ACCT 624 Exam 1

Negligence

Behavior that creates an unreasonable risk of harm to others; the failure to exercise reasonable care to protect another’s person or property.

Duty

The standard of care a reasonable person owes another (reasonable person standard)

Breach of duty

Failure to live up to the standard of care

Causation

Actual cause and proximate cause

Damages

A compensable loss suffered by plaintiff

Res ipsa loquitur proof required

• Event was of a kind that ordinarily does not occur in the absence of negligence

• Other responsible causes, including the conduct of third parties and the plaintiff, have been effectively ruled out

• Indicated negligence was within scope of defendant’s duty to plaintiff

What does Res Ipsa Loquitur permit?

A judge/jury to infer that defendant’s negligence caused plaintiff’s harm

When is Res Ipsa Loquitur useful?

Situations when no direct evidence of defendant’s lack of due care (negligance standard)

Negligence per se permits

plaintiff to prove negligence by offering evidence of defendant’s violation of statute enacted to prevent certain type of harm.

Strict Liability

Liability without fault

The law holds an individual liable without fault when the activity in which he or she engages satisfies three conditions

1. it involves risk of serious harm to people or property

2. it is so inherently dangerous that is cannot ever be safely undertaken

3. it is not usually performed in the immediate community

Inadequate warnings

An “unsafe” product can be made “safe” with adequate warnings about proper and improper use

Who can be liable for product liability

Any commercial supplier in distribution chain

Defenses to product liability

1. assumption of risk

2. comparative/contributory/modified comparative negligence

3. misuse

4. state-of-the-art defense

5. compliance with federal laws

Strict product liability

• Product defective when sold

• Product was so defective that it was unreasonable dangerous

  • Risk utility

  • Consumer expectations

• Product caused plaintiff’s injury

Express warranty

Explicit statement that leads a party to enter into the stated contract

Implied warranty

Automatically (by operation of law) applied to contract

Warranty

a guarantee or binding promise regarding a product

puffing

salesperson’s mere statement of opinion, rather than representation of facts

Seller disclaimed the warranty in writing

“as is” on used cars

Seller disclaims implied warranties in clear, unambiguous, conspicuous language

font, size, bold, etc

buyer fails/refuses to examine goods

refuses to take used car to a mechanic

buyer fails to file suit within applicable statute-of-limitations period

over $10, except murder

Magnuson-Moss Warranty Act

Requires that if seller decides to issue written warranty for consumer good, seller must specify whether warranty is “full” or “limited”

Accountant may be liable for violating explicit and/or implicit agreements

• explicitly, accountant agrees to perform contractual tasks

• implicitly, accountant agrees to complete work in a competent and professional manner according to professional standards

(accountant) Immaterial Breach

• receive agreed upon contract price for service(s) performed if substantially performed

• pay cost of obtaining new accountant

• pay reasonable and foreseeable damages

(accountant) material breach

pay for everything above (immaterial) and but not get paid for services performed

Accountants who commit fraud are liable to those parties they

reasonably should have foreseen would be injured through justifiable reliance on fraudulent information

Actual fraud

accountant’s actions meet criteria necessary to prove fraud

Constructive fraud

no fraudulent intent, but accountant is grossly negligent in performing his/her duties

Privity or near-privity (Ultramares rules)

requires that third party be in privity of contract with accountant or be close enough to accountant to constitute near-privity

Foreseen users and class of users (restatement rule)

requires that third party be known recipient or be from a class of known recipients of accountant’s work for liability to be established

Reasonable foreseeable users test

allows any third party that should have been reasonable foreseen as using product of accountant’s work to bring suit against the accountant for liability

Negotiation is less formal

dispute resolution engaged in by parties

Negotiation can happen with or without

lawyers, with or without litigation

Negotiation keeps disputes and results

quiet assuming lawsuits have not yet been filed

Mediation typically happens after

lawsuits are filed

Mediation more formal, typically with

3rd party who act as mediator

if agreement is reached at mediation, they become

enforceable under contract law

if no mediation is reach

parties move forward with litigation

mediation has a higher

chance of preserving the relationship than litigation

Mediation parties have more

control over the process and outcomes

mediation welcomes

creative solutions

Arbitration is the most formal, arbitrator issues a

ruing binding on the parties

Arbitration contract entered by the parties include

arbitration clauses and process determined in contracts

Arbitration is less

expensive than litigation

results are typically private

rulings are limited to scope of the dispute

very difficult to appeal and get thrown out

Arbitration has scheduling

conflicts

Arbitration appeal reasons

• award was result of corruption, undue influence or fraud

• award exceeds scope of issues

• Arbitrator displayed bias or corruption

• Arbitrator prejudiced rights of the parties

• Abitrator fails to make award mutual final definite award

Trademark elements

• distinctive mark, word, design, picture

• used by a producer

• in conjunction with a product(s)

• identifies the product(s) with the producer to consumers

Trademark renewal

between 5th and 6th years, after initial renewal every 10 years

Copyright

protects the fixed form of the expression of an original creative idea

length of copyright protection

various

Patent

protect a product, process, invention, machine, or plant produced by asexual reproduction.

Length of patent protection

20 years