FIFTEENTH EDITION
The
Legal & Regulatory
Environment of Business
Chapter 10—
Torts in the Business Environment
REED
McGraw-Hill/Irwin
SHEDD
PAGNATTARO
MOREHEAD
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
10-1
Learning Objectives
 To appreciate how tort law is related to
property.
 To understand the three divisions of torts and
to develop a theory of why torts are so divided.
 To be able to explain the elements of
negligence and to relate these elements to the
development of negligence law.
 To grasp why tort litigation is so controversial
in society today.
 To be able to explain why some torts are also
crimes.
10-2
Tort
Definition
A civil
wrong
other than
breach of
contract
Tort law
limits how
people act
and use their
resources
10-3
Categories Of Torts
Intentional Negligent
Strict
Liability
10-4
Intentional Torts
Deliberate
Action
Causes
INJURY
10-5
Intentional Torts
Either:
• Desire to bring about
Deliberate
Action
certain results
• Results are
substantially likely
10-6
Intentional Torts Types

Assault & Battery

Trespass

Infliction Of Mental
Distress

Conversion

Defamation- Public Or
Private Person

Fraud

Common Law
Business Torts


Invasion Of Privacy
False Imprisonment &
Malicious Prosecution
10-7
Common Law
Business Torts
 Injurious Falsehood- Trade
Disparagement
 Intentional Interference With
Contractual Relations
10-8
Negligence
Definition
Unreasonable
behavior that
causes injury.
10-9
Negligence ‘A, B, Cs’
A
Duty
Of Care
A
B
(Unreasonable
Behavior)
C
Causation
(Fact &
Proximate)
+
Breach
Of Duty
+
Damages
D
10-10
Proximate Causation
 Injury ‘in fact’ not sufficient
 Proximate cause = legal
cause
 Was injury ‘foreseeable’ or
reasonable to expect.
10-11
Negligence Defenses
Affirmative Defenses
Contributory Negligence
(Plaintiff’s own fault)
( now offset by
Comparative responsibility)
Assumption of Risk
(Plaintiff’s knowing
and willing
undertaking of an
activity)
10-12
Strict Liability In Tort
 Strict products liabilityunreasonably dangerous defective
products
 Production defect
 Design defect
 Warning defect
 Respondeat superior- scope
of employment
 Ultrahazardous activity
10-13
Other Strict Liability Torts
 Dram Shop Acts – Tavern owner liable for
intoxicated patrons
 Common Carriers - Damage To Goods
Being Transported, except
Acts Of God
Action Of Alien Enemy
Order Of Public Authority
Inherent Nature Of Goods
Misconduct Of Shipper
10-14
pop pop pop
QUIZQUIZQUIZ
Best Box Company advertises so effectively
that National Products, Inc. stops doing
business with Average Package Corp. Best
is liable for:
a. Appropriation
b. Wrongful interference with a contractual
relationship
c. Wrongful interference with a business
relationship
d.None of the above
10-15
think think think
TANK TANK TANK
Identify and describe the elements
of a cause of action based on
negligence.
10-16
Damages
Compensatory
Damages
Punitive
Damages
Compensate Plaintiff
For Injuries Suffered
Used To Punish
Defendant
Types:

Past/Future Medical Expense
 Past/Future Economic Losses
 Past/Future Pain Suffering

Negligent Behavior
“Gross” or “Willful &
Wanton”

Exemplary Damages
Calculation - Difficult
10-17
Highest Jury Tort Awards
(2007)
$109
Million
Medical Malpractice
$103
Million
Negligent
Security
$55
Million
Defective Truck
Transmission
The Crucial Controversy In Personal
Injury Torts Is In The Area Of Damages.
10-18
Alternatives To Tort System
Disadvantages




Contingency fee
Legal expenses
Punitive damages
Rarely costeffective
Alternatives
• Arbitration
• No-fault
insurance
• Workers’
Compensation
10-19
Workers’ Compensation Acts
 Protect Employees/Families From JobRelated Risks
 Employer Acted Unreasonably
 Tests For Compensation
 Injury Accidental
 Result Of Employment
 Exclusive Remedy Rule
10-20
think think think
TANK TANK TANK
Television reporters get jobs at a local
grocery store by misrepresenting
information about themselves in order to
do a story about the store’s alleged sale
of out-of-date meat. Are the reporters liable?
a. Yes
b. No
10-21