially certain that such consequences will follow. Mere
reckless behavior, sometimes called willful and wanton behavior, does not rise to the
level of an intentional tort.
 Under certain circumstances the law permits individuals to intentionally pursue a course
of conduct that will necessarily result in harm to others. The harm that results from such
conduct is said to be outweighed by more important interests. Self-preservation is one
such interest and is embodied in the right of Self-Defense. Individuals may exert
sufficient force in self-defense
2. Negligence
 Most injuries that result from tortious behavior are the product of negligence, not
intentional wrongdoing. Negligence is the term used by tort law to characterize behavior
that creates unreasonable risks of harm to persons and property. A person acts
negligently when his behavior departs from the conduct ordinarily expected of a
reasonably prudent person under the circumstances. In general, the law requires jurors to
use their common sense and life experience in determining the proper degree of care and
vigilance with which people must lead their lives to avoid imperiling the safety of others.
 Not every accident producing injury gives rise to liability for negligence. Some accidents
cannot be avoided even with the exercise of reasonable care. An accident that results
from a defendant's sudden and unexpected physical ailment, such as a seizure or a
blackout, generally relieves the defendant of liability for harm caused during his period
of unconsciousness. However, defendants who have reason to know of such medical
problems are expected to take reasonable precautions against the risks the problems
create. In some jurisdictions unavoidable accidents are called ACTS OF GOD.
 Assumption of Risk is another defense to negligence actions. This defense prevents
plaintiffs from recovering for injuries sustained as a result of a relationship or transaction
they entered with full knowledge and acceptance of the risks commonly associated with
such undertakings. Assumed risks include most of those encountered by spectators
attending sporting events. However, the law will not assume that individuals accept the
risk of intentionally inflicted harm or damage, such as injuries resulting from Assault
and Battery.
3. Strict liability
*The negligence standard is not the only possible basis for imposing tort liability.
 For example, many courts hold that common carriers owe their passengers “the highest
degree of care” (a more stringent standard)
What is Strict Liability?
 A very heavy duty on defendants
 The defendant is liable regardless of the care with which she conducts the
activity
 The liability flows not from carelessness, but from the very choice to conduct
the activity at all
3




The defendant is said to “act at her peril”…If something bad happens the
defendant would still be held liable
In some cases tort law imposes liability on defendants who are neither negligent nor
guilty of intentional wrongdoing. Known as strict liability, or liability without fault,
(liability in the absence of tort). This branch of torts seeks to regulate those activities that
are useful and necessary but that create abnormally dangerous risks to society. These
activities include blasting, transporting hazardous materials, storing dangerous
substances, and keeping certain wild animals in captivity.
A distinction is sometimes drawn between moral fault and legal fault. Persons who
negligently or intentionally cause injury to others are often considered morally
blameworthy for having failed to live up to a minimal threshold of human conduct. On
the other hand, legal fault is more of an artificial standard of conduct that is created by
government for the protection of society.
 Imposes liability for ultra hazardous situations. Persons who engage in
ultrahazardous activities may be morally blameless because no amount of
care or diligence can make their activities safe for society. However, such
persons will nonetheless be held legally responsible for harm that results
from their activities as a means of shifting the costs of injury from potential
victims to tortfeasors. As a matter of social policy, then, individuals and
entities that engage in abnormally dangerous activities for profit must be
willing to ensure the safety of others as a price of doing business.
As society has moved into modern times, we now have insurance/policies and protection
in the likelihood of an event happening; more prevention. We has shifted legal to the
side of the plaintiffs, plaintiffs are able to recover legally. 50 years this was not the case.
 Business have business insurance to protect themselves, they can have
liability insurance for those who are insured and seek recovery.
 Only applies in limited circumstances. Applies when there it is an ultra
hazardous situations
 What does Insurance do? Insurance spreads out the risk of loss out, so that
everyone shares responsibility rather than putting the brunt on the injured.
 The damages recovered by those injured as a result of a tortious act
of another are often paid for by insurance companies. This is
particularly true in Medical Malpractice cases. Doctors must pay
significant medical liability insurance premiums in order to stay in
business. When a doctor commits Malpractice, the patient may
receive an award of hundreds of thousands of dollars to millions of
dollars. As insurance companies continue to pay these hefty awards,
the rates for insurance premiums often rise sharply.
4. Product Liability

Products liability: caused by commercial products (Overall Framework)
(1) Negligence Claims
 Traditionally, there are significant hurdles to negligence recovery in
products liability cases.
 Two big hurdles:
1….. it is difficult to prove that a manufacturer’s negligence led to
the defect that injured the plaintiff
2. ….the biggest hurdle is the concept of “privity”
(2) Breach of Warranty, Expressed or Implied; Contractual Theories of Recovery
 BREACH OF EXPRESS WARRANTY
4




Breach of express warranty under Article 2 of the Uniform
Commercial Code.
Section 2-313 of the Code allows recovery if a seller makes
specific representations about the qualities of a product, and the
buyer is injured due to the failure of the goods to fulfill those
representations.
In practice, a limited remedy.
BREACH OF IMPLIED WARRANTY
 Uniform Commercial Code provides that a seller warrants that
its goods are “fit for the ordinary purposes for which such
goods are used.”
 This warranty arises by operation of law (not based on any
representations of the seller).
 Can be limited by statutes of limitation
(3) Strict liability
a. Manufacturing Defects
 Product is defective because it does not meet the manufacturer’s
own specifications for the product.
 If the product does not match the product specifications, it does not
matter how the defect occurred.
 Example: a medical instrument has a structural defect due to
contamination in the steel.
b. Design Defects
 A product can also be defective if its design makes it unnecessarily
dangerous to the user
 Two different tests:
i. Consumer expectations test
ii. Risk/utility test
c. Defects due to failure to warn
 Involves failure to warn the user of dangers associated with a
product’s use
 A consumer should be warned if a danger is “not generally known,
or if known is one which the consumer would reasonably not
expected to find in the product”
 If a warning is required, it must be an adequate warning

Consumers who have been injured by defectively manufactured products also rely on
strict liability. Under the doctrine of strict Product Liability, a manufacturer must
guarantee that its goods are suitable for their intended use when they are placed on the
market for public consumption. The law of torts will hold manufacturers strictly liable for
any injuries that result from placing unreasonably dangerous products into the stream of
commerce, without regard to the amount of care exercised in preparing the product for
sale and distribution and without regard to whether the consumer purchased the product
from, or entered into a contractual relationship with, the manufacturer.
2. Strict liability. When a manufacture puts out the defect product into the market
place and causes injury from the defected product.

… a manufacturer of products, which he sells in such a form as to
show that he intends them to reach the ultimate consumer in the form in
which they left him with no reasonable possibility of intermediate
5



examination, and with the knowledge that the absence of reasonable
care in the preparation or putting up of the products will result in an
injury to the consumer’s life or property, owes a duty to the consumer
to take that reasonable care.
Don’t have to prove the manufacture was negligent, you would only
need to prove that there products defect caused injury.
 EX) let’s say you are mowing you lawn on day day and the
blade comes flying out. You essentially have a defective
lawnmower-the blade comes flying off, this is not normal. You
would only need to prove the lawnmower is a defective
product.
 Who is liable? The manufacturers and the retailer and everyone
else involved in the marketing chain.
 Would a car salesman be held liable for selling a defective
product? This is Agency law, Agents can be held liable if they
lie and misrepresents the facts for their negligence, but not in
product liability cases, your not going to sue the salesman for a
defective product; product liability involves the manufactures
retailers and everyone else involved in the market
 Let’s make some adjustments to this example….let’s say
Cooper is mowing the lawn and his kids are playing catch,
while the kids are playing close the Cooper one of his kid gets
injured, and while playing his hand gets caught in the
lawnmower…in examining the lawnmower, we take a look at
design defect theory: what are the alternative designs, would
alternative designs minimize the risk of this happening. Once
an alternative design is established, it is then determined How
much more expensive is this design, and how effective is this
design.
Manufactures are exposed to liability, if they are not putting out safe
products
Toyota Case: product liability on the defective part (acceleration),
 As plaintiffs lawyers prepare to file their consolidated class
action on behalf of Toyota consumers, they face an obstacle
that has prevented similar claims from advancing in the past:
Class members didn't actually suffer physical injuries.
 The class members assert that they suffered economic injuries
because their vehicles declined in value following recalls tied to
sudden acceleration problems. Plaintiff’s have to prove there is
a defect in that product--strict product liability.
*Can not have a tort unless you have…….INTENT


Intent is the first essential element of any intentional tort (need to prove there is intent).
Cause of action is what we sue; you would need to prove each and every element of the
essential elements in intentional tort.
If there is no intent, there is no intentional tort. You need to prove intent in intentional tort.
Intent, as used in tort law, does not require a hostile or evil motive. Rather, it means that (1)
the actor desires to cause the consequences of his act, or that (2) he believes that the
consequences are substantially certain to result from the act. Examples:
6

EX)….If A fires a gun in the middle of the Mojave Desert, he intends to fire the gun, but
when the bullet hits B, who is in the desert without A’s knowledge, A does not intend that
result. A has not committed an intentional tort against B.
o Did A know the consequences of his action? No, he we in the middle of the desert, A
may have intended to fire a gun in the desert, but he did not intent B to also be in the
middle of the dessert; he did not internationally intent to injury B.
o Will A be found liable? A would not be found liable for intentional tort. this was an
unintended act on A’s part.
o This is a negligence claim. Was A negligent? A will be liable if he is found to be
negligent.
 Best argument is negligence; however, there is debate when are you liable
and when is are you not liable.
*Law of torts provides the legal rules to show when one is liable and when one is not liable for such
actions.

EX)…..A throws a bomb into B’s office in order to kill B. A knows that C is in B’s office
and that the bomb is substantially certain to injure C, although A has no desire to do so. Has
A committed an intentional tort against C?
o Did A desire the consequences of his action? Yes. (Maybe yes and Maybe no) what
does A want to do? He doesn’t want in injury C he wants to kill B. He knew C was
in the office, there was a possibility that A’s action could cause injury to C, chance C
he could be injured or killed by A’s actions toward B.
 You might not have intended to hurt or injure C, but did you have the intent.
You know the consequences of your action you are deemed to those
consequences
BATTERY
A battery is the willful or intentional touching of a person against that person’s will by another person,
or by an object or substance put in motion by that other person. Please note that an offensive touching
can constitute a battery even if it does not cause injury, and could not reasonably be expected to cause
injury. A defendant who emphatically pokes the plaintiff in the chest with his index finger to
emphasize a point may be culpable for battery (although the damages award that results may well be
nominal). A defendant who spits on a plaintiff, even though there is little chance that the spitting will
cause any injury other than to the plaintiff's dignity, has committed a battery.

Essential elements of a battery:
o Intent: Intent, as used in tort law, does not require a hostile or evil motive. 1) the
actor desires to cause the consequences of his act, or that (2) he believes that the
consequences are substantially certain to result from the act. (2 prong test)
o D must set in motion a force directed towards the P which results in physical contact
with the person of the P or something closely associated with the person of the P.
o Such force exercised towards the P must be without the P’s consent and against her
will.
 Have to prove the essential element as rights to recovery. First, causes of
actions and second, damages (right to recovery). Need to prove damages.
 We have all been victims of tort, but we don’t all file lawsuits and go to
court. It is up to us to distinguish when one is a victim of tort.
Garratt v. Dailey
 P, an arthritic woman, was about to sit down in a chair when the D, aged five years, nine
months, suddenly and without warning, pulled the chair out from under her. P fell to the
ground and was injured. P sued D for damages in battery. May she recover?
7
o
Battery: Intent, must prove all essential elements and evaluate the facts of the case,
if all these essential elements exist then one is liable for there actions and conduct.
 What if an essential element is not clear in the case/have not been satisfied?
This becomes a legal issue. We need to look at the case and IRAC the issues.
This is what is done when one conducts legal research; they analyze the
legal issues in the case.
 Assures that the rule of law exists
 First issue might be intent. One could argue the D is only 5 years
old, was he able to distinguish right from wrong? (how can we
determine this?). In this case D was not charged with a crime, he is
being sued under battery in a civil case.
o We are talking about tort law, not criminal law; criminal
law involves criminal acts and harm against society. Tort is
used in civil proceedings to provide relief for persons who
have suffered harm from the wrongful acts of others.
 Is there intent? Hard to distinguish, D is five years old. Was he doing it
willfully and with a hostile and evil motive? No--he was doing it to be
funny, doing it because he was prankster. He did not intent for P to get
injured, he intended for a laughs.
 Did he know the substantial certainty? D knew P was going to fall
on her kester, was there substantial certainty she was going to get
hurt—No. he a prankster, he did not intent for her to be seriously
hurt.
 Issue as to physical contact? Much different than Cooper punching you in
the face for asking stupid questions ever morning. D did not intent physical
conduct, he was playing a kid joke.
 The court says……
o
--Yes. Even a joke may result in a battery if the essential elements are present. The
pulling of the chair was intentional and done with substantial certainty that P would
attempt to sit where the chair had been. The removal of the chair caused the physical
contact between P’s body and the ground. The act was without P’s consent and
against her will. These facts constitute a battery for which P may recover in tort.
 Plaintiff may recover: the parents are found responsible for tortuous acts of
their children. The parents are not specifically liable, you must prove child
committed tortuous act, (i.e battery). This is what was examined in this case.
 Act of physical contact is pulling out the chair and P falling to the ground.
 Battery—EX) lets say Cooper shoots you with a gun. Is this battery? Is their
physical contact? Yes—Cooper pulled the trigger and set in motion, the act
for being shoot in the arm.
Fisher v. Carrousel Motor Hotel
 P attended a buffet style luncheon with others. P was standing in line waiting to be served
when D snatched the plate from P’s hand and shouted that P, a Negro, could not be served. P
sued for battery. May he recover?
o Yes. Although P was not actually touched, the unpermitted and intentional taking of
the plate constituted a battery. P was permitted to recover actual damages which
included mental suffering and exemplary damages for D’s malicious conduct.
ASSAULT
An assault invoves:
1. An intentional, unlawful threat or "offer" to cause bodily injury to another by force;
2. Under circumstances which create in the other person a well-founded fear of imminent peril;
8
3. Where there exists the apparent present ability to carry out the act if not prevented.
*Note that an assault can be completed even if there is no actual contact with the plaintiff, and even if
the defendant had no actual ability to carry out the apparent threat. For example, a defendant who
points a realistic toy gun at the plaintiff may be liable for assault, even though the defendant was fifty
feet away from the plaintiff and had no actual ability to inflict harm from that distance.


Any unexcused and intentional act that causes another person to be apprehensive of
immediate harm.
Essential elements:
o Intent
 D must set in motion a force directed towards the P. Mere words, looks, or
gestures, without more, however violent or insulting, is not an assault.
 D must be able to carry out the threat immediately, and there must be some
affirmative act to do so.
 To the P as a reasonable person, there must be the apparent present ability to
inflict immediate bodily injury.
Cucinotti v. Ortmann
 P filed suit alleging that D displayed a blackjack and stated that he would beat the P unless P
left the premises. Has P stated a cause of action for assault?
o No. The mere possession of blackjacks by D and others with him did not convert the
unactionable words into a cause of action. To convert a threat into an assault, there
must be some act to show that a battery will follow immediately. The complaint did
not allege that the blackjacks were shown to P in a manner that would amount to an
offer to commit a battery. Therefore, P’s complaint was dismissed.
Allen v. Hannaford
 P rented an apartment from D, but was behind in her rent payments. While P was having her
furniture moved out of the apartment, D pointed a pistol at P and threatened to shoot her in
order to prevent P from moving her furniture. P sued D for assault. D contended no assault
was committed because of the lack of evidence that the pistol was loaded. Is this an assault?
o Yes. Even if there were no actual present ability to shoot P, the apparent present
ability is just as effective in causing fright as though the gun were loaded. Actual
ability is not necessary. Therefore, D committed the tort of assault.
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
 Essential elements:
o An intentional act
 That amounts to extreme and outrageous conduct
 Resulting in severe emotional distress to another
State Rubbish Collectors Association v. Siliznoff
 An association of rubbish collectors threatened to beat P and burn his truck unless he paid
money that he collected in a territory assigned to someone else. P became ill from fright. He
sued for damages and to cancel promissory notes given in payment of the unlawful demand.
May he recover?
o Yes. The State Rubbish Collector’s Association was liable for intentional infliction
of emotional distress. The promissory notes were cancelled.
--------------------------------------------------------------------------------------------------------------------------NEGLIGENCE
 Definition of negligence: Breach of a duty of due care which is the actual and proximate
cause of the plaintiffs injury
9
o
What is the duty of due care? What is the legal standards that the courts use, for
breaching the duty of due care.
In general terms, negligence is "the failure to use ordinary care" through either an act or omission.
That is, negligence occurs when:


somebody does not exercise the amount of care that a reasonably careful person would use
under the circumstances; or
somebody does something that a reasonably careful person would not do under the
circumstances.
Negligence is often claimed in personal injury lawsuits. For example, a personal injury lawsuit arising
out of an automobile accident case or premises liability action is frequently based on the theory that
the defendant was negligent. Please note that negligence law varies between jurisdictions, sometimes
significantly, and you should check with a local legal professional if you wish to know the specific
negligence laws of your jurisdiction
Reasonable Man and the Four (4) Elements of Negligence
1. Duty of Reasonable Care-defendant has a duty to the plaintiff; you could hold a defendant
holds no duty to the plaintiff [i.e. trespass] more difficult to establish duty of reasonable care
2. A breach of that duty
3. Causation-two different concepts of causation; factual causation and legal causation: injuries
were foreseeable, no matter how farfetched. Deceptively simple.
4. Resulting damages-can claim damages.
*Key element for a case of negligence to be established in court; standard used to adjudicate a
defendants behavior of action results a breach of duty and standard or reasonable care.
The Reasonable Person
 A concept developed for the law to decide if there was a breach of duty and if it exists
 Prosser and Keeton: “an ideal, a standard, the embodiment of all those qualities which we
demand of the good citizens”
 In a trial, the jury is instructed to apply the concept to determine if what a defendant did
amounted to a breach of duty.
 The question the jury is asked; “Did the defendant act in the same way that a reasonable
person under like circumstances would have acted?”
o Question of fact, this is why it is up to the jury to decide, not a question of law, in
law we make the distinction. It’s up to the judge to decide a duty of reasonable care.
Jury overseas the behavior of a reasonable man.
**Reasonable Person Standard as an Objective Standard: the reasonable person standard is meant
to be a unitary standard.
Elements of Negligence
 For someone to be found guilty of a crime, the prosecutor must prove all elements of the
criminal activity. For a defendant in a lawsuit to be awarded damages based upon
negligence the plaintiff must prove all elements of negligence. These elements are:
1. Existence of a duty
2. Breach of that duty
3. Harm or damage to the plaintiff
4. The damage was caused by the defendant’s breach of duty.
DUTY OF DUE CARE…..you owe to everyone in society
10




There are many types of tortuous conduct that have particular names such as products
liability or medical malpractice. Even though there are particular names they are all
negligence actions.
A consumer goods manufacturer has a duty to make a product that is not dangerous when
used properly. A doctor has a duty to use best medical practices in treating his patients. A
driver has a duty to operate his vehicle with the safety of others in mind. Starbucks has a
duty to not serve coffee that could burn its customers. These are legal duties society
imposes upon its members to benefit all.
The duty of care generally only extends to those individuals directly harmed and whose
interaction with the conduct of the doctor, manufacturer, driver or barista is reasonably
foreseeable.
OBJECTTIVE TEST: each person owes a duty to act as a reasonable person would have
acted in the same or similar circumstances (reasonable person test): to determine whether the
defendant acted as a reasonable person.
o Lucy V. Zemher: The test used to determine whether the parties have the intention to
contract is the Objective Test (reasonable person test): Would a reasonable person,
under the circumstances, have considered it an offer and an acceptance?
 Lucy v. Zehmer: used the objective theory of law (sued for breach of
contract)
o Facts of the Case: On December 20, 1952, Lucy and
Zehmer met while having drinks in a restaurant. During the
course of their conversation, Lucy offered to buy Zehmer’s
471.6 acre for $50,000 cash. Although Zehmer’s claim that
he thought that the offer was made in jest, he wrote the
following on the back of a pad: “We hereby agree to sell to
W.O. Lucy the Ferguson Farm for $50,000, title
satisfactory to buyer.” Zehmer then signed the writing and
induced his wife, Ida to do the same.
o Ida claimed, however, that she signed only after Zehmer
assured her that it was only a joke. Finally, Zehmer claimed
that he was “high as a Georgia pine” at the time, but
admitted tht he was not to drunk to make a valid contract.
Is there a contact between Lucy and Zehmer? ….. There
was an order for Zehmer to enforce the contract. This case
went to the Georgia State Supreme Court
o Yes, there was a contract between Lucy and Zehmer
…..an agreement or mutual assent is of course essential to
a valid contract, but the law imputes to a person an
intention corresponding to reasonable meaning of his
words and acts, judged by a reasonable standard, manifest
an intention to agree, it is immaterial what may be the real
but unexpressed state of his mind.
 This is what a reasonable person would have
thought . Tort law makes it so that individuals act
reasonably. It is conduct that exposes you to
causes of harm.
 Subjective test: we learned last week, that in order for a contract to
come into existence, there must be a subjective “meeting of the
minds.” Ex. Raffles v. Wichelhaus
o Uses the subjective test: A contact for the sale of cotton
was signed by P and D. It provided for the sale of 125 bales
of cotton which was to arrive at Liverpool on the ship
11
o
o
Peerless from Bombay. When the cotton arrived D refused
to accept it. P sued D for breach of contact. D contended
that he intended to buy cotton from the ship Peerless which
sailed in October. However, P offered cotton from the ship
Peerless which sailed in December.
When the contract was made, neither the P nor the D knew
that there was two ships named Peerless sailing from
Bombay. P meant the ship in December and D meant the
ship sailing in October.May P enforce the contract against
D?
No!-- There was nothing in the contract to show which ship
named Peerless was meant by the parties. According to te
pleadings, P intended to purchase cotton from the other
ship. Thus, there was no meeting of the minds on the terms
of the contract, and therefore, no binding contract ever
came into existence. P could not recover because there was
never a binding contract.
 No Contract—there was no contract that comes
into the existence—there was no “meeting for the
minds”, for a contract to come into existence.
 Each were thinking of two different ships, and
when the cotton was going to be delivered.
*The reasonable person standard is meant to be a unitary standard. Does not take into account
whether you lived to your personal standard of care, more like--was your action subject to a
reasonable standard of care.
o
o
o
o
Physical disability taken into account (i.e. blind person); might not be held to the
same standard of care, because of his disability.
No allowance for mental disability
Children held to reasonableness standard of child of like age, intelligence, and
experience. Child found liable in Garratt v. Dailey (pg. 8-9 of notes)
 Not liable for battery, what do we look at next, if there had been no tort? We
look at negligence. Was he negligent?
 Takes/uses standard of child of like age, intelligence, and experience of the
child.
 In Garratt v. Dailey, D was five years old, playing a kid prank.
He’s a small child-has the intelligence and experience of a five year
old.
Superior knowledge: professionals (lawyers, doctors) held to standard of care
customarily exercised by members of professionals
 Professional negligence: malpractice, against a professional i.e. did the
doctor act as a reasonable person.
BREACH OF DUTY
 Once it has been established that a duty existed, then it must be determined if that duty
was breached. A duty has been breached when a defendant has knowingly exposed
another to potential damage. A defendant who did not realize he was exposing another to
harm, but should have recognized the probability that any reasonable person would have
recognized has breached his duty as well.
 “Negligence" is not the same as "carelessness", since a person might employ as much
care as they are capable of, yet still fall below society’s standards. It is possible that
12
someone is very careful about their conduct, and yet harm occurs.

Conduct that exposes others to an unreasonable risk of harm. Breach of a duty of due care.
o Has their been negligence
o Reasonable person test: reasonable minds can differ. Does not give us an answer, we
don’t have black and white law, our laws are so vague.
 Arguments that can be made on each side of the issue. Reasonable minds
can differ, no black and white answers in law
Negligence must be the cause of the plaintiff’s injury. If you are negligent you are found liable.
ACTUAL CAUSE
 After establishment of a duty and a breach of that duty, in a negligence case the plaintiff must
a loss or injury to recover. The prerequisite is important if a defendant is unable to deny his
negligence, but the plaintiff suffered no injury as a result. In such a case the defendant will
not be found liable. Loss or injury can vary from case to case. It may be a physical injury, it
may be damage to the plaintiff’s property, or in some instances it may be the suffering of
emotional distress.
 The only relief for the loss is the award of money. Loss can be proven by medical bills, repair
bills, cost of replacement property, loss of income from missed employment or testimony as
to the pain and suffering caused to the plaintiff by the defendant.


“But For” rule: but for the defendants negligence, the plaintiff would not have been injured
Substantial factor rule: If either one of two acts would cause the injury, it is sufficient if D’s
conduct was a substantial factor
o EX) Rear-ending Cooper while driving to school and talking on the phone, you
would you be found to be driving negligently? Yes—was this the cause of your
injury? Apply the “But For” test. Is this true? Yes—but for the defendants
negligence, the plaintiff would not have been injured. Must determine the cause of
conduct.
o EX. Merging fires cases
 2 fires merge (Cooper fire) and unknown fire merge together and burns
plaintiffs house.
 What would the defendant argue: The house would have burned down
anyways, their was an unknown fire blowing in the general direction of the
plaintiffs property.
 No “But For” case—true the fires merged together but there was already a
blazing fire about that merged with Cooper fire, Cooper’s fire alone was not
the driving factor of burning the plaintiffs house down.

Where not clear which of several negligent defendants actually caused the injury, some courts
shift the burden of proof
o EX. Summers v. Tice; case involves; shifting burden of proof to the defendant.
Summer v. Tice
 X and Y were hunting quail. Both negligently fired at the same time and one shot hit P in the
eye. P sued X and Y for his injury, but P could not establish who fired the shot which hit
him. May P recover?
o 3 guys X, Y, and P. P went ahead, both X and Y hear quail and fired in P’s direction
(not knowing he was there). X and Y had shot guns, one shot of buck shot and hit P
in the eye. However, P could not prove who shot him in the eye
o Sues both X and Y for there actions and cause of injury.
13
o
o

Up until 1951—law did not favor plaintiffs and their right to recovery. No existence
of tort law.
“But For” Test: Must prove defendant’s negligent act/actions was the extensive cause
of the plaintiffs injury.
 Courts must determine who is liable. Should these guys be let off the hook
for their negligent actions? Should they both be held liable for P’s injury? P
can not prove who shot him in the eye. Should P be compensated for his
injury, how do we determine who compensates him?
 May P recover damages? Court says…..
--Yes. P may recover damages from both X and Y because they acted together. X and Y are
jointly and severally liable. To hold other wise would exonerate both from liability, although
both were negligent. And deny redress to the injured person.
PROXIMATE CAUSE
 While there may have been a duty, a breach of that duty and the plaintiff suffered an injury,
unless the defendant’s act or omission was the source of the injury there will be no money
awarded to the plaintiff.
 In United States courts, this is known as “proximate cause”, and draws a difference between
legal causation for which there is liability, and factual causation for which there may not be
liability.
 An act may cause injury to a plaintiff, but it was not reasonably foreseeable that the plaintiff
would be injured. When an act sets off a chain of events that ultimately injures the plaintiff,
but the plaintiff is very far removed from the original act, the act is the factual cause and not
the legal cause needed to impose liability on the defendant. The leading case in the United
States to discuss this issue is
 Policy decisions on who should bear loss for unexpected injuries
o Forseeability test: Given the D’s negligence, was it foreseeable that P would be
injured? If yes, what is the proximate cause of plaintiff’s injury. If it is not
forseeablity there is no proximate cause.
o Can of Dr.Pepper Cooper tosses it out the window onto the ground floor, there’s a
soccer student late for practice and he slips and falls on Cooper’s Dr. Pepper puddle.
He cracks his head
 Was Cooper negligent? Did he breach duty of due care.
 Reasonable person acts:
 “But For” test: but for the defendants negligence, the plaintiff would
not have been injured --Yes!
 Forseeablity test: he is a soccer student. Is it foreseeable? Yes--He
is student, it could be/happen to any student. Is Cooper liable?
Yes—
o Ex) adding onto this…..Lets say the soccer ball goes flying
and a theater arts student kicks it and it stuck an electrical
wire (which was poorly maintained by the electrical
company) fell and electrocuted a Fullerton College student.
o The Parents then sue Cooper—because he wrongfully
caused there sons death. Cooper tossing out his Dr. Pepper
from his classroom onto the walk path caused these strange
chain of events. Was this a foreseeable event? No—as we
get further out there is no proximate cause, Cooper is then
not the proximate cause.
o How do we determine liability? How do we cut off liability
for negligent acts? Liable to those foreseeable events, not
14
for those who that are unforeseeable (i.e. such as Cooper’s
example).
o
Ex. Palsgraf v. Long Island RR; & Weirum v. RKO General Radio Station
Palsgraf v. Long Island RR
 Mrs. P was waiting for a train on a station platform. A man carrying a package was rushing
to catch a train that was moving away from a platform across the tracks from Palsgraf. As the
man attempted to jump aboard the moving train, a railroad guard on the car reached forward
to help him on, and another guard on the platform helped push him up from behind. In the
process, the man’s package, which (unknown to the railroad guards) contained fireworks, fell
on the tracks and exploded.
 The explosion caused scales at the other end of the platform to fall on Mrs. Palsgraf, causing
injuries for which she sued the railroad. At trial, the jury found that the railroad guards had
been negligent. The appellate court affirmed, and the railroad then appealed to New York’s
highest court. Is the railroad liable for negligence? Court says….

No--The injury to Mrs. Palsgraf was not foreseeable. The railroad was not the proximate
cause of the injury.
Weirum v. RKO General
 D radio station sponsored a promotion whereby motorists were to locate a special red car.
Messages from the car broadcast its location as it moved around the city. The first person to
approach the car at each location was given the opportunity to win a cash prize by answering
a question. One motorist who heard the broadcast sped along the freeway at 80 miles per
hour in order to reach D’s car first. That negligent and reckless driving forced P’s car off the
road, and he was killed.

Suit was brought against the motorist and the D radio station. May the radio station be held
responsible for the negligent acts of the motorist responding to its promotion? (neg driving of
motorists)
o
o
o

Back to Dr. Pepper example. Intervening negligent act (electrical company) will cut
off liability to the original negligent act (Cooper slipping Dr. Pepper).
In this case the intervening negligent act is (driving) cuts off liability of the original
act (radio promotion).
Goes to CA State Supreme Court and they determine……
Yes-- All persons must use ordinary care to prevent others from being injured as a result of
their conduct. In this case, it was foreseeable that D’s listeners would race to the announced
site to win a prize and disregard the demands of highway safety. It is no defense that P’s
death was caused by others acting negligently. The intervening negligent act by the motorist
was foreseeable. The reckless driving was stimulated by D’s affirmative act of promoting the
contest, and that exposed P to an unreasonable risk. Therefore, D is liable.
o Court says; intervening negligent act is (driving) cuts off liability of the original act
(radio promotion). However, in this case it is reversed. Why?.....
o Intervening negligent act was foreseeable and we are reasonable to the foreseeable
actions
o Dr. Pepper Example--Did Cooper’s actions cause the electrical wire incident? –No,
the electrical company did not maintain electrical wiring properly on campus.
o CA State Supreme Court said; This is Fair and just for them to be held liable. Radio
station is liable.
15
*Next class we will be looking at: forms of business organizations.
Bus 240 Legal Environment of Business
Lecture 12 7/12/10 Week 4 Study Guide


Custom Legal Environment of Business. Sixth (6th) Edition. Frank B. Cross, Roger LeRoy
Miller pg. 63, Chapter 16 Sole Propritorships Franchises, and Partnerships outline.
Final exam essay, in lecture outline, pg. 106 due next Tuesday 6/20/10.
Questions and Case Problems
Chapter 16 Propritorships Franchises, and Partnerships --pg. 87 of lecture outline




16-2A: (*See Appendix I for sample answer) YES
16-4A (pg. 400-402; & 402-404): NO
16-5A (pg. 404-406) : NO
16-6A: YES
o It is within a franchisor’s rights to determine the location of a franchise and to insist
that a franchisee sell certain products. A franchisor that exercises these rights is not,
without more, acting in bad faith. In this case, Dunkin’ Donuts refused to allow
Elkhatib to relocate his Westchester store and would not renew his franchise
agreements because he would not sell the entire line of Dunkin’ Donuts’s food products, including the pork-based sandwiches. Although Elkhatib alluded to dietary
restrictions associated with his religion in refusing to sell the pork products, the
franchisor could still act in good faith in insisting that he sell those items. The court
should grant the defendants’ motion for summary judgment.



16-7A The franchise contract (pg. 394-395): YES
16-9A Elements of a partnership (pg. 420-422): YES
16-10A Fiduciary duties (pg. 406 & 411): NO
Chapter 17 Limited Liability and Companies and Limited Partnership—Pg. 89 of lecture outline








17-2A (pg. 424-426): YES
17-3A (*See Appendix I for sample answer)
(a) NO
(b) NO
(c) YES
17-4A (pg. 417): YES
17-5A Liability of general partners (pg. 423): YES
17-6A Foreign limited liability companies: (pg. 418): NO
17-7A Limited liability partnership (pg. 421-422): YES
17-8A: WESTBURY
17-9A: Foreign limited liability companies (pg. 418): YES
16