Business Law in Canada, 6e Chapter 4

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Business Law in Canada, 6/e Chapter 4

• Torts and Professional Liability

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What Is a Tort?

• A social wrong (not necessarily a crime)
• A civil wrong (between individuals)
• When an intentional or careless act harms another
• Injured party sues for monetary compensation

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What Is a Tort?

• Crimes are social wrongs that affect society as a
  whole
• Some crimes are also torts
• A tort is an inherently wrongful act that causes
  injury to another

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Categories of Tort

• Intentional or deliberate acts that cause injury
  or loss

• Careless or negligent acts that cause injury or
  loss

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Intentional Torts

• Intentional conduct that causes injury
• Examples
• Assault and Battery
• Trespass to Land
• False Imprisonment
• Nuisance
• Defamation
• Courts may award punitive damages

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Intentional Torts

• Assault and Battery
• Assault - where there is fear of contact
• Battery - least touching in anger
• Defences
• 1. Accident not mistake
• 2. Consent (informed)
• 3. Self-defence (reasonable force)

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Trespass to Land

• Being on anothers land without authority
• permission implied for business offering public
  services
• Occupier owes only minimal duty to trespasser
• Continuing trespass remedied by injunction

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False Imprisonment

• The unlawful and intentional restraint of a
  person against his/her will
• Restraint must be total
• Victim must submit or be forced to comply

• Restraint may be justified if the person has done
  something s/he can be arrested for.
• Remedies special, general and punitive damages

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Nuisance

• Public nuisance affects public in general
• Private nuisance interferes with anothers use of
  his/her property
• Strict liability for inherently dangerous
  situations or products (Rylands v. Fletcher)

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Defamation

• A false statement about someone to his detriment
  - must be published or broadcast
• Slander - spoken defamation
• Libel - written defamation
• Damages Assumed for Libel must be proven for
  Slander

Continued ...
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Defamation/2

• Defences
• 1. Truth
• 2. Absolute Privilege
• 3. Qualified Privilege
• 4. Fair Comment

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Privacy

• Privacy protection provided by statute law
• Personal Information Protection and Electronic
  Documents Act
• Regulates collection and use of private
  information
• Provides a model code

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Negligence

• Inadvertent, careless conduct that causes injury
  to another
• Important area of tort liability for professionals

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Case Summary

• Donoghue v Stevenson set several precedents in
  the law of negligence
• the test to determine the existence of a duty
• product liability - manufacturer owes a duty to
  customer
• privity of contract may not defeat an action for
  negligence in product liability cases

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Negligence Essential Elements

• Existence of a duty of care
• Breach of that duty
• Injury or damage reasonably
  foreseeable
• The act caused the injury
• No contributory negligence

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Is a Duty Owed?

• Reasonable Foreseeability Test
• If it would be apparent to a prudent person that
  the conduct was likely to cause injury - duty is
  owed.
• We owe a duty to anyone we can reasonably
  anticipate might be harmed by our conduct
• Is there any reason to reduce or eliminate this
  duty? (Anns case)

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Duty of Care

• Misfeasance
• an act that causes harm to another
• court will provide remedy
• Nonfeasance
• a failure to prevent an injury
• courts reluctant to provide remedy
• If a person attempts to help, there is a duty to
  exercise reasonable care

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Breach of the Duty of Care

• Reasonable Person Test
• Reasonable person is a prudent person exercising
  care
• conduct falling between average and perfect

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Standard of Conduct

• What would a reasonable person have done in the
  circumstances?
• Actions that fall below socially acceptable
  standards create liability for damages
• Risk - The greater the risk of injury, the higher
  the standard

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Liability of Children

• Children liable for their torts
• standard is that of a reasonable child of that
  age
• Parents not generally responsible for their
  childrens torts
• except where there is obvious failure to
  control, instruct or supervise

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Special Situations

• Obligations of occupier of property to
• invitees
• licensees
• trespassers Note Occupiers Liability Acts
• Duties of Innkeepers
• safeguard property of guests
• post Section 3 of Innkeepers Act
• prevent guests from becoming intoxicated

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Negligent Misstatement

• Courts will award compensation when negligent
  words cause financial loss.

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Case for Discussion

• Haig v. Bamford
• This case established the legal principal that
• Liability is restricted to situations where the
  plaintiff knew or should have known that the
  information provided would be relied on by a
  limited group.
• Is this restriction appropriate?

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Strict Liability

• Liability when there is no fault
• When a dangerous situation is created by an
  unusual use of property, the owner/occupier is
  liable for all damages when it escapes
• e.g., water, animals

Continued ...
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Loss or Injury

• Plaintiff must show injury to self or loss of
  property as a result of defendants negligence
• Courts will compensate for
• economic loss
• mental disorder but not simply mental distress

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Causation

• The injury must be a direct result of the
  careless conduct
• But for test - but for the conduct of the
  plaintiff, no injury would have resulted

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Defences

• Remoteness Test
• Whether the specific type of injury suffered was
  reasonably foreseeable
• Test established in Anns case applied
• Thin skull rule
• Crumbling skull rule

Continued ...
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Defences/2

• Contributory negligence
• plaintiff partially responsible for own loss
• last clear chance doctrine
• Negligence Act allows court to apportion
  responsibility

Continued ...
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Defences/3

• Voluntarily assuming the risk
• a person who volunteers to enter a situation
  where the risk of injury is obvious cannot
  recover damages
• Occupiers Liability Act
• must be clear intention on the part of the
  volunteer to absolve occupier of legal
  responsibility
• Does not apply to work-related accidents

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Product Liability

• Manufacturers are liable for injuries caused by
  defective products
• Plaintiff must establish that the manufacturer
  was negligent
• Breach of manufacturers duty can be implied from
  circumstances
• Manufacturers must warn of dangers associated
  with product

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Liability of Experts

• Professionals and experts held to a high standard
• require skills and abilities expected of a
  professional in that field
• must exercise skill with degree of care expected
  from a reasonable person in that profession
• inexperience does not excuse incompetence
• common practice that is dangerous or careless is
  not an excuse

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Professional Liability

• Duty often set out in contract
• But tort liability requires adherence to a
  reasonable standard of performance
• Courts may extend liability to parties outside of
  the contract

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Negligence

• Standard of care expected of professionals
• Reasonable member of the profession
• Common practice may not measure up to reasonable
  standard
• Courts will examine the circumstances to
  determine if the conduct was reasonable

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To Whom Is Duty Owed?

• People who suffer economic loss because of a
  professionals negligent statements may recover
  damages
• Whether a duty was owed is determined by
  reasonable foreseeability test
• This test has been modified by the Anns case

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Case for Discussion

• The Hercules Case
• In Haig v Bamford, the SCC determined that
  accountants owed a duty of care to those they
  knew would rely on the statements they prepared.
  
• In the Hercules case, the SCC applied the Anns
  test and limited the range of liability to only
  those they knew would rely on the statements they
  prepared and who used them as intended.

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Risk Avoidance

• Professionals should be aware of the standard of
  care expected of them
• Adapt practices to avoid risk
• Professionals owe a fiduciary duty to clients
• Must act with loyalty and good faith
• Must disclose pertinent information
• Use extreme care with funds entrusted to them

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Insurance

• Often a condition of practice for professionals
• Protects against damages resulting from errors
  and omissions
• Premiums can be a significant business expense
• May cover legal costs when professional is sued

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Professional Disciplinary Bodies

• Some exercise significant control over their
  members
• With membership required
• With power to levy penalties and suspend
• Activities regulated by administrative law
• Charter rights may apply
• Compliance with human rights legislation required

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Other Business Torts

• Inducing breach of contract
• Deceit
• Conversion
• Passing off action
• Injurious falsehood

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Privacy

• Current business concern because access to
  information has been facilitated by data storage
  and retrieval systems and by the Internet
• Legislation protects private information