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.