Roger LeRoy Miller
BUSINESS LAW TODAY
THE ESSENTIALS
TEXT & SUMMARIZED CASES, 11E
Copyright
Copyright © 2017 Cengage © 2017
Learning. AllCengage Learning. All Rights Reserved.
Rights Reserved.
Tort Law and Product Liability
Chapter 3
Chapter Outline
• 3-1 The Basis of Tort Law
• 3-2 Intentional Torts against Persons
• 3-3 Intentional Torts against Property
• 3-4 Unintentional Torts (Negligence)
• 3-5 Strict Liability
• 3-6 Product Liability
Copyright © 2017 Cengage Learning. All Rights Reserved.
Learning Objectives
1. What is defamation? Name two types of
defamation.
2. Identify the four elements of negligence.
3. What is meant by strict liability? In what
circumstances is strict liability applied?
3. What are three types of product defects?
4. What defenses to liability can be raised
in a product liability lawsuit?
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-1 The Basis of Tort Law
3-1a The Purpose of Tort Law - French
word “wrong”.
3-1b Damages Available in Tort Actions
– Compensatory Damages
• Compensatory damages: A monetary award
equivalent to the actual value of injuries or
damage sustained by the aggrieved party.
• Special Damages - $$ you lost
• General Damages – Pain and suffering
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-1b Damages Available in Tort
Actions
– Punitive Damages
• Punitive damages: monetary damages awarded
to punish the defendant and deter similar
conduct
3-1c Classifications of Torts – intentional
and unintentional.
3-1d Defenses - right to defend.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-2 Intentional Torts
against Persons
3-2a Assault and Battery
– Assault: any word or action intended to make
another fearful of immediate physical harm
– Battery: physical contact with another that is
unexcused and intentional
3-2b False Imprisonment
– Case Example 3.4 Shoyoye v. County of Los
Angeles (2012). Arrested by mistake, but not
release due to an error. He spent 2 weeks in
jail.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-2c Tort of Intentional Infliction of
Emotional Distress to others
– Outrageous Conduct
– Limited by the First Amendment
• Case Example 3.6 Hustler Magazine, Inc. v.
Falwell (1988). Magazine published lies about a
Reverend losing his virginity to his mother.
Reverend sued and won. But was overturned by
the Supreme Court.
• Creators of parodies of public figures are
protected, same applies to figures in defamation
lawsuits.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-2d Defamation (slide 1 of 3)
To establish defamation, a plaintiff normally must
prove the following:
1. The defendant made a false statement of fact.
2. The statement was understood as being about the
plaintiff and tended to harm the plaintiff’s
reputation.
3. The statement was published to at least one person
other than the plaintiff.
4. In addition, if the plaintiff is a public figure, she or
he must prove actual malice.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-2d Defamation (slide 2 of 3)
– Statement of Fact Requirement
– The Publication Requirement
– Damages for Libel – writing or recording
– Damages for Slander - oral
1. Loathsome disease
2. Improprieties while engaging in business,
profession, or trade
3. Imprisoned for serious crime
4. Unchaste or engaging in serious sexual
misconduct
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-2e Invasion of the Right to
Privacy and Appropriation
– A person has the right to solitude. Breach of
that duty is a tort.
– Invasion of Privacy
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-2f Fraudulent Misrepresentation
– Intentional deceit for personal gain
– Includes several elements:
1. The misrepresentation of facts or conditions with
knowledge that they are false or with reckless disregard
for the truth.
2. An intent to induce another to rely on the
misrepresentation.
3. Justifiable reliance by the deceived party.
4. Damage suffered as a result of the reliance.
5. A causal connection between the misrepresentation and
the injury suffered.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-2f Fraudulent Misrepresentation
– Statement of Fact versus Opinion
– Negligent Misrepresentation
• Key difference between intentional and negligent
misrepresentation is whether person making the
false statement actually knew it was false.
• Typically occurs when person owes a duty to
another to give correct information.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-2g Abusive or Frivolous
Litigation
– Plaintiff files suit based on malice or without
a legitimate legal reason and loses the suit,
he can be sued for malicious prosecution,
recover costs of suit and, in some states, lost
profits.
– Abuse of process: does not require proof of
malice or prior litigation.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-2h Wrongful Interference (slide 1 of 2)
– Wrongful Interference with a Contractual
Relationship
1. Valid, enforceable contract exists between two
parties.
2. Third party knows about contract.
3. Third party intentionally causes either party to
breach the original contract.
• Case Example 3.13 Lumley v. Gye (1853),
Performer with a contract
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-2h Wrongful Interference (slide 2 of 2)
– Wrongful Interference with a Business
Relationship
• Distinguish competition vs. predatory behavior.
Predatory behavior is unlawfully driving
competitors out of market.
• To prevail, Plaintiff must show Defendant
targeted only Plaintiff’s customers and product.
– Defenses to Wrongful Interference
• Interference was justified or permissible (bona
fide competitive behavior).
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-3 Intentional Torts
against Property
3-3a Trespass to Land
– Occurs when a person, without permission:
1. Enters onto, above, or below surface of land
owned by another
2. Causes anything to enter onto land owned by
another
3. Remains on land owned by another or permits
anything to remain on it
– Establishing Trespass
– Damages
– Defenses against Trespass to Land
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-3b Trespass to Personal Property
– Trespass to personal property: Wrongfully
taking or harming the personal property of
another or otherwise interfering with the
lawful owner’s possession of personal
property
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-3c Conversion
– Conversion: Wrongfully taking or retaining
possession of an individual’s personal
property and placing it in the service of
another
– Good intentions are not a defense.
– Usually occurs with trespass to personal
property.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-3d Disparagement of Property
– Occurs when economically injurious falsehoods are
made about another’s property or product.
– Slander of Quality (Trade Libel): false statement
about another’s product that caused a third party to
refrain from dealing with plaintiff, causing financial
loss.
– Slander of Title: false statement about legal
ownership of another’s product resulting in financial
loss.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-4 Unintentional Torts
(Negligence)
Negligence: The failure to exercise the
standard of care that a reasonable person
would exercise in similar circumstances.
To succeed, plaintiff must prove:
1. Duty
2. Breach
3. Causation
4. Damages
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-4a The Duty of Care and Its
Breach (slide 1 of 2)
– Duty of care: The duty of all persons, as established
by tort law, to exercise a reasonable amount of care
in their dealings with others. Failure to exercise due
care, which is normally determined by the
reasonable person standard, constitutes the tort of
negligence.
– To determine whether the duty of care has been
breached, courts consider:
1. The nature of the act
2. The manner in which the act was performed
3. The nature of the injury
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-4a The Duty of Care and Its
Breach (slide 2 of 2)
– The Reasonable Person Standard
– The Duty of Landowners
• Duty to Warn Business Invitees of Risks
• Obvious Risks Are an Exception
– The Duty of Professionals
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-4e Special Negligence Doctrines
and Statutes (slide 2 of 2)
– “Danger Invites Rescue” Doctrine
– Good Samaritan Statutes
• A state statute stipulating that persons who provide
emergency services to, or rescue, someone in peril cannot
be sued for negligence unless they act recklessly and cause
further harm.
– Dram Shop Acts
• A state statute that imposes liability on the owners of bars
and taverns, as well as those who serve alcoholic drinks to
the public, for injuries resulting from accidents caused by
intoxicated persons when the sellers or servers of alcoholic
drinks contributed to the intoxication.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-5 Strict Liability
Strict liability: liability, regardless of
fault, which is imposed on those engaged
in abnormally dangerous activities,
keeping dangerous animals, and sellers
introducing defective and dangerous
goods
3-5a Abnormally Dangerous Activities
3-5b Other Applications of Strict Liability
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-6 Product Liability
3-6a Negligence
– Due Care Must Be Exercised
1. Designing the product.
2. Selecting the materials.
3. Using the appropriate production process.
4. Assembling and testing the product.
5. Placing adequate warnings on the label to
inform the user of dangers of which an ordinary
person might not be aware.
6. Inspecting and testing any purchase
components used in the final product.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-6b Misrepresentation
– When a user or consumer is injured as a
result of a manufacturer’s or seller’s
fraudulent misrepresentation, the basis of
liability may be the tort of fraud.
– The misrepresentation must have been made
knowingly or with reckless disregard for the
facts.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-6c Strict Product Liability (slide 1 of 3)
1. Consumers should be protected from
unsafe products;
2. Manufacturers and distributors should be
liable to any user of the product;
3. Manufacturers, sellers and distributors can
bear the costs of injuries.
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-6c Strict Product Liability (slide 2 of 3)
– Requirements for Strict Product Liability
1. Product must be in defective condition when
sold.
2. Defendant is in the business of selling the
product.
3. Product must be unreasonably dangerous.
4. Plaintiff must be physically harmed
5. Defective condition must be proximate
cause of injury
6. Goods are in substantially same condition
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-6c Strict Product Liability (slide 3 of 3)
• Proving a Defective Condition
• Unreasonably Dangerous Products
– Product Defects—Restatement (Third) of
Torts
• Manufacturing Defects
• Design Defects
– Case Example 3.26 Riley v. Ford Motor Co. (2014). Door
opened during accident. Judge ruled in Riley’s favor.
• Inadequate Warnings
– Case Example 3.27 Crosswhite v. Jumpking, Inc. (2006),
Back flips in trampoline.
– Other Applications of Strict Liability
Copyright © 2017 Cengage Learning. All Rights Reserved.
3-6d Defenses to Product Liability
– Assumption of Risk
– Product Misuse
– Comparative Negligence
– Commonly Known Dangers
Copyright © 2017 Cengage Learning. All Rights Reserved.
