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PSU Business Tort Presentation

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The Legal Environment of Business
A Critical Thinking Approach
8th Edition
Chapter 11
The Law of Torts
Chapter Outline
• The goals of tort law- why is there a law against
• Damages available in tort cases
• Classifications of torts
• Intentional torts
• Negligent torts
• Strict liability torts
• Global dimensions of tort law
Copyright © 2017 Pearson Education, Inc.
• An injury to another’s person or property
• A civil wrong
• A Tort is a (i) harm resulting from (ii) a person’s
negligence, or lack of forethought, which results in
(iii) direct harm or injury to (iii) another person’s
person or property.
• It is important to understand that liability from a
tort is different than liability from a breach of
contract or from a criminal action.
Copyright © 2017 Pearson Education, Inc.
Goals of Tort Law
• Compensate innocent persons who are injured or whose
property is injured as a result of another’s conduct –
compensation is usually made with money.
• Discourage private retaliation by injured persons and their
friends (problems with private feud).
• Promote a just society by forcing responsible parties to pay
for the injuries they caused – distributing risk or
redistributing risk to the appropriate parties).
• Deter future wrongs
Copyright © 2017 Pearson Education, Inc.
Classification of Torts
Copyright © 2017 Pearson Education, Inc.
Intentional Torts
• Involves purposeful action that the defendant
knew, or should have known, would harm the
person, property, or economic interests of the
plaintiff. Q: When should a person know or should
know of an impending harm or risk?
• Categories
– Torts against persons
– Torts against property
– Torts against economic interests
Copyright © 2017 Pearson Education, Inc.
Classifications of Intentional Torts
Copyright © 2017 Pearson Education, Inc.
Intentional Torts: a tort which was initiated by
an intentional act and harm resulted
• Assault, placing another person in fear or apprehension
of an immediate or offensive bodily contact.
– Point a gun at a person
– Trying to slap a person
– Was there contact? Was there offensive bodily
contact? Incidental contact in the subway or on the
bus? Sports activity?
– A threat to commit bodily harm?
– Q: when can an employer or employee commit an
assault? Security guard? Office disagreement?
Copyright © 2017 Pearson Education, Inc.
Assault and Battery

Battery: Intentional, unwanted, and offensive bodily contact
Hitting someone, pulling a chair from out from under someone?

Defenses: Actions to defend oneself are protected under law.

Self-defense, justifiable use of force to defense your person; the use of force
must be apportionate.

Defense of another, justifiable use of force to defense another person
Defense of property, justifiable use of force to defend your property, or the
property of another.
▪ Q: When is force justifiable? When, if ever is deadly force justifable?
▪ Can an employer, employee, or independent contractor commit battery?
▪ Q: based upon your knowledge of assault and battery, explain
how a company human resources policy should be adjusted to
prevent this tort? Company policy on workplace violence,
harassment, and verbal abuse?
Copyright © 2017 Pearson Education, Inc.

Intentional publication, or communication to a third party, of a false
statement that is harmful to person’s reputation
Libel: Publication of a defamatory statement in permanent form//
harder to retract/ long statue of limitations (2 years)

Statute of limitations is the time period this cause of action lasts.
Slander: Spoken defamatory statement
– Slander per se – Statement is so obviously harmful that proof of
special damages is not required ( 1 year statute of limitations).
– What is the difference between libel and slander?
Copyright © 2017 Pearson Education, Inc.
Defamation: Employer Based

Some statements are defamation per se or without further proof:
– i.
one has committed improprieties in the performance of his or
her profession.
– ii.
Has committed an illegal act without proof, committed an
unethical act without proof
– iii.
One has a lothesome disease
– Other types of defamation: false misstatements of fact which reflect badly upon
an employee, (i.e. stating employee was always absent when in fact the
employee was always present at work). A false misstatement of fact that is
injurious to reputation is defamation.
– Generally statements of opinion are not defamation if without malice or intent to
harm): he is a “lousy accountant,” “ he is an average doctor,” these are
statements of opinion, which are difficult to proof as defamation.
Copyright © 2017 Pearson Education, Inc.
Privacy Torts
Copyright © 2017 Pearson Education, Inc.
Torts Against Privacy (Con’t)

False Light: by actions place facts in a false content, placing a personal photo in a
context that embarrasses or misleads. Personal photo in a book about drug trade or
prostitution. See Movie, Borat, placing people in a false light, ordinary people held up
for ridicule. See current lawsuit of ex spouse against actor Johnny Depp.
Can an employer place the actions of an employee is a FALSE LIGHT?
Can an Employer place of the actions of an employee in a false light?
Public disclosure of private facts: disclosure of health record, personal records, or
personal private information. Employer’s policy of HR disclosure, employment records,
personnel record?
Appropriation: using name without permission or likeness without permission, photo
on cereal box. Employer use of employee Identity?
Q: What do businesses need to do to prevent this?
Copyright © 2017 Pearson Education, Inc.
Defamation – Defenses

Truth: truth is an absolute defense but remember the burden of proof is on the person
making the statement and the burden of proof is high: clear and convincing evidence
(not preponderance of evidence which is the standard to establish a breach of contract)
PrivilegeS (some statements are protected by law regardless if these later to shown to
be false).

Absolute privilege: Right to make any statement, true or false, about someone
and not be held liable for defamation (i.e. public legislative proceedings).
Conditional (qualified) privilege: Right to make a false statement about someone
and not be held liable for defamation provided the statement was made without
hatred or malice (law suit).
The Employer is also given a conditional privilege in order to encourage a candid
reference, and can comment unless employer makes a knowingly false statement with
malice. Why? But still must not make statement or put employee is a false light or
disclose personal information).
Q: What type of recommendation policy should an employer give? Develop a
company referral or recommendation or employment check policy.
Copyright © 2017 Pearson Education, Inc.
False Imprisonment and Intentional
Infliction of Emotional Distress

False imprisonment – Intentional restraint or confinement of a person
against that person’s will and without justification; false retention of a
customer by a shop-owner or “shopkeeper’s privilege” = merchant has
reason to believe shoplifted has occurred and retain person on
premises until police arrive. = detention for a reasonable period of
Note: however, person cannot be detained beyond what is reasonable.
Intentional infliction of emotional distress
– Intentionally (negligence alone can also be an element) engaging
in outrageous conduct that is likely to cause extreme emotional
pain to the person toward whom the conduct is directed.
– Funeral Parlor drops caskets and the body spills into full view.
Copyright © 2017 Pearson Education, Inc.
Intentional Torts against Property

Trespass to realty or trespass to real property

Intentionally entering the land of another
Causing an object to be placed on the land of another without due permission, not
leaving after being told. Ex: going into the backroom of a business without
permission. Refusing to leave when asked.
Trespass to personalty

Intentionally exercising dominion and control over another’s personal property,
taking the car of a person or the company out for a ride without permission.

Intentional permanent removal of property from the rightful owner’s possession and
control, taking a car for a ride which is then totaled in the ride. Taking office
equipment out of the office for personal use and then not returning.
Q: how could any of these be a business tort committed by a business, employer,
employee, or customer?
Copyright © 2017 Pearson Education, Inc.
Intentional Torts against Economic

Disparagement: Intentionally defaming a business product or service,
knowingly false statements about product, ownership, or servcing.

Elements to be proved by the plaintiff
▪ Defendant knowingly made a false statement of a material fact about
the plaintiff’s business, product, or service
▪ Publication = communication to a third party
▪ Damage to the reputation of the business, product or service
▪ Actual economic loss = can be difficult to prove, problem is
speculative damages.
▪ i.e statement saying meat in this product is made from “mad cows”
what is made as knowingly false? Ex. Food disparagement, a tort in
knowingly making false statements which are damaging to a food
product. So-called “veggie libel.”
▪ (Q:How is disparagement different from defamation?)
Copyright © 2017 Pearson Education, Inc.
Intentional Torts against Economic

Intentional interference with a contract

One person had a valid contract, Defendant third party knew about it and knowingly and
successfully taking action to entice a second party to breach a valid contract with the
plaintiff, second party breaks contract: there is a tortious interference with a contract of a
competitor or with a related party by the Defendant.
See recruiters and employment contracts. R knew about existing contract, took actions
to have employee break it (told it would increase pay 2x), employee broke the contract,
and the employer suffered harm. Or see former supplier interfering with a former buyer’s
customers in order to win or capture the buyer’s customer as his own “new customer.” .
Unfair competition: Entering into business for the sole purpose of causing a loss of business
to another firm. Ex: Family member starts a new business in order to drive his “evil” family
member out of business.
Misappropriation: Use of an unsolicited idea for a product, service, or marketing method
without compensating the originator of the idea. Intern presents an idea at a job interview with
the firm, the firm uses the idea for profit without telling or compensating intern (difficult to
Copyright © 2017 Pearson Education, Inc.
Problems in Tort # 1

Karen writes Bob a long letter in which she falsely accuses him of
stealing her bike. Bob is outraged because no one ever questioned
his character in that way before. He is so mad that he shows the
letter to several colleagues as well as to his boss.
A few weeks later he applies for a promotion and is turned down.
When he askes his boss why he is not given the promotion his boss
very reluctantly says that a number of people were concerned about
Bob’s integrity in light of the recent accusations about his
involvement in a bicycle theft.
Can Bob sue Karen for defamation and intentional infliction of
emotional distress. Why will he succeed or fail on each claim?
Copyright © 2017 Pearson Education, Inc.
Problems in Tort # 2

Action Advertising hired Alice Jones as an account executive. She
signed an employment contract under which she agreed to work for
the agency for a one year term for an annual salary of 30,000 SAR.
After the manager of Creative Ads saw an exceptional set of ads that
Jones created, he called Alice asking her whether she would be
interested in changing jobs. When Jones explained that she was
bound by contract for six months, the manager said that the contract
was unenforceable and further offered to double her salary is she
came to work for him because he did not believe that she was being
paid what she was worth.
If Jones quits and goes to work for Creative Ads, is there a tort? If so,
what would the remedy be? If not, why not?
Copyright © 2017 Pearson Education, Inc.
Negligent Torts

Negligence: Failure of a business party to live up to the standard of care that
a reasonable person would meet to protect others from an unreasonable risk
Plaintiff must establish:

(1) Duty
▪ Standard of care that the defendant owes the plaintiff
▪ Reasonable person standard

(2) Breach of duty
▪ Defendant’s conduct was not consistent with the specified duty
(3) Causation
▪ Actual cause – Determines if the defendant’s conduct resulted in the
plaintiff’s injury
▪ Proximate cause – Determines if the plaintiff and the type of injury
incurred by the plaintiff were foreseeable
Copyright © 2017 Pearson Education, Inc.
Negligent Torts
– (4) Damages

Defendant’s action must have resulted in some harm to the plaintiff for which
the plaintiff can be compensated

Rule: Businesses must warn customers about potential risks on the premises
on the business, otherwise the business is negligent. Ex: business stores
lumber and other storage on the front porch of the business and marks its with
yellow construction tape, customer still trips over it, customer has been injured
by negligence of business. (See “trip and fall” accidents).

Q: are business liable for the damages caused by the products they sell?
The Formula for a tort is:
Existence of a duty
Breach of duty
Defendant’s caused this breach of duty
Damages to the plaintiff or first person
Copyright © 2017 Pearson Education, Inc.
Doctrines that Apply to Negligent Tort

Res Ipsa Loquitur: (“The Thing (or harm) speaks for itself”).

The defendant’s negligence was the cause of the plaintiff’s harm
-Plaintiff must prove harm would not occur in the absence of negligence
-The negligence is within the scope of the defendant’s duty (Doctor leaving
a medical sponge in patient’s body after surgery). ( a piece of furniture (i.e.
piano) falls out of the window or off the lever and lands on an
unsuspecting pedestrian below).

Negligence Per Se: Legal doctrine
-When a defendant violates a statute preventing a harm
-Proof of the violation is considered proof of negligence
(Violation of a public housing statute is per se violation of a breach of contract).
(hobby store sells glue to minors when it is illegal to sell glue to minors for health
reasons). (Proof of sale of glue is proof of negligence).
Copyright © 2017 Pearson Education, Inc.
Defenses to Negligence

Contributory negligence: Proving that the plaintiff or first party did not
exercise the ordinary degree of care to protect against an
unreasonable risk of harm
– Lack of self-preservation resulted in the plaintiff’s harm, (is this
fair? If it can be shown that the plaintiff was partially at fault,
should the plaintiff be prevented from any recovery?)
– Response: even if plaintiff contributed to his or her own
negligence, did the defendant has the ‘last chance” to avoid the
Comparative negligence: Allocates recovery based on percentage of
fault allocated to plaintiff and defendant but plaintiff can only recover if
defendant is more than fifty percent negligent.
Copyright © 2017 Pearson Education, Inc.
Defenses to Negligence
– Pure comparative negligence – Court determines the percentage
of damages for which defendant is liable
– Modified comparative negligence – Defendant must be more than
50 percent at fault for plaintiff to recover

Assumption of the risk: Defendant must show that the plaintiff
voluntarily and unreasonably encountered a known risk
– Must establish that the harm suffered was the result of a risk
taken; plaintiff declined to wear safety glasses when working
around machines and therefore assumed the risk that his or her
eyes might be injured in an accident. (pieces of a grinding stone
fly off and hit plaintiff in an unprotected eye).
Copyright © 2017 Pearson Education, Inc.
Problems in Tort # 3

Madeline enters into a contract with Canyon Canoes to go on a
weeklong canoe trip down a river. The contract states that, although
the firm provided experienced guides and high quality equipment,
they are not insurers of the adventurer’s safety. The firm states that
it cannot be responsible for harm resulting form ordinary damages of
outdoor activities.
Madeline is injured when the Coleman gas stove she was provided
with explodes. The explosion was caused by an inadequate repair
that had been made by Canyon Canoes.
The company raise the defense of assumption of the risk when she
sues it for negligence. Did not the company tell Madeline ahead of
time that it was not responsible for possible future harm? Is this a
valid defense? Why or why not?
Copyright © 2017 Pearson Education, Inc.
Strict Liability Torts

Defendant is engaged in an activity that is so inherently
dangerous that no amount of due care can make it safe and that
any resulting harm from this activity is itself that fault of the
– Defendant is held strictly liable for any damages caused by
engaging in such activities. A quarry using blasting
explosives or a construction company using explosives to
demolish a building. Serving food which can be poisonous
(Japanese blow fish). Operating a bungie jump or sky diving
– Transportation of dangerous chemicals, keeping of zoo
animals or a dangerous animal or dog.
Copyright © 2017 Pearson Education, Inc.
Table 11.1 – Types of Tort Damages
Copyright © 2017 Pearson Education, Inc.
Global Dimensions of Tort Law
• Extent to which a U.S. judgment will be enforced in a
foreign nation depends on that nation’s laws
• U.S judgements are not accepted globally; the damages
paid in a tort claim vary significantly from country to
– A German federal court and an English court have
refused to award U.S. punitive damages. Some
countries decline to award punitive damages. Why?
• Business managers will have to become increasingly
familiar with the policies of foreign courts
Copyright © 2017 Pearson Education, Inc.
Objectives Covered
• The goals of tort law
• Damages available in tort cases
• Classifications of torts
• Intentional torts
• Negligent torts
• Strict liability torts
• Global dimensions of tort law
Copyright © 2017 Pearson Education, Inc.
Business Tort # 5
Business Tort # 5
Abdullah and Awan share the same office and have worked at the same
company for several years. Each is polite to one another but Abdullah over the
years believes that Awan has not been a good work colleague. He often avoid
everyday conversation and does not volunteer to attend company events.
Abdullah has on several occasions invited Awan over to his house to share his
hospitality, but Awan always declines. At this annual review, the boos asked
Abdullah how he like his work, and Abdullah responded “fine, but I think there
are some people here who just don’t want to get alone.” The boss more what he
meant? Abdullah responded, “Awan” he always thinks he is better than others
and he does socialize with others, in fact I think he is a quiet trouble maker.” The
boss later in his annual review evaluated Awan and wrote into his file, based
upon his conversation with Abdullah, “Awan is a problem. .. He just doesn’t
want to be a team player.”
Question: Does Awan have a reason to complain about his evaluation? Is his
complaint to be against Abdullah or the boss?

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