Tort, Contract, and Professional Liability
##TORTS ## Tort – breach of a legal duty, other than under contract, with liability for damage # key elements = fault and causation # 2 types of torts – intentional and unintentional # fault: unjustifiable injurious conduct which intentionally or carelessly disregards the interests of others # tort criminal offense # sometimes defendant is liable for damages even if did not intentionally cause the harm # legislation creates strict liability # liability can be determined by fault (common law) or strict liability (legislation) # compensation can be determined by leglisation (ie: no-fault insurance or worker’s compensation plans # vicarious liability = strict liability # applies to an employer # employer could instruct employee to perform employment duties with harmful effects or not train the employee properly which causes harm # employer may also be liable for employee’s actions arising in the course of employment # employees have limited assets available to pay compensation for the potential harm they can cause and it seems only fair that the person who makes the profit from an activity should also be liable for any loss #
Intentional tort is an act done deliberately and har must occur for there to be an action; harm can be unexpected; intention relates to the behaviour not the resulting damage and plaintiff (injured party) must establish some loss (it must be significant – not minimal) # examples of intentional torts: trespass / assault and battery / nuisance / false imprisonment / defamation / breach of contract / unlawful interference with economic relations / injurious falsehood / passing off # trespass = broadly defined as foricible, direct, and immediate injury to the plaintiff’s person, land or goods. # entering onto another person’s land without permission, lawful authority, right or express or implied license or invitation # may also be committed by propelling a person or object onto the land # refusing to leave the land # direct interference with the possession of the land # assault = threat of imminent violence # not the same as criminal code offence # battery = actual physical contact. defined as unlawful touching of a person wtihout consent; the intereference with a person’s body # not necessarily harmful contact # public nuisance = interference with lawful use of public facilities # private nuisance = interference with occupier’s use and enjoyment of the land and economic importance of the offending activity # false imprisonment = intentional restraint without legal justification # physical constraint is not required # threat of embarrassment can be enough # malicious prosecution – causing a criminal prosecution against an accused without the Crown’s honest belief that a crime was committed; unnecessary or sustained prosecution without lawful justification # defamation (libel) = a written defamation (false statement) which injures another reputation # defamation (slander) = spoken defamation which injures another’s reputation # defences to intentional torts 1. consent 2. self defence 3. defence of property 4. necessity 5. legal authority # consent: 2 forms are common: in sexual assault and sporting activities # sexual assault: it is especially important in relation to sexual assault where consent is relatively common in sexual interactions. it is virtually unthinkable that anyone would consent to being punched, kicked, stabbed during sexual contact. but it is a defence in lawsuits to recover damages for sexual assault, usually where it is said that the woman consented to sexual contact. the factual issue of consent is central. # sporting events: injuries and damages may be sustained. consent to participate permits some forms of assults that would otherwise be actioanlbe, as long as they fall within the rules of the game. injury caused outside the rules may lead to criminal charges. Determining liability in tort in such circumstances is focused on the specifics of what a person consetns to when participating in a particular sport # Self Defence: if a person harms another in defence of onself or one’s loved ones, no liability arises; however, the extent and appropriateness of the response to a threat of harm may give rise to liability # Defence of Property: a person might intrude upon or damage another person’s property. a certain degree of harm inflicted to defend one’s property does not give rise to liability but the extent and appropriateness of the response to a threat of harm are considered # Necessity: a person might intrude upon someone else’s property or harm another physically in order to avoid a threatening event. If such actions arise the defence would be one of”necessit” # Legal Authority – a police officer, for example, may use force, or such force, in the lawful performance of his or her duties which, if used by an ordinary citizen, might constitute a tort. the police officer is said to be acting under”legal authorit” # Defences to defamation action: truth – onus on defendant to prove truth of statement ; absolute privilege – complete immunity ; qualified privilege – immunity as long as statement made in good faith ; responsible communication on matters of public interest – when the publication of the statement was in the public interest and was done responsibly #
Unintentional Torts – an act not done deliberately but one which breaches a standard of care and causes harm; the harm may be unexpected, accidental or by mistake; significant harm must occur for there to be an action; plaintiff must establish some loss (significant) in order for the defendant to be liable # 3 main forms of unintentional torts: 1. Negligence (most common) 2. Product Liability 3. Occupier’s Liability #
Negligence – anyone who carelessly causes injury to another should compensate the victim for that injury # careless action which causes injury to a person or property # plaintiff must prove 3 things called “ELEMENTS OF PROOF” # 1. Defendant owed a duty of care to plaintiff 2. Defendant breached the required standard of care 3. Defendant’s conduct caused injury to the plaintiff (causation of damage) # DUTY OF CARE – foreseeability # focuses on the relationship between the plaintiff and defendant # TESTS: Would a reasonable person have foreseen that the defendant’s actions would have caused harm to the plaintiff or someone in that position? AND Whether such a relationship exists depends on foreseeability moderated by policy concerns # STANDARD OF CARE – refers to the level of care that a person must take in the circumstances; the standard of care required is that of the “reasonable person” ; the standard varies according to the activity ; the greater the risk, the higher the standard ; consider social utility of the activity ; consider feasibility of risk management # CAUSATION OF DAMAGE – did the breach of the duty of care and the standard of care cause the plantiff’s injury ; TESTS: “But For” the negligent conduct of the defendant the injruty would have occurred AND “Material Contribution” defendents materially caused unreasonable risk and to deny recovery because it cannot be proven which one caused the injry would be unfair (2 or more defendants involved but unclear who is at fault) # # Remoteness of damages – a person will not be held liable for the consequences of his acts if too remote or unrelated to the event/injury – the injury must be reasonably foreseeable # Defences to negligence 1. Contributory negligence 2. Accident 3. Voluntary Participation 4. Voluntary Assumption of Risk 5. Failure to Mitigate Damages # Contributory Negligence: partial defence to a negligence action ; the plaintiff’s conduct contributed to their own injury ; plaintiff’s loss will be apportioned according to degree of fault of the plaintiff and the defendant(s) ; the defendant’s liability may be reduced by the degree to which the plaintiff’s own conduct contributed to their injury ; court decides % apportioned ; whether or not either party had insurance is not relevant to the legal dispute # Voluntary Participation: in a criminal activity or antisocial action # Accident (“inevitable accident”): the event in question is simply an accident which no reasonable person could or out to have foreseen; something happened over which the person relying upon the defence had no control, and the effect of which could not have been avoided by the greatest care & skill # Voluntary Assumption of Risk: did the plaintiff voluntarily do something to assume the risk for the harm caused? or act in defiance or warning? ; did the plaintiff’s experience or knowledge result in an appreciation of the risk and a voluntary assumption of same? if so, defendant is relieved of duty of care and is not held to be negligent ; Failure to Mitigate: applies AFTER the injury occurs ; did the plaintiff do something to worsen or contribute to the seriousness of the injury after it occured? (ie) refusal to undergo medical treatment, continuing to act in a way that furthers the harm; partial defence ; cost of mitigation is a recoverable damage by plaintiff
Product Liability – 2 types – a product may be defective AND harm may be caused if product not used appropriately that is: 1. Liability for negligence in design, production, or inspection (defective products) 2. Liability for failure of the duty to warn even for non-defective products (mfger must warn about proper usage according to product and industry standards) # mfgers owe duty of consumers to give proper warnings about the use of products or how to NOT use products # Duty To Warn: mfgers responsibilty to make users aware of the risk associated with use/misuse of the product. Failure to adequately do so may results in liability # mfgr has ongoing duty to warn of potential dangers in use / misuse of product, but plaintiff must show that the mfgers failure to warn caused injury
Occupiers Liability – important business tort ; loss or injury suffered by visitors to the business premises # common law imposes degress of liabilty on 3 types of person entering onto the property 1. Invitee 2. Licensees 3. Trespassers # Occupiers liability leglislation imposes duty of care to all lawful visitors but ONLY duty of “common humanity” to trespassers. This creates a basic duty to take care of all persons # Occupiers Liability – tort imposing liability on occupants of land for harm suffered by visitors to the property # Invitee: a person permitted by an occupier to enter premises for business purposes # Licensee – a visitor (other than an invitee) who enters premises with the consent of the occupier # Trespasser – person who enters premises without permission of the occupier # law does not create liability on the part of the occupier simply because an unusual danger exists # an occupier must take reasonable steps to prevent foreseeable injury to person entering onto their land from any “unusual danger” thereon # liability arises only if the occupier failes to use reasonable care to prevent injury to the invitee from the unusual danger that exists
Damages – Usual tort remedy # 2 main categories 1. General Damages – non-pecuniary losses # pain and suffering ; future loss of income ; etc 2. Special Damages – quantifiable damages # medical bills ; actual lost wages ; etc
Other Remedies – 1. Punitive or exemplary damagers (to punish wrongdoer) ; 2. Injunction (2 types: restraining order; order requiring a person to do something) ; 3. Restitution – an order to restore property wrongfully taken
Legal Risk Strategies – businesses need to understand tort law to attempt to foresee whatever harm they may cause 1. Businesses can cause harm by negligence – vicarious liability for employees; defective products ; injuries by visitors to premises or release of harmful substances from business premises # 2. Businesses may also suffer harm – property might be damaged by negligent acts of others ; competitor might unlawfully interfere with its economic interests by injurious falsehoods, passing off its products as belonging to another, etc # Reduce risks by increasing business awareness of potential legal problems ; assessing the legal risks and obtaining professional advice before undertaking new ventures ; considering all risk management strategies including avoiding, reducing and transferring the risk; transferring risk by insuring against damage to one’s own property ; alerting, advising, and warning potential users of identified risks so they may be considered to assume the risks ; implementing internal quality control practices within the organization
PROFESSIONAL LIABILITY – Professionals: persons who have specialized knowledge and skills which are provided to clients, usually for a fee. # Lawyers, engineers, doctors, accountants, architects # Duties of professionals: 1. Contractual (based on a contract with client) 2. Fiduciary (relationship of trust arises becaue of professional’s skill & authority) 3. Tort (duty of care to client if it is foreseeable they could be injured by negligence) #
Contractual Obligations: agreement to provide services # agreement contains a “promise” (express or implied) to provide competent services # failing to provide competent professional services = a breach of the promise to provide services = breach of contract causing loss #
Fiduciary Duty: professional’s duty may go beyond the terms of their contract to provide services # duty arises then special relationship of trust exists # Ask if such a duty:1. The professional’s duty may go beyond the terms of their contract to provide services 2. The professional can unilaterally exercise the power in such a way as to affect the client 3. The client is in a vulnerable position. # common categories of fiduciary duty are: lawyer/client, doctor/patient # other relationships such as broker or financial advisor/client may be a fiduciary one, depending on circumstances # 3 PART FIDUCIARY DUTY TEST: 1. Is there vulnerability of the client? 2. is there trust and reliance of the client on the advice of the advisor? 3. Is there disrection of the advisor to make decisions on behalf of the client without consulting them? # Additionally, there may be a standard code of conduct applying to that professional in a professional code of conduct. Also important as confers another duty # If fiduciary duty found = the law imposes a wider range of obligations on the professional than is found in contract or tort law # the professional must act honestly, in good faith and only in the best interests of the client # need to then ask: did the professional breach their fiduciary obligations? # Professional liability may arise without negligence # 3 RULES OF FIDUCIARY: 1. Should not place himself in a conflict of interest with his client 2. Must give complete loyalty to the client 3. Has a duty not to profit at client’s expense # example is real estate agent may have conflict of interest if they act for both buyer/seller #
Tort Liability: where a professional deliberately or carelessly causes damage to a client # either negligence or intentional # tests for negligence/intentional are: there must be a duty of care with the professional / what is the standard of care of that professional and was it breached / is there causation? (was harm caused by the professional’s negligent or intentional conduct # Contract Liability – professional/client may have entered into a contract, terms of which the professional breached # did they misrepresent their skill or ability? # terms of contract are important # Tort or Contract Liability? Client can choose to sue in contract or tort if the professional was negligent or intentionally caused harm and did not comply with the terms of the retainer or contract # both actions can apply ; can be liability in 2 areas of law ; remedies are different for each type of breach so the client must consider this carefully in litigation #
professionals may also be liable to third parties as well as client third party liability: liability to some other person who stands outside a contractual relationship. # Example of situation mihgt be an auditor reports on client firm’s financial statement which is then used by lenders, investors, etc (third parties) and they suffer financial losses because of it # professional can be liable for contract, tort or breach off fiduciary duty (or all 3) # Misrepresentation: false statement of fact which intentionally misleads another to their detriment = intentional tort of “deceit” # 2 types: negligent or fraudulent # Fradulent Misrepresentation:intentional tort – false statement made with some “guilty knowledge” of or “wilful disregard” for the truth # Negligent Misrepresentation: false statement made without due care for its accuracy, causing injury # HEDLEY BYRNE PRINCIPLE: established the principle of liability to 3rd parties for negligent misrepresentation of the representor # held that a duty of care is owed to persons that the maker of a statement could reasonably foresee may have relied upon, which caused loss # therefore, liability may exist for 3rd parties without them having a contractual or fiduciary relationship # person who makes a misstatement may be held liable for losses suffered by a wider group than those with whom he has a direct contractual or fiduciary relationship # 2 PART TEST FOR TORT LIABILITY FOR INACCURATE STATEMENTS: 1. Was it reasonably foreseeable that the defendant’s act would harm the plaintiff? (was the relationship sufficiently close?) 2. Is there any reason to limit the scope of the duty or the class of persons to whom the duty is owed? (any policy reason to limit scope of duty to make the extent of liability predictable?) # Plaintiff must prove 5 elements for negligent misrepresentation: 1. must be a duty of care: a “special relationship” must exist between representor and representee / 2. Representation must be untrue, inaccurate, misleading / 3. Representor acted negligently in making such a statement, falling below standard of care of a professional / 4. Representee relied upon the negligent misrepresentation / 5. Representor so to the representee’s detriment # Accuracy of statement – easy to prove factual statements (date/deadline/etc) # expert opinions contain value judgements and more difficult to prove wrong # inaccuracy alone is not negligence because professionals are entitled to be wrong (use their best judgement) # however, why was the error committed? # professionals must exercise skill and knowledge expected of others in the same profession / but liability may also result if professoinal undertakes task outside of the usual skill level of profession # professional code of conduct and expert testimony establish the standard, but the court may still determine that the standard for members of that professional is too low and that the conduct was still negligent # Omission: standard includes a duty to not omit essential information # partial or incomplete information can be negligence if full disclosure is required # informed consent can apply ; must tell all the risks # issue is of “reliance” and “relevance” of the information (would the plaintiff have proceeded had they known what was omitted?) # Reliance and Detriment: did the plaintiff rely and act upon the advice of the professional? # advice must have been used by the plaintiff to make the decision that triggered the loss # detrimental reliance: worsening one’s situation after acting upon false information # if plaintiff would have acted regardless of this professional advice = causation is not shown and plaintiff has no claim # ROLE OF PROFESSIONAL ORGANIZATIONS – Responsibilities and Powers: self-regulating professions; regulated by statute # have 5 main social responsibilities: 1. Set educational and entrance standards 2. Accredit educational institutions that educate the professionals prior to membership 3. Set standards of ethical conduct and professional competence 4. Hear complaints and administer discipline to members 5. Look after general welfare of the profession if there is an unfair attack # Codes of Conduct: rules of a professional organization in setting out duties and appropriate standards of behaviour of members # members must observe the code of conduct in their profession # important as shows to the public the standard of professional care required to those members and whether breached # Discipline: important responsibility of professional body is to maintain and improve standards, often including discipline of members # if a member acts unprofessionally, unethically or illegally = displine will result # most prevalent breaches are departures from standards of skill and care, but some may be illegal acts or breaches of trust # penalties may include continuing legal education to refresh practice areas, a reprimand, fine or disbarment # Conflict of Duty Towards Clients, Profession, and the Courts: a professional may be aksed to testify in court about matters affecting a client or patient # turn to court for a ruling about whether providing information is a breach of confidence # professional has a general duty to not aid or assist client in committing illegal activity but not to report a client to authorities unless serious threat to public safety # STRATEGIES OF MANAGE LEGAL RISKS: most professionals require members to carry liability insurance to protect members from unintentional wrongdoing # if the professional provides opinions to the public, make sure they have 3rd party liability insurance # use a written retainer (ie: contract) wherever possible to set out the scope of work and nature of opinions to be provided to the client # use disclaimers to exclude work not undertaken and to limit liability # describe the purpose for which the work was undertaken and limit persons who may use or rely upon the opinion to reduce risk of tort and fiduciary liability # limit scope of advice given as part of volunteer or community of work b/c neither tort or fiduciary liability depends on payment being received # professionals should use every means to reduce errors and increase knowledge by ongoing education to ensure practising at standard of their profession #
monitor for conflict of interest in taking new clients: firm should screen for conflict of interest with existing clients. have business system in place (usually software) # limit potential for fraud, deceit or breach of fiduciary duty arising from intentional behaviour: put control mechanism in place in the firm to have another professional check on the file, assistant able to view, record and check information, etc. The more eyes on a file, the less likelihood of fraudulent activity being hidden #
##CONTRACTS## REQUIREMENTS OF A CONTRACT: 1. OFFER 2. ACCEPTANCE (TOGETHER IS “CONSENSUSE”) 3. CONSIDERATION (SOMETHING IN EXCHANGE FOR SOMETHING ELSE) 4. INTENTION 5. CAPACITY 6. LEGALITY 7. WRITING (IF REQUIRED BY STATUTE # contracts are voluntary legal relationships # parties choose to make a contract with each other and only then become legally bound to comply with those terms # most interactions can be classified as a contract # Contract: a contract is a set of promises that the law will enforce. # consensus requires that an offer be accepted # what was common intention of parties when the contract formed # contract = set of rights and obligations # Nature of an Offer: no contract until an offer has been made by one party (offeror) and accepted by the other party (offeree) # Offer: a description of a promise (or set of promises) the offeror is willing to make # offeree must agree (accept those promises) # only then can contract be formed, subject to the remaining requirements # Invitation to Treatment: a mere invitation to do business is not an offer to make a contract (called an invitation to treat) # it is an invitation to the public to begin the bargaining process only, not making a completed offer # goods on display in a store is not an offer; only an invitation to potential customers to pay the requested price by using merchandising or advertising techniques to attract customers # Advertisements: generally mere invitations to the public to visit the place of business and consider their merchandise. Generally an invitation to treat # business is not expected to sell the goods to everyone who reads the ads; cannot be responsibile for all ads b/c supply is limited; could not physically comply # public policy: if an ad was always an offer it would put every business in breach of contract to all those who accepted and to those whom it could not supply goods # advertisements in some cases, be offers # courts have held that they are offers only when their wording led to this interpretation # example of ad as offer:: an add to sell a fixed # of items at a fixed $ to those who accept first; reward for return of a lost item # Communication of an Offer: Conditions for an Effective Offer: the form of an offer is not important as long as it is heard and understood # offer must be communicated to the offeree in some way: usually orally, writing, but could be an act (bidder at auction or becokoning gesture, etc) # offer must not be vague or ambiguous # offer must be capable of being accepted # Communication of an Offer: Acceptance: it is not a contract when the customer is billed for work done without their knowledge; they must receive an offer and accept it or reject it; if not there is NO CONTRACT and NO LEGAL OBLIGATION TO PAY # if goods/services are provided without a request BUT in circumstances where offer could have been rejected but a person takes a benefit from the work done = deemed to be offer and acceptance ; this was a trap for unwary consumers so consumer protection legislation enacted # Written Offers: Standard Form Contracts: Risk and Benefits – an offer presented in printed document or notice, the terms of which cannot be changed but must be accepted as is or rejected # businesses often use standard form contracts # “take it or leave it contracts” # RISKS: offeree cannot change the terms and thus there is no real element of bargaining # offeree has no bargaining power and must accept/reject on the spot # may have no alternative means to receive G&S so must accept it (airline ticket, car rental) # BENEFITS: very use in fast-paced retail situations to reduce impossible delay while every offeree re-negotiates every term of the contract # efficient and effective for businesses & customers # standardizes many situations in modern business # result of much experience and a thorough job of legal drafting which could not be done in every trxn # 3 PROTECTIONS: 1. Could be used by a government-regulated business with terms subject to govt approval 2. Consumers are protected by legislation 3. The law of contracts is applied by the courts so consumers or weaker parties are protected # Written Offers: Required Notice of Terms: a standard form contract could contain harsh or surprising terms which offeree does not suspect # court will assess whether offeree knew of the term and if she did not, court will determine whether offeror took reasonable steps to advise and what those steps were; this is a very important protection for offerees # court will ask “was sufficient and clear notice given?” – if not, the interpretation will favour offeree # Written Offers: Unusual or Unexpected Terms: unexpected or onerous terms must be brought to offeree’s attention, especially if no signed document # eg: parking lot sign states “owner is not responsible for damage to vehicle” – what about personal injury to users in the parkade? # offeree may have been given notice of usual terms but not for the unusual or unexpected # principle of law: then offeree is not bound # Lapse and Revocation of an Offer – offer may end by 1. Lapse (time period for offer ends) 2. Revocation (offer withdrawn) 3. Rejection (offer rejected by offeree) 4. Counter-offer (propose new terms) # if any of these occur, offer cannot be accepted even if the offeree is unaware of lapse # LAPSE: An offer may lapse 1. When offere fails to accept within a specified time peirod 2. When offeree fails to accept within a reasonable time (if not specified time period) 3. When either of the parties dies or becomes insane prior to acceptance # REVOCATION: offer may be revoked/withdrawn before acceptance # offer can be revoked before acceptance even if offeror promised to hold the offer open IF the offeror provided notice to the offeree (communicated to the offeree) and offer is received by the offeree # an option may be used to prevent revocation # OPTIONS: offeree may bind an offeror to keep offer open for specified period of time in 2 ways 1. Option: a contract to keep open an offer for a specified period of time or exclusive right to accept; in return for a sum of money. To exercise the option: accept the offer contained in an option 2. Irrevocable Offer: the offer itself may specify that it is irrevocable # REJECTION: offer may end in 2 ways: 1. Offeree may reject the offer if it is not favourable and the offeree does not propose new terms (does not make a counter offer) 2.Offeror or offeree may propose new terms = counter offer and negotiations continue (note*counter-offer rejects the earlier offer) # COUNTER-OFFERS: can be offers and counter-offers in business negotiations until an offer is finally accepted without modification # making a counteroffer ends the original offer and it is not revived = it is rejected # a mere inquiry into the terms offered (is this your best price?) is not a rejection; it is a discussion terms # counteroffer must also be clear and unambiguous # Elements of Acceptance: Positive and Unconditional: acceptance must be certain/unconditional # acceptance must be a positive act # conduct must refer unequivocally to the offer made (shaking hands at end of negotiations) # note* silence is not acceptance unless the parties habitually use that method and it is by agreement between the parties # Communication to the Offeror: by words or actions (usually positive words or conduct) # silence is not consent without a pre-exisiting agreement # some offers may be accepted by offeree’s conduct if that was intended by offer and not communicated to offeror # Moment of Acceptance: contract is formed the moment an offer is accepted # at that time it is legally binding # 1. Who made the offer? 2. When was it communicated? 3. When and by whom the offer was accepted? # INVITING TENDERS: it is common biz practice to either 1. Obtain Firm Offers from tenderers for a fixed quantity of G&S over a certain period or 2. Explore The Market to develop the best terms to proceed with a project later (call for RFP) # if a tender is made to obtain firm offers = the bid most fitting the offer should become the basis for the contract and 2 contracts are formed according to SCC # In exploring the market, there is NO INTENTION to form a contract upon receipt of the tenders # offer often expressly denies that contract will result with the successful bidder # perhaps becomes just a standing offer to identify terms and conditions for possible contract later # purpose of the tenders is nothing more than to identify possible suppliers, typical terms and conditions # OFFER is inviting the tenders and making a promise to consider the tender and accept the bid most compliant with specifications # the ACCEPTANCE is in the tenderer taking the time and effort to prepare and submit a bid # if the inviting party fails to consider the tenderer’s bid = it is a breach of the tender contract #