Ch 04

Fundamentals of Business Fundamentals of Business LawLaw

Summarized Cases, 8th Ed., and Excerpted Cases, 2nd Ed.

ROGER LeROY MILLERInstitute for University Studies

Arlington, Texas

GAYLORD A. JENTZHerbert D. Kelleher Emeritus Professor in Business Law

University of Texas at Austin

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning.

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Learning ObjectivesLearning Objectives• What is a tort?• What is the purpose of tort law? What

are the two basic categories of torts?• What are the four elements of

negligence?• What is meant by strict liability? In

what circumstances is it applied?• What is a cyber tort, and how are tort

theories being applied in cyberspace?


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Basis of Tort LawBasis of Tort Law• A tort is a civil, legal injury to a

person or property caused by a breach of a legal duty.

• Plaintiff (the injured party) sues the Defendant (the Tortfeasor) for damages:– Compensatory Damages.– Punitive Damages.– CASE 4.1 Buell-Wilson v. Ford Motor

Co., (California, 2008).


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ClassificationsClassifications• Three Torts:

– Intentional.– Unintentional (negligence-no fault).– Strict Liability (absolute liability).


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• Assault and Battery.– Assault: the reasonable apprehension or fear

of immediate contact.– Battery: completion (contact) of the assault.– Defenses:

• Consent.• Self-Defense and Others.• Defense of Property.

Intentional TortsIntentional TortsAgainst PersonsAgainst Persons


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• False Imprisonment.– Confinement or restraint of another person’s

activities without justification.– Merchants can detain a suspected shoplifter

as long as there is probable cause.• Infliction of Emotional Distress.

– Extreme and outrageous conduct.– Some courts require physical symptoms.

Intentional TortsIntentional TortsAgainst PersonsAgainst Persons


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• Publication of a false statement as fact (oral or written) that injures a person’s good reputation.– CASE 4.2 Lott v. Levitt, (U.S. District

Court, Illinois, 2007).– Third party must hear or see statement.– Statements made on the internet may be

actionable.

DefamationDefamation


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• An individual who re-publishes the statement will be liable.

• Statement must hold someone up to contempt, ridicule or hatred in the community.

• Slander per se (no proof of damages is required):– Loathsome communicable disease.– Professional impropriety.– Imprisonment for a serious crime.– Unmarried woman is unchaste.



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• Defenses:– Truth is normally an absolute defense.– Statement was Privileged:

• Absolute: judicial and legislative proceedings.• Qualified: good faith, limited.

– Public Figures: plaintiff must show statement made with “actual malice.”



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• Invasion of the Right to Privacy.– Person has the right to solitude. Breach of

that duty is a tort.• Appropriation.

– Use of another’s name or likeness without permission, and for the user’s benefit.

Intentional Torts Intentional Torts Against PersonsAgainst Persons


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• Fraudulent Misrepresentation.– Intentionally deceive another to believe in a

condition that is different from the condition that already exists.

• Knowing misrepresentation of fact. • Intent to induce innocent party to rely.• Justifiable reliance by innocent party.• Causation and Damages.

– Contrast: “puffery” or statements of opinion.

Intentional Torts Intentional Torts Against PersonsAgainst Persons


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• Wrongful Interference with Contractual Relationship.– Valid, enforceable contract exists between

two parties.– Third party knows about contract.– Third party intentionally causes either party

to breach the original contract.

Wrongful InterferenceWrongful Interference


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• Wrongful Interference with 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.

Wrongful InterferenceWrongful Interference


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• Trespass to Land.• Trespass to Personal Property.• Conversion.• Disparagement of Property.

– Slander of Quality.– Slander of Title.

Intentional Torts Intentional Torts Against PropertyAgainst Property


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• Negligence is an unintentional tort.• Occurs when someone suffers injury

because of the defendant’s failure to comply with a legal duty.

• Defendant (tortfeasor) creates foreseeable risk of injury.

Unintentional TortsUnintentional Torts(Negligence)(Negligence)


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Negligence: Analysis Negligence: Analysis • Did the Defendant owe the Plaintiff a

legal duty of care?• Did the Defendant breach that duty?• Did the Plaintiff suffer a legal injury?• Did the Defendant’s breach of duty

cause the Plaintiff’s injury?


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Negligence: Care and Negligence: Care and BreachBreach

• Duty of Care and Breach.– Duty is based on reasonable person standard. – How would a reasonable person have acted

under the circumstances?– Duty of Landowners to business invitees and

tenants to keep common areas safe.– Duty of Professionals to clients (attorneys,

CPA’s, doctors).


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Negligence: Injury & Negligence: Injury & DamagesDamages

• Injury Requirement and Damages.– Plaintiff must suffer a legally recognizable

injury.– Not all injuries can be compensated.

• Causation.– Causation in Fact (“but for” test).– Proximate Cause (foreseeably strong

connection).


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Defenses to NegligenceDefenses to Negligence• Assumption of the Risk.• Superceding Intervening Cause.

– Event must be unforeseeable.• Contributory Negligence (few

jurisdictions).– Plaintiff recovers nothing if he is at fault.

• Comparative Negligence (more common).– As long as Plaintiff is less than 50% at fault

he can recover a pro-rata share of the verdict.


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Special Negligence Special Negligence DoctrinesDoctrines

• Res Ipsa Loquitur.• Negligence Per Se. Violation of law is

legal breach of duty. Plaintiff must show:– Defendant broke a law/statute.– Plaintiff is in special class to be protected; and– Statute designed to prevent injury to Plaintiff.

• “Danger Invites Rescue” doctrine.• Dram Shop Acts.


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Strict LiabilityStrict Liability• Does not require fault, intent or breach

of duty.• Usually involves ‘abnormally

dangerous’ activities and risk cannot be prevented.

• Dangerous Animals.• Product Liability—manufacturers and

sellers of harmful or defective products.


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Cyber TortsCyber Torts• Can a person be liable for a tort

committed in cyberspace?• Communications Decency Act (1996).

– “No provider/user of an interactive computer service shall be treated as the publisher …provided by another information content provider.

– CASE 4.3 Fair Housing Council of San Fernando Valley v. Roommate.com, LLC (9th Circuit, 2008).


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SPAMSPAM• Who should be liable for “spam” and

computer viruses that cause injury?– Federal CAN-SPAM Act 2003.

• Is SPAM trespass to chattel?

Ch 04

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