Chapter 19

The Liability Risk

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Outcomes Understand the basis of Legal LiabilityKnow how to applyLaw of NegligenceImputed NegligenceRes Ipsa Loquitur

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A lady spilled coffee on herself and become a millionaire. Stella AwardsMcDonalds Hot Coffee_(360p).flv

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Liability RiskMcDonald CaseProduct Liability?Negligence?

Not just business firms, professionals, pet owners, drivers or even governments are liable.

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Dog owner being sued 2 years ago my dog bit a lady that was attempting to pet them. Our insurance paid for her hospital bills. There was no hospital stay just some stitches. Our insurance company paid for all of the bills and made a settlement offer. They declined and we just got served with a civil law suit. Source: http://www.lawguru.com/

Dog sitterssued for$1M afterpetdies New York City couple is suing a dog sitting service for $1 million, claiming the sitter let their pet, Percy the French bulldog, overheat in a van and then dropped him off to die alone in their Manhattan apartment. Bankers Robert Hardon and Laura Garner left 5-year-old Percy with Doggie Love of Queens for one night in July 2009. The lawsuit says a sitter drove the pooch from Astoria to the West End apartment in the back of an enclosed Econoline van and dropped him off in the empty apartment. Percy was found dead hours later in front of an air conditioner. When vets examined Percy that night they found that his body temperature was high and that he had suffered seizures. The pet sitters told theNew York Postthat the company expects to be cleared in the case and that the worker no longer is employed at the agency. Source: http://www.walletpop.com/2010/07/15/dog-sitters-sued-for-1m-after-pet-dies/

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QuestionsA cat came into your house, and your dog bit the cat. Can the cat owner sue you for damages? Or can you sue the cat owner for damages?

A thief came into your house, of course you know his intention. He got hurt because of the environment of your house. Can you be sued for his injury?

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Basis of Legal LiabilityA __________is a violation of a persons legal rights, or a failure to perform a legal duty owed to a certain person or to society as a wholeLegal wrongs include:Crime (criminal wrongdoing prohibited by the government, the government initiates the prosecution, person committing the crime may be sentenced to jail )Breach of contractTort (civil wrongdoing, the committed person pay compensatory or punitive damages, initiated by the injured)

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Basis of Legal LiabilityA tort is a legal wrong for which the court allows a remedy in the form of money damagesThe person who is injured (plaintiff) by the action of another (tortfeasor, wrongdoer) can sue for damagesTorts fall into three categories:1. Intentional, e.g., fraud, assault knowingly spreading false information

2. Strict liability: liability is imposed regardless of negligence or fault (without proof of carelessness or fault)May be applied to defectively manufactured products

3. Negligence (not the same as "carelessness, even you are careful)Your mother bought you a drink, you discovers a bug inside the drink and then sue the manufacturers.

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Law of NegligenceNegligence is the failure to exercise the standard of care required by law to protect others from an unreasonable risk of harmThe standard of care is not the same for each wrongful act. It is based on the care required of a reasonably prudent person (who uses good judgment or ___________in handling practical matters)

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Law of NegligenceElements of Negligence Existence of a legal duty (to protect others from harm)Drive safely

Failure to perform that duty by lawSomeone injured because your failure to replace a flat tire (negative act, failure to act).Damage or injury to the claimantCar collisionProximate cause relationship between the negligent act and the infliction of damagesA proximate cause relationship requires an ___________ of eventsAn construction firm, for example, may not be able to use no chronological proximity to escape from duty of care if a distant future tenant inhaled poisonous gas from the building materials

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Law of NegligenceThe law allows for the following types of damages:Compensatory damages compensate the victim for losses actually incurred. They include:Special damages, e.g., General damages, e.g., Punitive damages are designed to punish people and organizations so that others are deterred from committing the same wrongful act e.g. McDonald, Exxon, BP

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Law of Negligence-Defenses against negligenceThe ability to collect damages for negligence depends on state lawUnder a contributory negligence law, the injured person cannot collect damages if his or her care falls below the standard of care required for his or her protectionUnder strict application of common law, the injured cannot collect damages if his or her conduct contributed in any way to the injury

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Law of Negligence-Defenses against negligenceUnder a comparative negligence law, the financial burden of the injury is shared by both parties according to their respective degrees of faultUnder the pure rule, you can collect damages even if you are negligent, but your reward is reduced in proportion to your faultIf you are 80% at fault, your award is reduced by 80%, you got $20 for a $100 rewardUnder the 50 percent rule, you cannot recover if you are __ percent or more at faultUnder the 51 percent rule, you cannot recover if you are __ percent or more at fault

Note: At common law, if some contributory negligence could be established on the plantiffs part, the plantiff would not be able to claim any damages in negligence action. However, the harsh application of common law has been ameliorated by Law Amendment and Reform (Consolidation) Ordinance (Cap 23) in Hong Kong. This is know as comparative negligence

Tort Law in Hong Kong: An Introductory Guide by Stephen D. Mau

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Law of Negligence-Defenses against negligenceSome legal defenses can defeat a claim for damages:The last clear chance rule states that a plaintiff who is endangered by his or her own negligence can still recover damages from the defendant if the defendant has a last clear chance to avoid the accident but fails to do soYou got hit when you are crossing the road at red light and playing your iphone. Under the assumption of risk doctrine (Volenti Non Fit Injuria), a person who understands and recognizes the danger inherent in a particular activity cannot recover damages in the event of an injuryYou are teaching a ____________how to drive and he crashes in a hill. He can defend himself by using the assumption of risk doctrine if you sue him for damagesVolenti Non Fit Injuria Latin: to one who is willing, no harm is done

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Imputed NegligenceUnder certain conditions, the negligence of one person can be attributed to anothere.g., the negligent act of an employee can be imputed to the employerUnder a vicarious liability law, a motorists negligence is imputed to the vehicles ownerYou are driving your friends car to pickup his friend, and hit someone, who is liable?Under the family purpose doctrine, the owner of an auto can be held liable for negligent acts committed by family membersYour 10-year old daughter drives your car .. Under a dram shop law, a business that sells liquor can be held liable for damages that may result from the sale of liquor (note: dramshop = bar in US) The continual selling of liquor to a drunk man who then injures someone

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Res Ipsa LoquiturUnder this doctrine, the very fact that the injury or damage occurs establishes a presumption of negligence on behalf of the defendantMeans, the thing speaks for itself

Three requirements must be met for res ipsa loquitur ("the thing speaks for itself) to apply:The event is one that normally does not occur in the absence of negligenceThe defendant has exclusive control over the instrumentality causing the accidentThe injured party has not contributed to the accident in any way

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Applications of Negligence LawThe standard of care owed to others depends upon the situationA trespasser is a person who enters or remains on the owners property without the owners consentThe duty to refrain from injuring a trespasser is sometimes referred to as the duty of slight careA licensee is a person who enters the premises with the occupants expressed or implied permissionE.g., a door-to-door salespersonThe property owner must warn the licensee of unsafe conditions or activities which are apparentAn invitee is a person who is invited onto the premises for the benefit of the occupantThe occupant has an obligation to inspect the premises and eliminate any dangerous conditions Mail person

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Applications of Negligence LawAn attractive nuisance is a hazardous condition that can attract and injure childrenThe occupants of land are liable for the injuries of children who may be attracted by some dangerous condition, feature or articlee.g., a building contractor leaves the keys in a tractor, and a child is injured while driving itOr bus driver leaves the keys and

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Applications of Negligence LawOwners and operators of automobiles who drive in a careless manner can be held liable for property damage or bodily injury sustained by another personAn owner who is not the operator can be held liable for the acts of operators if an agency relationship existsToday, governmental entities can be sued in almost every aspect of governmental activityThe doctrine of sovereign immunity has been modified over timeA governmental unit can be held liable if it is negligent in the performance of a proprietary function, e.g., the operation of water plants

Charitable institutions are no longer immune from lawsuits, especially with respect to commercial activities

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Note (reference only):

Most states distinguish between governmental and proprietary functions

A governmental function includes services that only the government does, such as restaurant inspection, animal control, health and safety permits and licenses, sanitation, vital statistics, and related functions.

A proprietary function is one that a private entity can performe.g. highway design can be proprietary function http://biotech.law.lsu.edu/

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Applications of Negligence LawUnder the doctrine of respondeat superior (let the master answer), an employer can be held liable for the negligent acts of employees while they are acting on the employers behalfThe worker must be an employeeThe employee must be acting within the scope of employment when the negligent act occurredA parent can be held liable if a child uses a dangerous weapon to injure someoneMost states have laws that hold parents liable for willful and malicious acts of children that result in property damage to othersOwners of wild animals are held strictly liable for injuries to others

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Current Tort Liability ProblemsRecently, risk managers, business firms, physicians and liability insurers have been troubled by:A defective tort liability systemMedical malpracticeCorporate fraud and lax corporate governance

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Current Tort Liability ProblemsDefects in the present tort liability system include:Rising tort liability costsInefficiency in compensating injured victimsUncertainty of legal outcomesHigher jury awardsLong delays in settling lawsuits

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Exhibit 19.1 Types of Damages

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ExerciseCar clash: manufacturer, negligent drivers were suited:

the manufacturer of the vehicle is 0.5 percent responsible for the accident, it may be required to pay a large percentage of the damages. Which rule does it apply?

Joint and several liability rule.

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ExercisesWhat is negligence?

What are the four element of negligence? Explain briefly.

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ExercisesWhat is strict liability?

Explain 1.Compensatory damages2.special damages, give example3. general damages, give example

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ExercisesApplication question

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Application questionHints for part (a): Look at (1) Existence of a legal duty. (2) Failure to exercise that duty. (3) Damages or injury. (4) Proximate cause relationship.

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Show Whirlwind Mowers is guilty of negligence. One must establish the following:

(1) Existence of a legal duty. there is a legal duty not to produce a product that could harm someone. (2) Failure to exercise that duty. The product is defective and harmful: the blade flew off.

(3) Damages or injury. Andrew is injured, (4) Proximate cause relationship. The proximate cause of loss is a mower blade that flew off and injured Andrew. An unbroken chain of event between the negligent act and the injury

From examination of the facts above, Whirlwind Mowers appears to be guilty of negligence.

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(b) Under the doctrine of res ipsa loquitur, the very fact that the event occurs is sufficient proof that the defendant is negligent: The injury would not have occurred if the lawn mower had been manufactured properly. The injury would not have occurred if the blade had not torn lose from the machine. (c) Andrew may receive an award for special damages that compensate the claimant for determinable and itemized losses, such as medical expenses, the loss of earnings, and damage to property. Andrew may also be awarded general damages for losses that cannot be specifically itemized, such as pain and suffering, disfigurement, and the loss of future earnings. Finally, punitive damages may be awarded where the objective is to punish Whirlwind Mowers so that others are deterred from committing the same wrongful act.

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