Business Law: Torts, Contracts, and Strict Product Liability

Vocabulary practice flashcards covering intentional and unintentional torts, general contract law principles, warranties, strict liability, and product liability.

Tort

A civil wrong not arising from a breach of contract; a breach of a legal duty that proximately causes harm or injury to another.

Compensatory Damages

A monetary award equivalent to the actual value of injuries or damages sustained by the aggrieved party, intended to return the plaintiff to their pre-tort position.

Special Damages

An amount awarded in a tort action to compensate the plaintiff for quantifiable monetary losses, such as medical expenses, property damage, and lost wages and benefits both now and in the future.

General Damages

An amount awarded to compensate individual plaintiffs for nonmonetary aspects of harm suffered, such as pain and suffering; these damages are not available to companies.

Punitive Damages

Money damages awarded to a plaintiff to punish the defendant and deter future similar conduct, appropriate only when conduct is particularly egregious or reprehensible.

Gross Negligence

Extreme negligence, defined as an intentional failure to perform a duty in reckless disregard of the consequences affecting the life or property of another.

Intentional Tort

A wrongful act knowingly committed where the tortfeasor intended the consequences of the act or knew with substantial certainty that specific consequences would result.

Tortfeasor

An individual or entity who commits a tort.

Transferred Intent

A legal principle under which intent is transferred when a defendant intends to harm one individual but accidentally harms a second person instead.

Assault

Any word or action intended to make another person fearful of immediate physical harm, creating a reasonably believable threat without requiring physical contact.

Battery

The unprivileged, intentional touching of another person, which can be harmful or merely offensive as determined by the reasonable person standard.

False Imprisonment

The intentional confinement or restraint of another person's activities without justification, accomplished through physical barriers, physical restraint, or threats of physical force.

Actionable

Capable of serving as the valid legal basis for a lawsuit.

Intentional Infliction of Emotional Distress

A tort involving an intentional act that amounts to extreme and outrageous conduct exceeding all bounds of decency accepted by society, resulting in severe emotional distress.

Defamation

Any published or publicly spoken false statement of fact that causes injury to another's good name, reputation, or character.

Libel

Defamation committed in writing or in another permanent recording medium, in which general damages are presumed as a matter of law.

Slander

Defamation in oral form, which normally requires the plaintiff to prove special damages (actual economic loss) to establish liability.

Slander Per Se

A false oral statement actionable with no proof of special damages required, covering statements about loathsome diseases, trade/professional improprieties, serious crimes, or unchaste/serious sexual misconduct.

Actual Malice

A legal requirement in public-figure defamation lawsuits, defined as making a statement with either knowledge of its falsity or reckless disregard for the truth.

Appropriation of Identity

An invasion of privacy tort involving the unauthorized use of an individual's name, likeness, or picture for commercial purposes; also codified in statutes as the right of publicity.

Malicious Prosecution

A lawsuit initiated out of malice and without a legitimate legal reason against a party who subsequently loses the initial case and is then sued by the winning party.

Abuse of Process

The use of a legal process (such as a subpoena or order of attachment) against another in an improper manner or to accomplish a purpose for which it was not designed, without requiring proof of malice or prior litigation.

Wrongful Interference with a Contractual Relationship

A business tort occurring when a third party knows of a valid, enforceable contract between two parties and intentionally induces one of them to breach it, causing damages.

Wrongful Interference with a Business Relationship

A business tort where a party uses predatory practices to intentionally harm an established business relationship or gain a prospective economic advantage beyond legitimate competition.

Trespass to Land

The entry onto, above, or below the surface of land owned by another without permission or legal authorization, or causing an object or person to remain on the land.

Attractive Nuisance Doctrine

A doctrine holding a landowner liable for injuries to young children attracted onto the property by an artificial object, such as a swimming pool.

Licensee

A person who receives a license or legal permission to enter onto or use another individual's real property, such as an electric meter reader.

Trespass to Personal Property

The unlawful taking, harming, or interference with another person's exclusive possession of their personal property, diminishing its value, condition, or quality.

Conversion

The wrongful taking, using, or retaining possession of personal property belonging to another with interference so substantial that the tortfeasor may be required to pay the full value.

Slander of Quality

Also called trade libel; the publication of false information about another's product alleging it is not what the seller claims, which induces third parties to refrain from business and causes financial loss.

Slander of Title

The publication of a statement that falsely denies or casts doubt on another person's legal ownership of property, resulting in financial injury.

Negligence

The failure to exercise the standard of care that a reasonable person would exercise in similar circumstances, resulting from a breach of duty without intent to harm.

Duty of Care

The legal obligation imposed on all individuals by tort law to exercise a reasonable amount of care in their dealings so as not to infringe on the interests of others.

Reasonable Person Standard

The objective standard of behavior expected of a hypothetical, ordinarily prudent person against which negligence and breach of duty are measured.

Business Invitee

A customer, client, or visitor invited onto a business operator's premises for commercial purposes, to whom the owner owes a duty to warn of foreseeable risks and eliminate hidden dangers.

Malpractice

Professional negligence involving misconduct or the failure to exercise the requisite degree of professional skill and training (such as by physicians, accountants, or lawyers).

Causation in Fact

An act or omission without which ("but for" which) the plaintiff's injury would not have occurred.

Proximate Cause

Legal cause; exists when the connection between an act and an injury is sufficiently strong and the risk was foreseeable enough to justify imposing liability.

Good Samaritan Statute

A state law providing that persons who rescue or provide emergency services to someone in peril cannot be sued for ordinary negligence unless they act recklessly.

Dram Shop Act

A statute imposing liability on bar owners, taverns, or servers of alcohol for injuries caused by intoxicated patrons when the server contributed to that intoxication.

Negligence Per Se

An action deemed negligent as a matter of law because the defendant violated a public safety statute intended to prevent the specific injury suffered by a protected class of persons.

Res Ipsa Loquitur

A doctrine meaning "the thing speaks for itself," creating a rebuttable presumption of negligence where the event does not normally happen without negligence and the defendant held exclusive control.

Assumption of Risk

An affirmative defense against negligence showing that the plaintiff knew and appreciated an existing danger and voluntarily undertook the risk of injury.

Superseding Cause

An unforeseeable intervening force or event that breaks the causal connection between a defendant's wrongful act and the plaintiff's resulting injury, relieving the defendant of liability.

Contributory Negligence

A minority common law rule under which any negligence by the plaintiff that contributes to their own injury acts as an absolute bar to financial recovery.

Comparative Negligence

A tort standard apportioning liability between the plaintiff and defendant based on their proportionate percentage of fault, reducing damages rather than barring recovery completely.

Contract

An agreement that can be enforced in court, formed by two or more parties who agree to perform or refrain from performing an act now or in the future.

Objective Theory of Contracts

A doctrine stating that the intent to form a contract is determined by outward, objective facts as interpreted by a reasonable person, rather than by secret subjective intentions.

Bilateral Contract

A contract formed at the exact moment promises are exchanged; a promise given in exchange for a return promise without requiring immediate performance.

Unilateral Contract

A contract that arises only when an offer can be accepted through actual performance by the offeree, coming into existence at the moment performance is completed.

Formal Contract

A contract that requires a specific legal form or method of creation to be valid, such as negotiable instruments or contracts executed under seal.

Informal Contract

A contract that does not require a specified legal formality or form to be valid, evaluated on substance rather than adherence to strict formalities.

Express Contract

A contract in which the terms of the agreement are fully and explicitly stated in words, either oral or written.

Implied Contract

A contract formed in whole or in part from the conduct of the parties where property or services were provided, payment was expected, and the other party had the opportunity to reject them.

Executed Contract

A contract that has been completely performed and carried out by both contracting parties.

Executory Contract

A contract that has not yet been fully performed by one or both parties.

Unenforceable Contract

A contract that satisfies all necessary elements for validity but cannot be enforced in court due to a specific legal defense or statute, such as the Statute of Limitations.

Voidable Contract

A valid contract that may be legally avoided (canceled) or ratified at the option of one of the parties, such as a minor or an incapacitated person.

Void Contract

An agreement that produces no legal obligations and has no legal force or effect from the beginning, such as an agreement formed for an illegal purpose.

Offer

A promise or commitment to perform or refrain from performing a specified act in the future, communicating serious intention and reasonably definite terms to an offeree.

Revocation

The withdrawal of an offer by the offeror, effective upon receipt by the offeree before an acceptance has occurred.

Option Contract

An irrevocable contract under which the offeror holds an offer open for a specified period of time in exchange for consideration provided by the offeree.

Counteroffer

An offeree's response to an offer that rejects the original offer while simultaneously submitting a new proposal with modified terms.

Mirror Image Rule

A common law rule requiring that the terms of the offeree's acceptance adhere exactly to the terms of the original offer without addition or change.

Mailbox Rule

A contract principle stating that an acceptance of an offer becomes effective and forms a binding contract upon dispatch via an authorized mode of communication, even if never received.

Click-On Agreement

An electronic contract formed when an online purchaser indicates assent to be bound by contractual terms by clicking a button such as "I agree."

Shrink-Wrap Agreement

An agreement whose terms are packaged inside the physical box of a product (such as software), where the buyer assents to the terms by retaining and using the goods.

Browse-Wrap Terms

Terms and conditions posted on a website that do not require explicit assent or clicking "I agree" before downloading, viewing, or installing software.

Consideration

The value given in return for a promise or performance; must consist of something of legally sufficient value and be obtained through a bargained-for exchange.

Forbearance

The act of refraining from exercising a legal right that one possesses, constituting legally sufficient consideration in a contract.

Preexisting Duty Rule

The legal principle that promising to perform an act one is already obligated to do by law or prior contract does not constitute legally sufficient consideration.

Rescission

An equitable contractual remedy whereby a contract is canceled and both parties are returned to the positions they occupied prior to the agreement's formation.

Past Consideration

An act or benefit given in the past that cannot serve as consideration for a subsequent promise because it lacks a bargained-for exchange.

Illusory Promise

A statement that appears to be a contract promise but expresses such uncertainty of performance that the promisor has not bound themselves to do anything.

Release

A binding contract in which one party forfeits the right to pursue a legal claim against another in exchange for consideration, barring any further recovery.

Promissory Estoppel

An equitable doctrine enforcing a promise made without consideration when the promisor reasonably expected reliance, the promisee reasonably relied on it to their substantial detriment, and injustice can only be avoided by enforcement.

Contractual Capacity

The legal competence and mental capacity required by law for an individual entering into a contract to be bound by its terms.

Disaffirmance

The legal repudiation, setting aside, or avoidance of a contractual obligation by a party lacking full capacity, such as a minor.

Lucid Interval

A temporary period of sufficient intelligence, judgment, and will during which a mentally incompetent person is legally capable of forming a valid, binding contract.

Usury

The illegal practice of lending money at an interest rate exceeding the maximum statutory rate permitted by state law.

Covenant Not to Compete

A contractual agreement to refrain from competing with another party for a specified time and within a defined geographic area, enforceable if reasonable and ancillary to a valid contract.

Reformation

An equitable remedy in which a court corrects or rewrites a written contract (such as an unreasonable covenant not to compete) to reflect the true intentions of the parties and make it reasonable.

Procedural Unconscionability

Unfairness in the formation of a contract arising from a party's lack of knowledge or meaningful choice, often caused by fine print, confusing legalese, or take-it-or-leave-it adhesion terms.

Substantive Unconscionability

Contractual terms that are overly harsh, unfair, or oppressive on their face, such as clauses depriving an insured party of any right to remedy in court.

Exculpatory Clause

A contract provision releasing a party from liability for monetary or physical injury regardless of who is at fault, generally disfavored when violating public policy.

Statute of Frauds

A state statute requiring that certain categories of contracts (such as land contracts, agreements taking over one year, and goods valued at $\$500$ or more) be written and signed by the defendant to be enforceable.

Strict Liability

Liability imposed on a defendant regardless of fault, moral culpability, or the degree of care exercised, common in abnormally dangerous activities, wild animals, and defective products.

Abnormally Dangerous Activities

Rare, ultrahazardous undertakings that involve a high degree of risk of serious harm to persons or property that cannot be completely eliminated even through the exercise of reasonable care.

Product Liability

The legal liability imposed on manufacturers, distributors, and sellers for physical injuries or property damages caused by defective goods to consumers, users, or bystanders.

Privity of Contract

The direct legal relationship existing between the contracting parties; not required in product liability lawsuits based on negligence or strict liability.

Express Warranty

An explicit oral or written promise made by a seller or lessor regarding the quality, description, or performance of goods that becomes part of the basis of the bargain.

Implied Warranty of Merchantability

A legal warranty automatically arising in sales or leases by merchants that goods are reasonably fit for the ordinary purposes for which they are sold, properly packaged, and of fair quality.

Implied Warranty of Fitness for a Particular Purpose

A warranty arising when a seller knows the buyer's specific purpose for an item and knows the buyer is relying on the seller's skill and judgment to select suitable goods.

Unreasonably Dangerous Product

A product defective to the point of threatening health and safety beyond the expectation of the ordinary consumer, or for which an economically feasible safer design was neglected.

Manufacturing Defect

A physical flaw or departure from design specifications occurring during fabrication or assembly that leaves a product unit defective or incorrectly assembled.

Design Defect

A defect occurring when a product conforms to specifications but the design itself creates an unreasonable hazard that could have been avoided with an economically feasible alternative design.

Market-Share Liability

A theory apportioning damages among all manufacturers of an identical defective product during a specific timeframe when the exact manufacturer of the injury-causing unit cannot be identified.

Preemption

A defense against product liability claims asserting that comprehensive federal safety regulations over a product line (such as medical devices) supersede and preclude state tort claims.

Product Misuse

A defense asserting that the plaintiff used a product in a manner not intended or reasonably foreseeable by the manufacturer, barring or reducing recovery.

Tolling

The temporary legal suspension of the running of a statute of limitations, such as until an injured party discovers or reasonably should have discovered the defect or injury.