1. Ch 12-1 © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS A Critical Thinking Approach Fourth Edition Nancy K. Kubasek Bartley A. Brennan M. Neil Browne Nancy K. Kubasek Bartley A. Brennan M. Neil Browne

2. THE LEGAL ENVIRONMENT OF BUSINESS CHAPTER 12 The Law of Torts © 2006 Prentice Hall Ch. 12-2

3. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-3 Features of Tort Law Tort: an injury to another’s person or property Some wrongful acts may constitute both a tort and a crime Tort law is mostly state law—variable Tort: an injury to another’s person or property Some wrongful acts may constitute both a tort and a crime Tort law is mostly state law—variable

4. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-4 Goals of Tort Law Primary Goal: to compensate innocent persons who are injured by wrongful acts of others Other goals: Discourage private retaliation Promote civility Deter wrongful actions

5. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-5 PUNITIVEPUNITIVE NOMINALNOMINAL Damages in Tort Cases COMPENSATORYCOMPENSATORY

6. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-6 Compensatory Damages Object: To restore plaintiff to the same position before the tort Includes: Special and general damages

7. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-7 Special Damages Definition: Demonstrable out of pocket costs Examples: Doctor bills, medication, therapy, lost wages, property damage

8. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-8 General Damages Compensation for pain and suffering Calculated by the jury or trier of fact based upon the severity of the injuries and the amount of the special damages

9. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-9 Nominal Damages Awarded for “technical victory” Recognition that defendant’s acts were wrong Plaintiff, however, has suffered little, if any, real damage Awarded for “technical victory” Recognition that defendant’s acts were wrong Plaintiff, however, has suffered little, if any, real damage

10. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-10 Punitive Damages Go beyond compensating plaintiff Intended to inflict punishment on defendant Usually allowed in cases where defendant acted willfully and injuries are severe The punitive amount is paid to plaintiff Go beyond compensating plaintiff Intended to inflict punishment on defendant Usually allowed in cases where defendant acted willfully and injuries are severe The punitive amount is paid to plaintiff

11. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-11 Problems with Punitive Damages Not available in some states! Theory of punitive damages is frequently under attack Inconsistently applied—often reduced on appeal No generally accepted appellate court standards for review

12. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-12 Public Perception of Punitive Damages Press usually reports the sensational jury verdict, but rarely reports the subsequent outcome, after appeals Public is left with impression, supported by insurance industry propaganda, that “courts and juries are out of control”

13. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-13 Too Hot To Handle! Too Hot To Handle! Widely Reported Cases McDonald’s hot coffee BMW v. Gore Exxon Valdez case #1

14. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-14 “Tort Reform” Politicians, federal and state, have played to the public perception that tort law is an uncontrolled giveaway of millions of dollars to undeserving plaintiffs by introducing “tort reform” legislation

15. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-15 “Tort Reform” Features: Limitations on punitive damages Caps on all damages Changing the standard of proof More effort at state level Vetoed at federal level

16. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-16 Classifications of Torts Strict Liability NegligentNegligent IntentionalIntentional

17. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-17 Intentional Torts Zones of legal right to recover for harms against… Person Property Economic Interest including Harm to Reputation

18. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-18 Intentional Torts Against Person Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress

19. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-19 Intentional Torts Zones of legal right to recover for harms against… Person Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Elements: Intentionally placing another in fear or apprehension of immediate, offensive contact Defenses: Joking, future threats, lack of capacity to generate fear

20. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-20 Intentional Torts Zones of legal right to recover for harms against… Person Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Elements: Intentional, unwanted, offensive contact Defenses: Self-defense, defense of others, defense of property Limits: Use of force must be reasonable

21. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-21 Intentional Torts Zones of legal right to recover for harms against… Person Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Elements: Publication of false, negative information about another that harms reputation  Libel: written defamation  Slander: oral defamation Defenses: truth, opinion, lack of publication, privilege, public figures

22. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-22 Intentional Torts Zones of legal right to recover for harms against… Person Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Types:  Public disclosure of private facts  False light  Appropriation  Invasion of privacy

23. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-23 Intentional Torts Zones of legal right to recover for harms against… Person Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Definition: Restraint or confinement of person, without consent or justification Elements: Physical force or threat thereof Usual Context: Suspected shoplifter cases

24. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-24 Intentional Torts Zones of legal right to recover for harms against… Person Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Defenses: Statutory shield for retailers who show reasonable use of force and basis for action Damages: Usually no physical harm, little or no damages

25. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-25 Intentional Torts Zones of legal right to recover for harms against… Person Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Assault Battery Defamation Invasion of privacy False imprisonment Intentional infliction of emotional distress Relatively new cause of action Elements: Defendant’s intentional conduct toward plaintiff is outrageous and likely to cause extreme emotional distress Some states also require a showing of physical manifestation of emotion

26. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-26 Property Intentional Torts Zones of legal right to recover for harms against… Trespass To realty To personalty ConversionDisparagement

27. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-27 Economic Interest including Harm to Reputation Intentional Torts Zones of legal right to recover for harms against… Disparagement Interference with contract Unfair competition Misappropriation

28. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-28 NegligenceNegligence Careless or reckless acts that result in injury Elements: DutyBreachCausationCause-in-Fact Proximate Cause Damages

29. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-29 Negligent Torts Negligence: Careless or reckless acts that result in injury Elements:DutyBreachCausationDamages Duty is defined by the standard of care that defendant owes to plaintiff Example: Shopkeeper—customer Test: Did defendant exercise the degree of skill and care of a ‘reasonable person’? Duty is defined by the standard of care that defendant owes to plaintiff Example: Shopkeeper—customer Test: Did defendant exercise the degree of skill and care of a ‘reasonable person’?

30. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-30 Negligent Torts Negligence: Careless or reckless acts that result in injury Elements:DutyBreachCausationDamages Burden is on plaintiff to show that defendant’s actions, or lack of action, breached the duty of care

31. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-31 Negligent Torts Negligence: Careless or reckless acts that result in injury Elements:DutyBreachCausationDamages Cause-in-Fact: ‘But for defendant’s action, or lack thereof, the injury would not have happened’ Proximate Cause: Relates to the degree of directness or indirectness of the chain of events beginning with defendant’s act and ending with the injury to plaintiff—often called ”Foreseeability” Cause-in-Fact: ‘But for defendant’s action, or lack thereof, the injury would not have happened’ Proximate Cause: Relates to the degree of directness or indirectness of the chain of events beginning with defendant’s act and ending with the injury to plaintiff—often called ”Foreseeability”

32. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-32 Negligent Torts Negligence: Careless or reckless acts that result in injury Elements:DutyBreachCausationDamages Plaintiff must be able to show injury, physical, mental, or economic, which leads to some actual damages The usual measure of damages in tort cases is that amount which restores plaintiff to the same position he was in prior to the injury Plaintiff must be able to show injury, physical, mental, or economic, which leads to some actual damages The usual measure of damages in tort cases is that amount which restores plaintiff to the same position he was in prior to the injury

33. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-33 Negligent Torts Negligence: Careless or reckless acts that result in injury Special Theories: Res ispa loquitor: The thing speaks for itself EXAMPLES  Exploding bottles  Falling elevators EXAMPLES  Exploding bottles  Falling elevators Negligence per se: Plaintiff is in the statutory zone of protection when the negligence occurs; defendant’s action also violates the same statute Effect: Assists plaintiff in proving case

34. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-34 Defenses to Negligence Negligence: Careless or reckless acts that result in injury Contributory negligence Comparative negligence Pure version Modified version Assumption of risk

35. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-35 Strict Liability Torts No matter how careful defendant may be, the law imposes liability anyway Theory: NOT based on defendant’s culpable actions:  Some social utility is generated by inherently dangerous activity.  Some will be injured, despite precautions.  When this occurs, it is appropriate to shift the loss to the manufacturer, because manufacturer is in a position to better absorb the loss by spreading it to all customers via small price increase. Theory: NOT based on defendant’s culpable actions:  Some social utility is generated by inherently dangerous activity.  Some will be injured, despite precautions.  When this occurs, it is appropriate to shift the loss to the manufacturer, because manufacturer is in a position to better absorb the loss by spreading it to all customers via small price increase.

36. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-36 Global Dimensions of Tort Law International business increasingly faces possible tort actions at home and abroad Enforcing judgments in foreign courts is difficult and the outcome is uncertain Treaties may provide reciprocal recognition of judgments, but few are in force Some jurisdictions choose not to recognize U.S. legal practices, (i.e., punitive damages)

37. © 2006 Prentice Hall THE LEGAL ENVIRONMENT OF BUSINESS Ch. 12-37 Summary Tort law is intended to provide compensation to injured party Damages are compensatory, nominal, or punitive Torts are intentional, negligent, or strict liability U.S. tort law is significantly different from that of most other countries