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Torts Exam Checklist

1. Vicarious Liability: D is responsible for tort committed by someone else


a. Respondiat Superior- ER is responsible for torts committed by and EE
while EE was acting within the “course and scope of employment”.
i. Control Theory: bases liability on the ER’s right to control and direct the
activities of the EE. Looks to what EE was doing and asks if it was part of
EE’s job. Acts need to be so connected to justify required that ER bear
that loss. EE has control over the physical details of the work.
ii. Enterprise/Benefit Theory: bases liability on the benefit to the ER’s
enterprise provided by the EE’s conduct. Looks to the purpose of the EE’s
activity. Preventative polices by management are no bar to VL.
b. Scope and Course of Employment: RS only applies if EE was
acting.
c. “Going and Coming Rule”: If accident on the way to work, not in scope
of employment. If returning home after work, courts are divided. Exception if trip
involves an incidental benefit to ER (express or implied). Exception if travel to
the place of work creates a special hazard or contains special risks.
d. Frolic: when EE departs from course and scope of employment to a significant
degrees in pursuit of the EE’s own interests. Bars VL to ER.
e. Detour: less serious deviation from course and scope of employment, esp if
deviation was “reasonably foreseeable”. Allows VL to ER.
f. “Borrowed Servant” Doctrine: services of an EE may be loaned to
another ER. If that ER is not in control of the EE, EE may be the new ER’s
“borrowed servant”
g. Indpt Contractor- ER is NOT VL. Based on extent of control which the
boss exercises over details or work OR if the individual is engaged in a distinct
occupation or business. RS doesn’t apply b/c principal isn’t in position to control
manner in which the indpt contractor performs work. Negligent hiring isn’t VL, it is
direct liaiblyt.
i. EXCEPTIONS: principal is VL to indpt contractor if—intrinsically
dangerous work, principal has a duty by law or K, nuisance, probable injury
w/o precaution, illegal act ((think of exceptions as non-delegable duties.
Principle can’t avoid liability by contracting out work))
h. Intentional Torts: ER is VL for intentional torts of EE if: tort is within scope
of the employment and in furtherance of the ER’s business and the tort was
foreseeable in view of the nature of the employment. If EE commits an
intentional tort w/dual purpose of furthering ER’s interest and vending personal
anger, RS may lie. If the EE acts purely in his own interests, no RS VL. Test is not
EE’s motive but if the act was within scope of the duties of employment.
i. Punitive Damages: only if some form of malice by the D (wrongdoing was
intentional and deliberate).
j. Joint Enterprise: are VL for torts committed by other members of group.
i. Elements: an agreement among the members of the group; common
purpose; community of (pecuniary?) interest in that purpose, equal right of
control in the enterprise.
k. Joint ventures: explicitly a business or profit making association; more
limited purpose
i. Elements: same as joint enterprise
l. “Social Joint Enterprises”- began with car trips. Recently, limiting
doctrine by requiring a shared pecuniary interest.

2. Strict Liability: liability without fault, even if all possible care is used
a. Animals-possessors of animals are SL for harm caused by the trespass of their
animal’s on other’s property. Exception is dogs & cats.
b. Coase theorem: if assignments were clear and parties could costlessly
negotiate, the efficient result would occur no matter how the law assigned rights
and responsibility for damages.
c. Domesticated Animals: possessor is not SL for harm (other than for
trespass) UNLESS possessor knew the animal had a dangerous propensity (if the
owner knew or should have know—actual knowledge isn’t required) and that
dangerous propensity was the cause of the harm.
d. Wild Animals (not customarily domesticated in the region): possessors are SL
for all harm done by the animal as a result of the dangerous characteristic of the
animal
e. Abnormally Dangerous Activities: one who carries on an abnormally
dangerous activity is subject to SL for harm to the person, land or chattels of
another resulting from the activity, even if he exercised utmost care to prevent
the injury.
f. SL is limited to the kind of harm. Contributory negligence by P will
not bar SL recover.
g. Assumption of risk is a defense to SL if P knowingly and
voluntarily subjects herself to danger
h. Factors to consider: high dress of risk, likelihood harm will be great,
inability to eliminate risk using due care, activity is not a matter of common
usage, activity is inappropriate in the locality, social value of the activity
i. Typical examples: nuclear reactor, use or storage of explosives, crop
dusting, airplane accidents

3. Products Liability: 3 theories of recovery- negligence, breach of warranty,


strict products liability
a. Negligence- one who negligent manufactures a product is liable for any PI
proximately caused by his neg. If P is a bystander, he can recover if he was a
“foreseeable P”
i. Thing of danger- the nature of a thing is such that it is reasonable
certain to place life and limb in peril when negligently made.
ii. Usually occurs through: negligence in manufacturing the product,
negligence in inspecting or testing the product, negligence in advertising
or sale of product (failure to warn)
iii. Public Policy- even w/no negligence, policy demands responsibility
where it would “reduce the hazards to life and heath in defective products
that reach the market”
b. Breach of Warranty: an express or implied representation about the
quality or attributes of a product. If the product doesn’t live up to these
representations and loss results, can have a breach of warranty claim.
Limitations include the UCC requirement of prompt notice of the breach, buyer
must have relied on the warranty. Defenses include disclaimers and limitation of
consequential damages.
3 types of warranties under the UCC
i. Express Warranty (UCC § 2-313)- seller says that her goods have
certain qualities and goods don’t have these qualities. Arises from
statement of fact, description of goods, or use of a sample or model.
ii. Implied Warranty of Merchantability (UCC § 2-314)- implied if
the seller is a merchant w/respect to goods of that kind (need facts that
suggest buyer is telling the seller of the problem and the seller is saying
that one time will be good). Goods must be fit for the ordinary purpose
that goods are used. Seller must be in that business and regularly sell the
kind of goods in question. Factors: fair and average quality, fit for ordinary
purpose, equal in kind and quality if in different units, adequate contained
and packed and labeled, must pass trade standard w/o objection under K
description.
iii. Implied Warranty of Fitness (UCC § 2-315)- at time of sale, sellers
purpose for which buyer intends to use produce, buyer relies upon seller’s
skill or judgment to selection suitable good. Seller relies on seller’s
judgment and seller knows buyer wants goods for particular purpose.
c. Strict Products Liability: seller of a product is liable w/o fault for PI
caused by product if product is sold in defective condition. Once defect is when,
seller is liable even if he used all possible care and even though the P did not buy
the product form or have any contractual relationship with the seller. Defect must
be the actual and proximate cause of the harm to P.
i. R2T 402A: One who sells any product in a defective condition
unreasonably dangerous to the user or consumer or to his
property is subject to liability for physical harm thereby caused to the
ultimate user or consumer, or to his property, if: (1) the sellers is engaged
in the business of selling such a product and (2) is expected to and
does reach the user w/o substantial change in the condition in which it is
sold.
1. Comment G-- Meaning of Defective Condition: when it
leaves the sellers hands, it’s in a condition that is
unreasonably dangerous to the ultimate consumer.
a. Types of Defects under R3T:
i. Manufacturing defects- a flaw in construction
that cases product to depart from its intended
design, even though everything was done to prevent
it.
1. Elements: identify the flaw in the product,
prove the flaw caused the harm, trace
existence of flaw to the time of the sale,
negate other sources of the flaw
ii. Design defects- product’s very design renders it
dangerous and unsafe when the foreseeable risk of
harm could have been avoided by an alternative
reasonable design by the manufacturer. Two tests:
1. Consumer contemplation (Expectation
test): if its dangerous to an extent beyond
what would be expected by the ordinary
consumer. Problems with this test if danger is
obvious or warning is given or the the overall
benefits are huge
2. Risk-utility Test: balances dangers and
benefits of product design. Test to use.
Factors: utility, likelihood and severity of
harm, availability of substitute products,
manufacturers ability to design out danger,
user’s ability to avoid harm by using carefully,
user’s awareness of danger, manufactures
ability to spread the loss.
iii. Warning defects- failure to inform user of
potential dangers that make product dangerously
unsafe (no instructions or warnings)
2. Comment I-- Meaning of “Unreasonably Dangerous”:
consider the utility of the product and the risk involved in its use.
Must show there was a safer design that could have been used,
that design is necessary but not sufficient, and the absence of
alternative design is fatal to the claim.
3. Comment J-- Failure to Warn
a. Failure to Warn Standard: the manufacturer knew or
should have known about the hazard –AND- failed to take
precautions in marketing the product to warn users or
consumers about the hazer. So, the manufacturer must
discover the hazard and the warning must be adequate to
inform the public about the danger.
b. Triggering the Duty to Warn: just warning will not
protect you. If the danger is obvious or well known to the
public, no duty to warn. Warnings are required for hidden
dangers (ie: possible allergic reactions). Required where
necessary for the safe and proper use of the product.
Necessary for prescription drugs. Must be measured
according to whatever knowledge and understanding.
c. Read and Heed: P is given benefit of a presumption that
a proper warning would have been followed and accident
would have been avoided. Presumption is rebuttable by
showing P ignored other warnings.
d. Adequacy of Warning: must be available to the actual
user, understandable to the actual user, sufficiently
prominent to attract user’s notice, sufficiently urgent given
the gravity of the risk.
4. Comment K-- Unavoidably unsafe products (prescription
drugs)
a. If products are sold by a seller after being property prepared
and marketed and proper warning is given, the seller is not
SL b/c he was trying to help public with an apparently useful
and desirable product. ((but there has to be proper warning
to not be SL))
b. Prescription Drugs under R3T: it is defective if at the
time of sale or distribution, the drug contains a
manufacturing defect, is not reasonably safe due to
defective designs, or is not reasonably safe due to
inadequate instructions or warnings
5. Comment N-- Contributory Negligence isn’t a Defense
for P: no defense when such negligence is merely in a failure to
discover the defect in the product or to guard against the
possibility of its existence. If the user or consumer discovers the
defect and is aware of the danger and nevertheless proceeds
unreasonably to make use of the product and is injured by it, he is
barred from recovery.
ii. Liability for Non-manufactured/Used Goods- SL applies to
product’s manufacturer and its retailer and any other person in the
distributive train who sells products.
1. Under R3T, Seller of Used Product is liable when:
negligent; for a manufacturing defect if marketing would lead
consumer to expect product was safe as new; where seller
remanufactures the product; product violates a safety state or
regulation applicable to used product
2. Considerations: goal of compensation; goal of loss spreading;
ability to pressure manufacturer to improve safety; ability to take
steps to assure greater safety; ability of the innocent seller to
obtain indemnity from manufacturer.
iii. Liability on Commercial Lessors (Retailers and Wholesalers)
1. All sellers in direct chain of marketing from manufacture to
consumer can be liable for injuries caused by defective products.
This is true even if the intermediate sellers had no responsibility for
the defect, as where the goods are simply put on the shelf and sold
without inspection or alteration.
2. A transaction for professional services is not subject to strict
liability, even though the professional may incidentally make use of
products in rendering the service. A transaction that is essentially
the sale of a product with some service component (e.g.,
installation of the product) will be subject to strict liability if the
product is defective.

iv. Types of Loss


1. Economic- damages resulting from product failures are more
adequately covered by laws of K and warranty, not tort. Includes
the product of not performance (not lost wages, drs bills
v. Defenses b/c of P’s behavior
1. Contributory Negligence is not a defense
2. Assumption of Risk is a complete bar. If the user consumer
discovers the defect and is aware of the danger, and proceeds
unreasonably anyways to make use of the product and is injured by
it, he is barred from recovery.
3. Comparative Negligence- extended to actions founded on
strict products liability
4. Unforeseeable Misuse of Product (Comment H of R2T 420A)-
a product is not defective if it is safe for normal use. The
unforeseeable misuse leading to injury doesn’t result in SL b/c the
product is not defective.
5. Foreseeable Misuse of Product: imposes a duty on the
manufacturer to protect the user. The manufacturer may have a
duty to design the product to avoid harm from the misuse.
6. Sum it all up: P’s conduct may be relevant to any of the
following issues… keep it distinct by a good analysis:
a. Duty/Breach- was the product defect?
b. Proximate cause: was the conduct of P so unforeseeable as
to excuse D from liability
c. Affirmative Defenses: Should the lack of care of P reduce or
bar recovery

4. Nuisance: favored by cts b/c it’s flexible. You don’t necessarily have the
right to use your property however you want b/c your neighbor also has
rights (balancing act)
a. Private: some thing or activity that interferes substantially and unreasonably
with a possessor’s use and enjoyment of his land. Between two private parties.
i. Examples: usually the interference is b/c of a non-trespassory invasion
(smells, light, smoke, dust, noise, pollution)
ii. P must show: liability producing conduct (intentional interference with
P’s rights, negligence, or abnormally dangerous activy or other conduct
giving rise to strict liability—it’s easy to show intent) resulting in
interference with the use and enjoyment of P’s land that is substantial
(more than a trifle) and unreasonable.
iii. Factors to consider in balancing interests of neighbors : the
amount of harm caused by the activity, the capacity of each party to bear
the harm and shift the loss, the nature of the clashing land uses, the
nature of the locality, which activity has priority in time, unreasonable
invasion, unlawful or unreasonable manner of operating business
iv. Remedies: temporary damages, permanent damages, injunction
(conduct has to be intentional and continuing)
b. Public: a “catch-all” low grade criminal offense that involves interference with a
common public right. There’s a criminal violation and authorities attempt to get
civil relief for the harm caused. Can overlap with private nuisance.
i. Examples of public rights protected from nuisances: public
health (pollution of water supply, mararial swamp), public safety (vicious
dog), public morals (crack house, gambling), public peace, public
comfort/convenience (blocking a public street, smoke, dust vibrations),
maintenance of improper business (unlicensed bar)
ii. Factors: Cts look at the type of neighborhood, the frequency/duration,
the degree of damage, the social value of the activity
iii. Enforced by the DA
iv. Defenses: contributory negligence (if claim is based on D’s negligent
maintenance of nuisance); assumption of risk
5. Defamation: a cause of action remedy for wrongful injury to a person’s
reputation
a. CL Elements: A defamatory statement concerning the P; must be of
and concerning P; publication of the statement to a 3rd party (at
least 1 person) who could understand the defamatory meaning;
fault; slander and pecuniary harm. Can’t defame the dead, even if
its affecting your current situation. Trust is a complete defense
under CL.
i. Must be of and concerning P: satisfied when P is identified by name;
or reasonably understood to be talking about P (Can be inferred). The
general rule concerning group libel is that disparaging words about a large
group or class of persons doesn’t give rise to a libel action by any
individual members of the group.
ii. Publication of statement to 3rd party: P has to show that the
meaning of the statement was understood by 3rd party it was published to.
There is no liability if the publication occurred by mistake and was w/o
fault on D’s party (ie: P was eavesdropping and heard something, D isn’t
liable). If P repeats a defamatory statement made by D to P alone, D is
usually not responsible for this publication (exception: if D should expect
that P will have to repeat the defamation—ex when a discharged EE has to
explain why he is fired)
1. Print publication/periodicals (US Rule)- one rule of
publication of a magazine = one cause of action. Only one cause of
action for an article, statement of broadcast. But you can bring suit
in any state. D usually has to be given notice to remove a
defamatory statement along w/sufficient control to be able to
remove the statement.
b. Libel: defamation published by means of the printed word (ie: statement
contained in a written note passed to one person who reads it and destroys it is
still libel). P is not required to prove actual damages; damages were presumed.
i. Libel per se- printed defamatory statement attributable to P prima
facie
ii. Libel per quod: document itself is not clearly defamatory; need
something else
c. Slander: reserved for defamation published by means of the spoken word or
transitory gestures; typically communication is limited to a number of people (ie:
statement shouted in a crowded auditorium). P was required to prove special
pecuniary damages unless it was “slander per se” (would injury P in his trade; P
has loathsome disease; accuse P of crime w/serious punishment; accuse of
serious sexual misconduct)
d. Constitutional Limits: deals with the statute of P as a public or
private figure
i. Public official: must prove the statement was made with “Actual
malice”. Presumed or punitive damages awarded.
1. General Purpose Public Figures: of such pervasive fame
or notoriety that the person is a public figure in all contexts (ie:
movies states, celebrities, Oprah, Michael Jordan)
2. Limited Purpose Public Figures: only with respect to a
particular public controversy; not every aspect of their life lends
them to be treated as a public figure (whistle blower, anti war
protestor).
ii. Private official: only have to show negligence. No liability if based only
on negligence (So no damages)

e. Malice
i. Actual Malice: making a statement knowing it was false; making a
statement with reckless disregard for whether or not it is false
(recklessness requires more than lack of care; recklessness requires proof
that the publisher in fact entertained serious doubts about the truth of the
statement); must be show by clear and convincing evidence.
1. A deliberate misquotation is in some sense false and meets this
requirement if it materially changes the meaning of the quoted
statement.
f. Opinions get full 1st amdt protection. No separate privilege exists for
opinions (its protected by other constitutional limitations). Facts don’t get 1st
amdt protection if they are false.
6. Privacy Torts: four types: intrusion, appropriation, public disclosure,
false elements
a. Intrusion: invasion of a person’s private space or affairs. P may sue if his
solitude is intruded upon, and this intrusion would be highly offensive to a
reasonable person
i. Elements: some sort of invasion into a private area of P’s life. The
intrusion must be highly offensive to a reasonable person.
ii. Distinctions: not necessary that it be published to a 3rd person. The tort
is complete as soon as the offensive intrusion takes place. Those who get
the published information are not liable for the intrusion (if you just get the
tape from the intrusion, you aren’t liable for the intrusion itself). There
has to be a private place involved (if D takes P’s picture in a public place,
this is usually not enough)
iii. Examples: spying, eavesdropping, snooping, breaking and entering into
a person’s home or office
b. Appropriation: involves the use of P’s name, likeness, or identity for the
user’s (financial) benefit. Based on the idea that a person’s identify may have a
distinct value that should be protected
i. Elements: D makes use of P’s likeness or identity for D’s own use or
benefit
c. Public Disclosure: assume the matters published are true. The complaint is
that what was disclosed was private and had no reason being published and the
disclosure of them is SO highly offensive that P should have a COA to recover
damages for mental anguish.
i. Distinctions: must be publicized to more than one person (widespread
disclosure is required)
ii. Elements: D must publicize some private information about the P; such
disclosure must be highly offensive to a reasonable person and the
information disclosed must not be a matter of legitimate public concern.
iii. Concerns w/the 1st amdt b/c of the public’s right to know (if the facts
involved a matter a matter of legitimate concern to the public, the const
protects the right to disclose them)
d. False elements: portrays the P as something that the P is not (not
recognized in all states). It protects a person’s privacy interest in not being
portrayed to the public in an objectionable false position.
i. Elements: D must publicize some matter that places P in a false light;
the false light must be highly offensive to a reasonable person’ D must
have KNOWLEDGE of the falsity of the position that P is placed –OR- must
act in reckless disregard of the falsity
ii. Distinctions: matter doesn’t have to be defamatory as long as it places
the P in a highly offensive false light.
7. Civil Rights:
a. Common Law (R2T § 865)- one who by a consciously wrongful act
intentionally deprives another of the right to vote in a public election or to hold
public office or seriously interferes with either of these rights is subject to liability
to the other.
b. Statute- 42 USC § 1983- Every person acting under “color” of state law who
deprives another of rights, privileges and immunities secured by the US Const
and Fed law is liable to the party injured.
i. Elements:
1. Every person- includes individuals; city, county and other local
govtal entitles if the deprivation is caused by a custom or policy of
the governmental entity.
2. Under “color” of state law- doesn’t have to be an action
sanction or permitted by state law. Does include actions that
violate state law
ii. State of Mind requirements: no state of mind requirement but it
may be NECESSARY in order to constitute a violation of a person’s
constitutional rights.
iii. Parratt-Daniels-Davidson line: shows the court trying to define the
scope of the procedural due process right. There are two issues to
determine: (1) if P has any right to a hearing at all in the particular
situation; (2) if a right does exist, will a hearing taking place after the
injury be sufficient
iv. Bivens Actions: damages may be obtained for injuries following a
violating of the 14th amdt by fed officials. When the rights violation is
accomplished by a fed official, § 1983 may not apply. Limitations are
when the special factors may counsel hesitation
v. Municipal Liability: municipalities may be sued under § 1983 but they
are only liable IF the deprivation of fed rts was caused by an official policy
of custom. Official policy is made by the policymaker designated by state
law: “only where a failure to train in a relevant respect demonstrates
“deliberate indifference” to the rts of others a such a shortcoming be
properly thought of as a city “policy of custom” actionable under § 1983.
vi. Immunities (for §1983 and Bivens actions):
1. Complete immunity: executive branch officials, judges and
prosecutors acting in their job, states are immune from § 1983
actions.
2. Qualified immunity: police officers (civilly liable if no reasonably
competent officer would have acted is such”, if an official violated a
clearly established right (objective test)
vii. Injury and Damages: deprivation of a constitutional right does not
entitle P to damages; P must prove actual injury resulting from
deprivation; no presumed damages; punitive damages allowed but not
against govt entities
viii. Structural Injunctions: ct orders that fundamentally restructure a
state institution that has been found to be engaging in systematic
violations of constitutional rights. P had to show they are in fact suffering
a deprivation of protected rights and the they have a need for the
injunction (by showing a likelihood of future harm)
8. Misuse of Legal Process: includes malicious prosecution, wrongful civil
proceedings and abuse of process
a. Malicious Prosecution: Institution of criminal proceedings, lack of
probable cause to initial the proceedings, malice, termination of the proceedings
in favor of the accused, damages
i. Elements:
1. Institution of criminal proceedings- D must be actively
involved; any formal institution of criminal proceeds satisfies this
element
2. Lack of probable cause to initial the proceedings- D must
have lacked reasonable or honest belief in the truth of the charge
3. Malice- D must have improve motive for bringing the action.
Three types: actual malice, legal malice and malice in law. May be
inferred from D’s conduct.
4. Termination of the proceedings in favor of the accused-
the criminal proceeding can’t be revived; termination for something
that P was not guilty of
5. Damages- damages for loss of reputation; damages for emotional
distress and humiliation; damages to the cost of defending against
the criminal charges
ii. Defenses: D can prove that P was in fact guilty of the crime charge
(affirmative defense) by proof of preponderance of the evidence; P’s guilty
is established to the jury’s satisfaction; advice of counsel (if you told attys
everything)
b. Wrongful Civil Proceedings: same as malicious prosecution but only
applies to civil cases; hard to prevail on
i. Elements: same as malicious prosecution (initial criminal proceedings,
lack of probable cause, malice, damages, termination in favor of D). Some
cts add the requirement of special injury (injury caused by the seizure of
P’s person or property)
c. Abuse of Process: occurs when a person involved in criminal or civil
proceedings uses various litigation devises for improper purposes (ie: P seeks to
harass through lawsuit)
i. Elements: D must make use of the processes of the court and the use
must be for the purpose for which the process was not designed.
1. Process- almost any enforceable order of the court.
ii. Distinction: Lack of Probable cause to bring the suit is not an element.
Favorable termination of the underlying suit is not an element.

9. Misrepresentation: includes fraud/deceit, negligent misrepresentation,


innocent misrepresentation, mutual mistake, unilateral mistake
a. Deceit/falsity (intentional misrepresentation): P must establish a
misrepresentation by D; scienter; an intent to induce the P’s reliance on the
misrepresentation; justifiable reliance by the P; damage to P b/c of the reliance.
i. Elements: A false representation of material fact by the D; knowledge or
belief by the D that the representation in untrue; intent by the D to induce
the P to act in reliance on the representation; justifiable reliance on the
misrepresentation by the P; damage to the P from reliance on the
misrepresentation.
1. False representation of material fact by the D:
a. Types of misrepresentation: affirmative
misrepresentation of fact; D actively conceals facts and
prevents P from learning them; concealment of material
fact; actions by the D (during back odemeter on car)
b. Not type of misrepresentation: D simply remains
silent but no effort was made to stop P from discovering the
matter. This allows one party to take advantage of the
other’s ignorance.
c. Exceptions when you have a duty to speak in
certain situations:
i. D owes a fiduciary duty to P
ii. Proverbial “half truth”- misleading impression by
omitting impt info
iii. Newly acquired information that would make a
previous statement misleading
iv. Parties who have access to basic info about a
transaction that the other party is unlikely to be able
to obtain
2. Knowledge or belief by the D that the representation in
untrue:
a. Scienter and the intent to deceive- a type of
culpable state of mind; making the misrepresentation
with knowledge that it is untrue (or recklessness with regard
to if it’s true) and with intent to deceive the other party.
3. Intent by the D to induce the P to act in reliance on the
representation: treated as statements of fact
4. Justifiable reliance on the misrepresentation by the P:
the misrepresentation must in fact cause P to take some action and
P must be justified in taking this action. Two aspects: (1) was the
representation one that a reasonable person would rely on; (2) did
P in fact rely upon the statement to his or her detriment—
causation).
a. Justifiable reliance on opinions—in general, cts don’t
regard opinions are reliance (ie: prediction of the future).
Exception if it’s is implied that there is a factional basis for
them
b. Generally, cts do not impose on P’s the duty to investigate
statements of fact to determine the truth, unless P is on
notice of circumstances indicating that future investigation
is required.
5. Damage to the P from reliance on the
misrepresentation:
a. Benefit of the Bargain: difference between the actual
value of what the P received and the value it would have
had if it had been as represented. This is the more
generous method & more common. The more the thing is
represented as being worth, the more damages you will get.
b. Out of Pocket Measure: alternative measure.
Calculates the difference between the value of what gave
and the value of what P received. Uses the net economic
damages by the net loss. Works well when the buyer is
misrepresenting to the seller.
c. Consequential Damages: under either measure, P can
also recover additional consequential damages proximately
cause by the fraud.
b. Negligent misrepresentation: D is only negligent, not intentional
deceptive; liability is limited to situations (business, profession, employment,
economic interest) where D should understand that the matter is impt and that
care in providing information is essential. Usually applies to business
relationships.
i. Elements: Misrepresentation of a fact by D; the misrepresentation is
made in the course of the D’s business, profession, or employment, or in
the course of a transaction in which the D has an economic interest; the
misrepresentation results from the negligence of the D (failure to use
reasonable care) in obtaining the info and communicating it to the P;
justifiable reliance (By a P to whom D owes the duty of care); resulting in
economic damage
ii. Liability to Third Parties: three rules dealing w/accounting and when
they are liable for negligence
1. NY rules (Credit Alliance): liable when they are aware that
statements are to be sued for a particular purpose; by a particular
known party; some conduct by the accountant links them to the
third party who will rely on the statements
2. Restatement rule: liability to the limited group of persons
that the accountant knows will rely on the information; with regard
to a transaction that the accountant intents the info to influence
3. Foreseeability Rule: some cts go even further and say that
you’re liable to any foreseeable party.

10. Competitive Torts:

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