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Chapter 10—Torts in the Business Environment

REED SHEDDREED SHEDD PAGNATTARO PAGNATTARO MOREHEAD MOREHEAD

F I F T E E N T H E D I T I O NF I F T E E N T H E D I T I O N

TheThe Legal & Legal & RegulatoryRegulatory Environment of of BusinessBusiness

McGraw-Hill/IrwinCopyright © 2010 by The McGraw-Hill Companies, Inc. All rights

reserved.

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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.

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Tort

Tort lawlimits howpeople act

and use their resources

DefinitionDefinitionA civil wrong

other thanbreach ofcontract

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Categories Of Torts

Intentional NegligentStrict

Liability

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Intentional Torts

DeliberateAction

Causes INJURY

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Intentional Torts

Either:• Desire to bring about certain results• Results are substantially likely

DeliberateAction

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Intentional Torts Types

Assault & Battery

Infliction Of Mental Distress

Invasion Of Privacy

False Imprisonment & Malicious Prosecution

Trespass

Conversion

Defamation- Public Or Private Person

Fraud

Common Law Business Torts

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Common Law

Injurious Falsehood- Trade Disparagement

Intentional Interference With Contractual Relations

Business Torts

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Negligence

DefinitionUnreasonable behavior thatcauses injury.

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DD CC

AANegligence ‘A, B, Cs’

A

Duty

Of Care

+

Causation(Fact & Proximate)

+ Damages

BBBreachOf Duty(Unreasonable Behavior)

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Proximate Causation

Injury ‘in fact’ not sufficient Proximate cause = legal

cause

Was injury ‘foreseeable’ or reasonable to expect.

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Negligence Defenses

Assumption of Risk

(Plaintiff’s knowing and willing

undertaking of an activity)

Affirmative Defenses

Contributory Negligence (Plaintiff’s own fault)

( now offset by Comparative responsibility)

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Strict Liability In Tort Strict products liability-

unreasonably dangerous defective products Production defect Design defect Warning defect

Respondeat superior- scope of employment

Ultrahazardous activity

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Other Strict Liability Torts Dram Shop Acts – Tavern owner liable for

intoxicated patrons Common Carriers - Damage To Goods

Being Transported, except

Acts Of GodAction Of Alien Enemy

Order Of Public AuthorityInherent Nature Of GoodsMisconduct Of Shipper

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pop

QUIZpop

QUIZpoppop

QUIZQUIZBest Box Company advertises so effectively Best Box Company advertises so effectively that National Products, Inc. stops doing that National Products, Inc. stops doing business with Average Package Corp. Bestbusiness with Average Package Corp. Bestis liable for:is liable for:

a.a. AppropriationAppropriationb.b. Wrongful interference with a contractualWrongful interference with a contractual relationshiprelationshipc.c. Wrongful interference with a business Wrongful interference with a business relationshiprelationshipd.d.None of the aboveNone of the above

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think

TANKthink

TANKthinkthink

TANKTANK

Identify and describe the elements Identify and describe the elements of a cause of action based on of a cause of action based on

negligence.negligence.

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Compensatory Damages

Compensate Plaintiff For Injuries Suffered

Punitive Damages

Used To Punish Defendant

Types: Past/Future Medical Expense

Past/Future Economic Losses

Past/Future Pain Suffering

Calculation - Difficult

Negligent Behavior“Gross” or “Willful & Wanton”

Exemplary Damages

Damages

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Highest Jury Tort Awards

The Crucial Controversy In PersonalInjury Torts Is In The Area Of Damages.

$103Million $55

Million

Medical Malpractice Negligent Security

Defective Truck Transmission

$109Million

(2007)

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Alternatives To Tort System

Disadvantages Contingency fee Legal expenses Punitive damages Rarely cost-

effective

AlternativesAlternatives

• ArbitrationArbitration

• No-fault No-fault insuranceinsurance

• Workers’ Workers’ CompensationCompensation

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Workers’ Compensation Acts Protect Employees/Families From Job-

Related Risks Employer Acted Unreasonably Tests For Compensation

Injury Accidental Result Of Employment

Exclusive Remedy Rule

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think

TANKthink

TANKthinkthink

TANKTANKTelevision reporters get jobs at a local Television reporters get jobs at a local

grocery store by misrepresenting grocery store by misrepresenting information about themselves in order to information about themselves in order to do a story about the store’s alleged sale do a story about the store’s alleged sale

of out-of-date meat. Are the reporters liable?of out-of-date meat. Are the reporters liable?a.a. YesYesb.b. NoNo