Business Law – Chapter 3: Tort Law Study Guide

Business Law – Chapter 3: Tort Law Study Guide

This study guide captures essential concepts for the Tort Law chapter, integrating class notes, slides, and homework answers comprehensively for exam preparation.

1. What is a Tort?

  • Definition: A tort is defined as a civil wrong that results in harm or injury to another person, property, or business. It is distinct from a crime or breach of contract.

  • Purpose: The primary aim of tort law is to compensate the victim rather than to penalize the wrongdoer.

  • Parties Involved:

    • Plaintiff: The individual or entity that initiates a lawsuit (the person suing).

    • Defendant: The individual or entity being accused in a lawsuit (the person being sued).

2. Types of Torts

  • Intentional Torts: These are acts that are committed on purpose. Examples include:

    • Assault

    • Defamation

    • Trespass

    • Passing off (misrepresenting one's goods as those of another brand)

  • Unintentional Torts: These are torts that arise from carelessness or negligence. Examples include:

    • Negligence

    • Product Liability

    • Professional Negligence

  • Strict Liability: This legal concept holds a party responsible for their actions regardless of fault or intent, especially when dealing with inherently dangerous activities or materials (e.g., using hazardous substances).

3. Vicarious Liability

  • Definition: Vicarious liability refers to the legal doctrine whereby employers can be held accountable for the wrongful acts of their employees performed during the course of their employment.

  • Risk Management: Businesses can reduce risks associated with vicarious liability through:

    • Training programs

    • Supervision practices

    • Purchasing liability insurance

4. Negligence Act

  • Joint Liability: This legal principle entails that two or more parties share liability for an act, allowing the plaintiff to recover damages from any responsible party.

  • Contributory Negligence: If the plaintiff is found to be partially at fault in causing the harm, the damages awarded may be reduced proportionally.

5. Elements of Negligence

To establish a case of negligence, the plaintiff must demonstrate the following five elements:

  1. Duty of Care: There was a legal obligation for the defendant to exercise care towards the plaintiff.

  2. Breach of Standard of Care: The defendant failed to meet the standard of care that a reasonable person would have applied in the same situation.

  3. Causation: The plaintiff must demonstrate that the defendant's conduct caused the harm, often analyzed using the ‘But For’ test, which states that the harm would not have occurred but for the defendant's actions.

  4. Foreseeability: The harm must be a predictable result of the defendant's actions.

  5. Quantifiable Harm: The damages suffered must be measurable in monetary terms.

6. Product Liability – Ways to Reduce Risk

  • Companies can minimize the risk of product liability claims by implementing the following practices:

    • Conduct thorough testing of new products for potential flaws before entering the market.

    • Engage in regular quality control inspections to ensure products meet safety standards.

    • Allow easy return processes for consumers to return damaged or faulty products.

    • Implement immediate recall programs for any product defects identified after release.

    • Maintain detailed documentation of all safety testing and quality assurance processes.

7. Negligence vs. Strict Liability

  • Negligence: The plaintiff is responsible for proving that the defendant acted carelessly and thus caused harm.

  • Strict Liability: Under strict liability rules, the defendant is held automatically responsible for harm unless they can demonstrate that they exercised due diligence and took all necessary precautions to avoid such harm.

8. Passing Off (An Intentional Business Tort)

  • Definition: Passing off occurs when one individual sells their product under the guise that it is from another established brand.

  • Protection Strategies: To safeguard against passing off, businesses should:

    • Register trademarks for their brands.

    • Monitor the market actively for imitations.

    • Take legal action against imitators when necessary.

9. Trespass Policy (Occupiers’ Liability)

  • Preventive Measures: Businesses should adopt the following strategies to manage trespassers:

    • Clearly display ‘No Trespassing’ signs to deter entry.

    • Regularly inspect and maintain property to eliminate hazards.

    • Request that trespassers leave voluntarily.

    • If necessary, detain trespassers in accordance with the Trespass to Property Act while utilizing minimum force and calling law enforcement when needed.

10. Case Study: Cigarette Fire (Product Liability)

  • Duty of Care: Companies owe a duty of care to users even when no contractual relationship exists; this extends to foreseeable users and anyone else who may be harmed (e.g., bystanders).

  • Considerations: In such cases, various factors such as the negligence of the boy involved, the flammability of the couch, and the poor construction of the house are considered.

  • Defensive Arguments: The company may defend its position by:

    • Denying liability outright.

    • Introducing other parties as co-defendants.

    • Claiming contributory negligence on the part of the plaintiff.

11. Case Study: Defamation (Online Rumour)

  • Definition: Defamation occurs upon the dissemination of false statements that cause harm to someone’s reputation.

  • Employer Liability: An employer may be held vicariously liable for defamation if they were aware or encouraged the harmful statements.

  • Damages Suffered: Common consequences of defamation include loss of sales, damage to reputation, harm to goodwill, and increased public relations costs.

  • Remedies Available: Legal remedies for the victim include:

    • Injunctions to remove defamatory content.

    • Retractions, which involve public apologies.

12. Defences in Tort Law

  • Contributory Negligence: This defense asserts that the victim contributed to their own harm, impacting the potential damages awarded.

  • Voluntary Assumption of Risk: This defense applies when the victim knowingly accepted certain risks, often documented through waivers.

  • Balance of Probabilities: In tort cases, the plaintiff is required to demonstrate that it is more likely than not that the defendant caused the harm in question.

13. Exam Triggers – Key Concepts to Focus On

  • Distinctions between Negligence vs Strict Liability.

  • Understanding Duty of Care & Foreseeability principles.

  • Insights into Product Liability cases, especially the Cigarette Case example.

  • Legal implications of Defamation given the online context (Rumour Case).

  • Requirements and consequences surrounding Trespass & Occupiers’ Liability principles.

  • The applicability of Contributory Negligence in various scenarios.

  • Mastering the ‘But For’ Test for causation in negligence claims.