lecture 5 - tort law and redress

Dispute Resolution in Court

settling disputes in business

• figuring out if one party has done what they have agreed and if they haven’t, if something is going to be done about it

• few cases actually go to court

  • people try to settle differences before going to court

• lawsuits for breach of contract are not that common

• trend of rises and falls of such disputes especially if tied to the economic health of the country (e.g.. real estate purchases)

Why are lawsuits for breach of commitment not common?

• honouring commitments is integral to business

• internal mechanisms curtail the need to sue anybody

• both parties want to avoid lawsuits

  • not good for either side’s reputation

  • people do not want to do business with someone with a history of suing people

  • costs money

contract enforcement comes down to cost-benefit analysis

• holding a contract has to outweigh the costs and problems that may arise

The Adversarial System

used in Canada

solving disputes involving rule of law and people involved in case present proof and reasonable arguments

• all or nothing scenario - winner or loser ( eg. family law, criminal law)

the system is consistent with the political and economic ideology in the West

places emphasis on self-interest, built-in-distrust of the state, role of individual

What are the 2 principles of the adversarial system?

1. Party Autonomy

2. Party Prosecution

Party Autonomy

parties have the right to pursue or dispose of legal rights as they decided

• limits the judge’s role to cases actually brought to a judge

• judge is reactionary

• judge won’t seek out other cases, can only respond to what’s brought to them

Party Prosecution

parties involved have the sole responsibility to advance their case without interference from the judge

• right to present proof

• parties choose how they move forward to the case

• the judge’s role is passive legitimacy

• any decision-making process can be accepted if it meets the criteria of the democratic process

Political and Economic Ideology

1. Parties have to be self-interested

2. Built-in distrust

3. Role of individual

Parties have to be self-interested

• they have to want something solved

• self-interest is the root of capitalist economies

• whoever has the better case will win

• in contrast totalitarian states make the decisions; inquisition

Built-in distrust

• in the system, one of the parties is the state

• defendant produces evidence for their case

• in civil courts, both sides need to produce evidence including the state

Role of individual

people are directly participating in their own cases

How does the adversarial system have a cathartic/therapeutic effect?

• subdues hostile feelings b/w parties

• trials originate from the idea of revenge; trials by battle etc.

• sign of acceptance as people debate

truth isn’t as important as if people view the case as fair; is truth or fairness more important?

What is the role of lawyers in the adversarial system?

• lawyers best interest for the client to not lose

• shared interest; unfavorable for lawyer to lose case

Impartiality/Fact-finding - The Adversarial System

• Judge needs to consider this when they insert themselves into trial

• decisions cannot be interpreted as favouring one party over another

• fact-finding gives legitimacy to the system

• increases potential for less bias if both sides are presenting facts

What are some problems with the adversarial system?

• science and law are at odds with each other

• science values general law, not particular cases

• expert witness testimony is crucial to the outcome of cases (put too much weight on one person’s opinion)

• science operates in an open culture

• wrongful convictions; one wrong conviction can shake the system, a system where legitimacy is core to its functioning

• prosecutors can become focused on winning not justice

• jury can be prone to group thinking

what are 4 scientific conventions?

1. searching for theory and general knowlegde

2. using methods of certain field

3. not decided on something until you have enough evidence

4. commitment to openness and sharing

What are legal conventions?

1. difference of sources and data compared to science

2. deciding on conclusions

What are some ways to improve adversarial system?

1. the role of judge

   • function like a magistrate; assess

   • more of a role when it comes to expert witnesses

   • evaluate what the witness is saying

   • no longer playing a passive role

2. plea of innocence

   • the accused would use their right to silence

   • police would follow lines of question provided by accused

3. appeals that are fact-based

Contract

agreement b/w two or more parties that outlines their rights and obligations and enforceable by courts

What are some requirements that must be met for a agreement to be considered a contract?

• Parties have reached an agreement on the subject in question;

• Parties intend to create legally binding relations;

• Parties have legal capacity to enter into contracts;

• Parties entered into a contract voluntarily ( e.g., neither party is forced or deceived into a contract);

• A contract has a consideration ( that is, it involves something of value for both parties);

• Legal formalities are met (e.g., a contract is in writing or witnessed);

• A contract is not illegal ( that is, not prohibited by law or not performed in an illegal manner)

What are the 2 parts of forming a contract?

1. offer

   • willingness of one party to enter into a contract with another party on certain terms

2. acceptance

   • demonstrates willingness of the other prospective party to enter into a contract on the terms specified by the offeror

Invitation to Treat

request for offers

Ex. merchandise advertising is an invitation to treat; invites shoppers to make offers to purchase goods at the advertised price

Agreement

clearly manifested either by written or verbal exchange b/w the parties or by their conduct

Consideration

something of value

Ex. payment of money, receipt of goods or services etc.

requirements of consideration reflects the idea that a contract is a bargain b/w parties

Gratuitous Promise

promise to do something for free, without a return from the other party

What are the 2 types of contract to be classified?

1. Conditions - essential terms that strike to the very heart of a contract

2. Warranties - other terms of a contract that are less significant

• breach of condition may lead to termination of a contract

• breach of warranty will allow innocent party to pursue other remedies, but not usually lead to end of a contract

What are 2 situations that distinguish illegality in contract law?

1. illegality as the contractual formation

   • the contract may be illegal if it is made to commit an act prohibited by the statute

   • also illegal for reasons of public policy (eg. a criminal should not be permitted to profit from a crime)

2. illegality as to the performance of a contract

   • party is intending to perform a contract in an illegal manner

   • Ex. business is legally leased a premises but occupying without a valid permit

What are the 2 exceptions to voiding an illegal contract?

1. where the parties to a contract are not equally guilty (eg. if one party is less blameworthy or victim to fraud, duress, oppression)

2. where the plaintiff repents before contract is performed

Voidable contract

a party may choose to repudiate (end) a contract without being considered in breach of it

• if one or more essential requirements for a contract are not met contract is considered void

Capacity

ability of the person to understand the nature and terms of a transaction and to make an informed decision about it

What are the 3 categories of individuals in relation to which issues of capacity may arise?

• minors

• persons with mental disorders or disabilities

• highly intoxicated individuals

What are the 3 regimes in relation to contracts made by minors?

• Some contracts concluded by minors are recognized are recognized as valid (ex. contracts necessaries of life)

• Some are void from start; when contract is harmful or prejudicial against minor

• Some are voidable on option of a minor

  • if minor chooses not to end a contract, it will have its full effect

  • if a minor ends the contract they are relieved of all future responsibilities under the contract

When is it possible for a person with mental disorders to void a contract?

1. whether the other party knew of the mental disability (actual knowledge or willful blindness to the fact)

2. whether a contract was fair

What 3 conditions have to be met for an intoxicated individual to void a contract?

1. due to intoxication, they were unable to understand what they were doing

2. another party to a contract was aware of intoxication

3. the intoxicated party promptly moved to rescind the contract

Privity of Contract

idea that only parties to a contract have rights and obligations under it

What are some situations in which a third party may assert rights under a contract?

1. Novation

2. Assignment

3. Third-party beneficiary

Novation

• when a third-party replaces one of the original parties to an existing contract

• terminates original contract and substitutes with a new one

Assignment

• involves a transfer of contractual rights to a third party

• does not change/replace original contract

• in case of breach, third party is able to sue other party under the original contract

Third-party beneficiary

• contracts providing for benefits to be conferred on third parties

Common Mistake

occurs when both parties make the same mistake

• if a common mistake occurs under a contract that relates to something fundamental in the contract, it may be considered void

Mutual Mistake

happens when both parties are mistaken, but their mistakes are different

• the mutual mistake precluded the parties from having a real agreement on the issue, contract may be considered void

Unilateral mistake

when one party to a contract makes a mistake

• agreement may be voidable depending on mistake

Misrepresentation

misstatement of fact that may mislead or induce a party into a contract

Innocent Misrepresentation

one party makes a false statement but believes it to be true

• in common law there is no remedy

• rules of equity allow for rescission

Fraudulent misrepresentation

when a party knows that information is false and makes such false statement with intent to induce another party into a contract

• voidable at the election of innocent party

• court may grant innocent party rescission

Was the prospective party induced into a contract due to misrepresentation?

if innocent party was aware of the misrepresentation but still entered into the contract or wasn’t influenced by that misrepresentation, the contract will not be rescinded

Was the party under an obligation to disclose certain information?

silence is not considered misrepresentation; in some cases there is duty to disclose certain information and failing to do so may amount to misrepresentation

Duress

when a person is forced to do something under threat of forces against himself, his family or his property

• such threat negates the existence of free consent and makes resulting contract voidable

• violence need not be present; sufficient amount of pressure on one party to make them feel they have no other choice is enough

Undue Influence

situations where a party was put under a moral pressure to enter into a contract

1. actual undue influence (ex. being bullied into a contract)

2. presumed undue influence, which arises from a certain preexisting relationship b/w parties

   • one party is in a position of trust or authority and therefore may exert influence over the other party (ex. doctor-patient, guardian-ward)

Unconscionability

applies to situations where there is significant power imbalance b/w the parties that results in weaker parties being taken advantage off

In order to make sure that a contract is unconscionable what must be established?

1. inequality in the positions of the parties

2. and unfair bargain

Discharge of a contract

situation when the obligations under it have come to an end and the contract is no longer in force

What means can a contract be discharged by?

• by performance

• by agreement

• by frustration

• by operation of the law

• by breach

By Performance

when parties perform their obligations according to terms of the contract, it then comes to an end

By Agreement

when parties may be unable or choose not to perform a contract as originally agreed, yet do not want to be in breach of it either

1. before a contract is fully executed, parties can agree to not proceed with the contract and conclude a waiver, which states neither party can assert rights under the contract

2. parties may conclude new agreement that replaces the old one, releasing them from the contract

3. parties can agree to accord and satisfaction; essentially “purchase of a release from an obligation arising under contract”

By Frustration

occurs when due to some unforeseen circumstances, it is no longer possible to perform obligations under a contract

• circumstance may be physical or may be a result of a legal development that made performance legally impossible

By Operation of Law

law either prescribes that obligations are discharged in certain situation (eg. a bankrupt is absolved from liability upon an order for discharge) or changes to the law lead to discharge of certain contracts

By Breach

when one or both parties have no fulfilled their obligations according to the terms of the contract

2 main types":

1. Failure to perform on a due date

2. Anticipatory Breach; which occurs when one party informs the other prior to the due date that it will not be performing its obligations; is breach is accepted by innocent party, leads to termination of the future performance of a contract

Remedies

• damages

• rescission

• specific perfromance

• injunction

• rectifiation

Damages

seek to restore an innocent party to the position they would have been in had the contract been performed

• most common remedy to breach of contract

Mitigate damages

plantiff must take all reasonable steps to reduce the loss resulting from the breach

Liquidated

parties agree to a specific penalty in case of contract breach

• avoids costly disputes and litigations

Consequential

damages resulting from the consequences of a breach

Punitive

seek to punish the defendant for malicious, arbitrary, or highly reprehensible misconduct

Rescission

sets aside a contract and restores the parties back to their original precontract positions

• can be used when a contract was the result of fraud, misrepresentation, or undue influence

Specific Performance

court order obligating a party to do what they promised to do under a contract

• used when a contract involves a certain unique object and where damages would not properly compensate for a party’s failure to deliver

Injunction

court order requiring defendant to either do or refrain from doing something

Rectification

equitable remedy that can be used when parties made a mistake in a contract that distorts their original intention

Classical Contract Law

reflected ideas of the free market prevalent in the 19th and 20th centuries

• individuals were presumed to be independent, informed, rational actors who should be free to exercise their autonomy through contract law

• notions of rational actors presupposed that individuals have all the necessary information to make informed decisions and choose the best course of action

• efficiency considerations supported individual freedom and choice

• when individuals were allowed to make transactions without state-imposed limitations, they’d choose the most beneficial arrangements

What was contract law and scholarship preoccupied with the most?

With how to respect and promote individual autonomy and efficiency, rather than how to protect weaker parties

• the parties were expected to look out for themselves and take responsibility for choices they made

• promoted the idea of individualism, independence, self-reliance

What were the 3 main elements that the courts focused on?

1. offer

2. acceptance

3. consideration

Contemporary Contract Law

challenged the key presumption that parties to a contract are always equal, independent, informed, rational actors and recognized need to protect weaker parties

• doctrine of unconscionability - allows courts to set unfair contracts aside

• contractual law does incorporate some protections but doesn’t mean autonomy are no longer important

tort law

used for harms suffered in noncontractual interactions where parties to a suit are often strangers to each other

• conduct that is considered a tort can also be a criminal offence

What are the 6 functions of tort law?

1. Compensation

2. Deterrence and Admonition

3. Standard setting

4. Psychological

5. Educational

6. Ombudsman

Compensation

award of damages; compensates victims for loss they have suffered

Deterrence and Admonition

imposition of liability on the wrongdoer and an obligations to pay damages to victims may help promote more responsible conduct to deter careless acts

Standard Setting

linked to deterrence and admonition; ability of tort law to establish certain standards of behaviour

Psychological

may help empower victims of wrongdoings adn allow for recognition of injustice faced

Educational

can attract media & scholarly attention, informing public about certain types of wrongdoings or problems; can help generate impetus for change

Ombudsman

an impartial and independent officer established to investigate allegations of maladministration and to make recommendations for improvement

• tort lawsuits perform ombudsman-like function when they expose wrongful or negligent acts of state authorities or private businesses

What are the 2 types of torts?

1. Intentional

2. Negligent

Intentional Torts

where a tortfeasor (person who has committed a tort) wished to produce a certain wrongful result

most common intentional torts are:

• Battery

• Assault

• False Imprisonment

• Trespass to land

• Wrongful interference with chattels

• Defamation

Battery

when a person intentionally causes harmful or offensive contact with another person

Ex. hitting, punching or grabbing someone

• contact doesn’t have to cause harm; merely be offensive or unwanted

Ex. kissing or hugging someone against their will

Assault

when a tortfeasor intentionally creates an apprehension of immediate harmful or offensive contact

• occurs without contact as soon as the victim is under apprehension of immediate harm

• assault and battery usually follow immediately after the other

False Imprisonment

occurs when a person intentionally confines another person within certain fixed da

• tort committed when the confinement is unauthorized and a confined person has no free avenue of escape

• confined by force, threat of force, or psychological means if they believe there is no choice but to comply

Trespass to Land

means entering or being on someone’s property without authorization

Wrongful Interference with Chattels

Chattels are movable property; The tort covers the following situations;

1. unauthorized touching of one’s property (trespass to chattels)

2. interference in ownership or possession of one’s personal property (conversion)

3. unlawful retention of someone else’s property and refusal to return it (detinue)

Defamation

making false statements that can damages a person’s reputations and lower him in the estimation of the community

2 forms

1. libel - written word

2. slander - spoken word

Defences to Intentional Torts

1. Consent

2. Self-Defence

3. Defence of others

4. Defence of property

5. Necessity

Consent

must be freely given

• if consented to a act that would constitute a tort, tortfeasor will not be held liable

Self-Defence

when a person is under threat from someone she may be justified in using force in order to protect herself; force must be proportional to threat

Defence of Others

protecting others from an attack (ex. parent - child)

Defence of property

person may use force to defend his personal and real property; force must be reasonable

Necessity

when a person finds himself in imminent danger from external sources

• can be private and public

• Private Necessity: occurs when one is seeking to protect a private interest (ex. person trespassed on private property in order to survive a typhoon)

  • only covers situations when no actual damage was caused

• Public Necessity: refers to situations where some private rights are interfered with for the purpose of protecting the community at large (ex, police trespass on private property to apprehend offender)

Negligence

failure to excercise reasonable care

Rests on the following concepts:

1. duty of care

2. standard of care

3. causation and proximity

Duty of Care

person or a corporation has a responsibility to avoid actions that can be reasonably forseen to cause harm to others

• other can be affected by their actions

How do we know duty of care exists?

1. Whether the circumstances disclose reasonably foreseeable harm and proximity sufficient to establish a prima facie (at first sight; upon initial observation)

2. if so, whether there exist residual policy consideration, outside the relationship of the parties, which justify denying the imposition of the duty of care

Standard of Care

seeks to represent an objective general standard of behaviour for a given activity

• underlying question is: did the defendant fail to do what a reasonable person would have done under the same circumstances

Causation and Proximity

must be a connection b/w the defendant’s conduct and damage

• if the harm would not have occurred but for the negligence of the defendant, there is causation

Defences to Torts of Negligence

1. Voluntary assumption of risk

2. illegality

Voluntary assumption of Risk

when plaintiff had knowledge of the risk of injury involved in a given activity and voluntarily assumed that risk