Torts, Negligence And Product Liability Chapter 7 (2ed)

Torts, Negligence and Product Liability

Torts TORT: any wrongdoing for which an action for damages may be brought Examples: • Negligence, • product liability, • Deceit • Interference with Contractual Relations • Passing Off • Nuisance • Injurious Falsehood • Defamation • Assault and Battery

Negligence Negligence is a careless act or omission that causes harm to another and for which the law entitles the injured party to compensation. Examples: • •

failing to provide adequate warnings about dangers in a product giving negligent professional advice such as in the case of an accountant, doctor, engineer, architect or lawyer • injuries caused to a plaintiff by the careless driving of the defendant's delivery driver • in the case of bar owners, serving alcohol to intoxicated persons who later injurethemselves or others due to their state of drunkenness • failing to make sure that an employee gets home safely after a company officeparty where alcohol was served

Proving Negligence Must prove three things in a negligence action – Duty of care – The Standard of Care – Causation The Standard of Proof – is a measure of degree to which these three things must be proven

Duty of Care 1) It must have been reasonably foreseeable that the plaintiff could have been injured by the defendants conduct A plaintiff is foreseeable if he was in the zone of danger created by the defendant. 2) There must not be any compelling policy reasons for refusing to impose a duty of care.

Standard of Care In order to be held liable for negligence the conduct of the defendant must fall below a standard of care. The standard of care that the defendant must exercise towards the plaintiff is that of a reasonable person in the same or similar circumstances. The reasonable person test is an objective test. Professionals such as doctors, surgeons, dentists, accountants, engineers and lawyers are held to a higher standard of care known as a specialized standard of care. This is the standard of a reasonable professional with that type of specialized training. Other factors to consider in determining whether the defendant breached the standard of care include: • Violation of a statute creates a arguable presumption of negligence • Custom in the community • The emergency doctrine. This holds the defendant to lower standard of care because an emergency required him to act in the manner that he did in order to avoid a greater harm from occurring.

Causation The plaintiff must prove that the defendants carelessness caused the plaintiff to suffer some damage. Canadian courts use the "but for" test in determining causation. This test requires the court to ask the question "But for the defendants actions, would the plaintiffs harm have occurred? "Exceptions: 1. The court may refuse to apply the "but for" test if it would lead to an unfair result and deny the plaintiff a remedy. For example, if there were several causes which could have caused the plaintiffs damage, then the plaintiff only has to prove that the defendants carelessness was a material cause of the damage, not the only cause. This is similar to the substantial factor test used by courts in the United States. 2. Res Ipsa Loquitur. (Latin for "the thing speaks for itself) This doctrine makes an inference of liability because the thing that caused the accident was in the exclusive control of the defendant. In other words, it could not have been be anyone but the defendant who caused the harm.

Standard of Proof • The plaintiff has to prove all of the elements of the tort of negligence on what is called a balance of probabilities. • This means he has to prove that there was a greater than 50% chance that the defendant's carelessness caused the plaintiffs loss. • If the evidence of both sides is found to be equally believable by the trier of fact (i.e. the judge or jury), then the plaintiff will lose.

Defenses to Negligence – Remoteness – Intervening Act – Contributory Negligence – Voluntary Assumption of Risk (Volenti) – Joint and Several Liability – Vicarious Liability

Remoteness Even if the plaintiff can prove the three elements discussed above, if the loss suffered by the plaintiff was too remote to result from the defendant's careless conduct, then the defendant will not beheld liable in negligence. The courts look at whether the type of harm that the plaintiff suffered was a reasonably foreseeable result of the defendant's carelessness. If the loss was unforeseeable, then defendant will not held liable.

Intervening Act an event which happens after the defendants negligence that worsens the plaintiff's damages. In general liability is restricted to damages caused directly by the negligence and not indirectly through other acts not readily foreseen.

Contributory Negligence If the plaintiff's damage has been caused partly by his own carelessness and partly the defendant's, then the plaintiffs damage award will be reduced in proportion to the plaintiffs own negligence. The defendant must prove the plaintiff was negligent using the negligence tests above.

Voluntary Assumption of Risk If plaintiff knew the risk and voluntarily assumed the risk by engaging inthe activity then defendant will have no liability. If a plaintiff signed an exclusion clause, the defendant may be able to prove volenti. However, the party seeking to rely upon the clause must show that they brought it to the attention of the customer.

Joint and Several Liability If different defendants cause a single injury, they will be held jointly and severally liable. This means that the plaintiff can choose to collect all of his damages from one defendant, or some of his damages from each defendant, regardless of how the court apportioned liability. The defendant or defendants that pay the plaintiff, will then have to demand reimbursement from the other defendants that were held liable, in proportion to the amount that the court found those other defendants at fault. For example, if the roof of a building caves in causing you personal injury, and the court finds that the architect was 10at fault for design error, the project manager was 20% at fault for failing to property supervise and the roofing contractor was 70% at fault for construction error, you can choose to collect all of your damages from the architect even though he was only 10% at fault. The architect would then have to try and recover his money from the other defendants in proportion to their liability. But if one of those defendant's is bankrupt, then he may not be able to recover all of his money.

Vicarious Liability This doctrine holds an employer liable for torts of their employees committed in the course of employment.

Product Liability Under the tort of negligence, this is the liability of a manufacturer/service provider for negligently made or provided goods or services that cause harm (injury, death, damage) to another . Manufacturers owe a duty to consumers of their products to see to it that there are no defects in manufacture which are likely to give rise to injury in the ordinary course of use.

Typical Product Defects • component, manufacturing process, or design problem that failed to meet product standards • failure to do quality control on product prior to release • failure to test product adequately • failure to provide warnings or proper user safety instructions • failure to develop product with minimal risk for usage

Liability – Contract or Tort Liability can be based either in contract or in tort. For example, when you purchase a product where you have a contract with the seller, you may be entitled to sue for breach of contract for defects in that product. If, however, the contract contains an exclusion clause limiting or exempting the seller from liability, you may have to sue under the tort of negligence. Similarly, if you are not the purchaser, but merely a consumer having no contract with the seller, you would have to sue under negligence.

Failure to Warn Perhaps the most difficult area for manufacturers is the nature and extent of the warnings they have to give. The nature and scope of the manufacturer's duty to warn varies with the level of danger entailed by the ordinary use of the product.

Strict Liability where liability is imposed without proof of negligence i.e. if you produced it, sold it, serviced it, you are liable a no-fault based standard of liability

Strict Liability versus Negligence • E.U. and many U.S. states use strict liability standards in product liability cases, although E.U. allows “state of art” and “development risk” defences • Canada uses negligence standard – if manufacturer followed reasonable standard of care in design, manufacturing, packaging, labeling, and marketing of product, then not liable even if product defective

Other Business Torts • • • • • • •

Deceit Interference with Contractual Relations Passing Off Nuisance Injurious Falsehood Defamation Assault and Battery

Deceit Deceit is fraudulent misrepresentation that induces another to enter into a contract. In order for the defendant to be found liable, the plaintiff must prove that: i) the defendant made a false statement, ii) the defendant knew about the statement, iii) the defendant intended to mislead the plaintiff and iv) the plaintiff suffered a loss as a result of reasonably relying on the defendants statement. If these four elements are present then the plaintiff can recover damages in tort and be released from his contract with the defendant.

Interference with Contractual Relations This occurs when the defendant induces the plaintiff to breach a contract that the plaintiff has with another party. The most common example of this is where a defendant poaches the plaintiffs employee. However, it applies to any contractual relationship.

Passing Off This occurs when the defendant represents another person's products or services as his own.

Nuisance The tort of nuisance occurs when the defendant engages in an activity that unreasonably interferes with the neighbours use and enjoyment of his land." It does not have to be intentional. Below are some examples of nuisance: • A factory that emits toxic chemicals that drift over to the plaintiffs farm and destroys the crops • Loud music from a club that disturbs residents in the neighbourhood • Cooking smells from a next door restaurant • Running a foul smelling pig farm in a residential area

Injurious Falsehood This occurs when the defendant makes a false statement about the goods or services produced by someone else that is harmful to the reputation of those goods or services. Lawsuits under the tort of injurious falsehood usually occur in situations of negative or comparative advertising. In order to succeed in an action for injurious falsehood, the plaintiff must prove that the defendant made a false statement about the plaintiffs goods or service with malice or other improper motive.

Defamation Defamation is the public utterance of a false statement of fact or opinion that harms another's reputation. Where the statement is made orally, it is called slander. If it is made in writing, then it is called libel.

Assault and Battery People often confuse these two torts because they are often joined together in the same claim, although they are two different torts. Assault occurs when the defendant intentionally causes the plaintiff to reasonably believe that offensive bodily contact is imminent.' He does not have to actually come in physical contact with the plaintiff. It is enough that there is a threat of imminent physical harm. For example, raising your fist to someone would be an act of assault. Battery on the other is the actual offensive bodily contact. For example, actually following through with your fist and hitting someone.

Damages in Tort • General Damages – compensate for pain, loss and enjoyment of life, and loss of life expectancy • Pecuniary Damages – compensate for loss of future income, costs of future care and other expenses • Punitive Damages – awarded to punish defendant where defendant has acted in a seriously “malicious” manner • Aggravated Damages – awarded to compensate the plaintiff for distress and humiliation caused by a defendant's reprehensible conduct.

Impact on International Business product liability costs can be high U.S.: - most problematic country why? - contingency fees, strict liability, juried trials, punitive/treble damages, many states have no cap on damages E.U.: - “strict liability”, damages capped Canada: - more restricted and sensible judicial trials, limited contingency fees limited use of punitive damages and $ 1 M cap Japan - liability very difficult to prove - system supports manufacturers

Liability Insurance Liability insurance is an insurance policy whereby the insurance company agrees to pay damages on behalf of a person that incurs liability, up to the monetary limits stated in the policy. It includes a duty to defend, which means that the insurance company has to pay your legal expenses in defending the lawsuit. Appropriate liability insurance is an important part of risk management for businesses.