Essentials of Business Law, 9th edition
INSTRUCTOR’S MANUAL
Chapter 34 Professionals’ Liability
LESSON OVERVIEW
While the previous chapter dealt with the various aspects of product liability, Chapter 34 deals with
professionals’ liability by discussing the characteristics of a professional, the distinction between the
malpractice of professionals and other forms of negligence by nonprofessionals, the elements of a
malpractice lawsuit that are applied to professionals, along with examples of professional malpractice
that might be caused by health care providers, accountants, financial planners, architects and engineers,
attorneys, insurance agents and brokers, and others. Students will also learn how professionals protect
themselves against the losses that might result from being found liable for malpractice or negligence.
Finally, students’ understanding of the topics is evaluated through objective-type questions, discussion
questions, and case scenarios. Students are encouraged to conduct their own research through the use of
the Internet and other sources.
CHAPTER OUTLINE
A. PROFESSIONALS (p. 568)
B. MALPRACTICE (p. 568)
C. ELEMENTS OF MALPRACTICE (pp. 568-569)
D. LIABILITY FOR PROFESSIONAL MALPRACTICE (pp. 569-574)
1. Liability of Health Care Providers (pp. 569-570)
2. Liability of Accountants (pp. 570-571)
3. Liability of Financial Planners (p. 571)
4. Liability of Architects and Engineers (pp. 571-572)
5. Liability of Attorneys (p. 572-573)
6. Liability of Insurance Agents and Brokers (pp. 573-574)
7. Other Professionals’ Liability (p. 574)
E. REDUCING PROFESSIONALS’ RISK OF LIABILITY (p. 574)
F. CHAPTER SUMMARY (p. 575)
G. CHAPTER ASSESSMENT (pp. 575-581)
1. Matching Legal Terms (pp. 575-576)
2. True/False Quiz (pp. 576-577)
3. Discussion Questions (p. 577)
4. Thinking Critically About the Law (p. 578)
5. Case Questions (pp. 578-579)
6. Case Analysis (pp. 579-581)
7. Legal Research (p. 581)
KEY TERMS
Key terms are listed at the beginning of each chapter, posted in the student textbook margins, and
placed in bold in the copy. They are listed here for your quick reference.
§ professional (p. 568)
§ malpractice (p. 568)
§ Good Samaritan laws (p. 569)
§ loss of consortium (p. 569)
§ churning (p. 571)
§ statute of limitations (p. 572)
§ whole life insurance (p. 573)
§ term insurance (p. 573)
LEARNING OUTCOMES
The chapter Learning Outcomes will help you and the students discover the concepts and information
that should be understood upon completion of the chapter. You may want to access the PowerPoint
(PPT) slides for Chapter 34 when you begin the study of the chapter and discuss each Learning
Outcome. Each Learning Outcome will be covered separately in the Instructor Notes, but they are
shown here in total as an overview of the sections being presented in Chapter 34. The corresponding
text page numbers and PPT slides are listed next to each outcome. These slides should be used to
reinforce the main points of the lecture.
After completing this chapter, the students will be able to:
1. Explain the characteristics of a professional. (p. 568, PPT slide 2)
2. Distinguish between the malpractice of professionals and other forms of negligence by
nonprofessionals. (p. 568, PPT slide 3)
3. Explain how the elements of a malpractice lawsuit are applied to professionals. (pp. 568-569, PPT
slide 4)
4. Provide examples of professional malpractice that might be caused by health care providers,
accountants, financial planners, architects and engineers, attorneys, insurance agents and brokers, and
others. (pp. 569-574, PPT slides 5-17)
5. Explain how professionals protect themselves against the losses that might result from being
found liable for malpractice or negligence. (p. 574, PPT slide 18)
LECTURE OUTLINE
A. Professionals
A professional is a person who performs highly specialized work that depends on special abilities,
education, experience, and knowledge. Professionals generally are members of state and national
professional societies, such as bar associations or medical societies, that establish entry requirements,
set levels of competence for performance, accredit educational institutions, develop ethical standards,
and discipline members.
B. Malpractice
Malpractice refers to a professional’s improper or immoral conduct in the performance of his or her
duties through carelessness or lack of knowledge. While the term is usually applied to physicians,
dentists, attorneys, and accountants, it may be applied to all professionals. In law, malpractice is a
specific type of negligence, that is, the malpractice lawsuit is really a negligence lawsuit in which a
professional is the defendant.
C. Elements of Malpractice
As was true for product liability lawsuits discussed in Chapter 31, a claim of negligence must generally
prove each of four elements, for if even one of these is not present, an action for negligence will be
dismissed.
D. Liability for Professional Malpractice
The following discussion explains how specific professionals can commit malpractice or engage in
behavior that might result in a charge of negligence.
1. Liability of Health Care Providers
A medical professional commits malpractice when his or her actions demonstrate that he
or she has failed to observe accepted standards of performance and, as a result, the
patient suffers injury or death.
2. Liability of Accountants
Accounting professionals are liable to their clients and to third parties when they fail to
observe established standards for their profession and if such failure has caused clients
or third parties to suffer a loss.
3. Liability of Financial Planners
Financial planning is a profession in which practitioners attempt to advise their clients,
who can be either individuals or businesses, of the best ways to manage their financial
affairs.
4. Liability of Architects and Engineers
Architects design and supervise the construction of buildings and other large structures.
Engineers usually design devices or installations of a complex nature, such as bridges
and power-generating stations. Each specialty involves work that, if done negligently,
could result in injury to others. Both architects and engineers are subject to lawsuits for
negligence if their work results in injury to parties with whom they have contracted or to
third parties.
5. Liability of Attorneys
An attorney is liable to a client if he or she fails to exercise due care in handling a
client’s affairs. If the attorney is in general practice, the standard of performance is that
of other attorneys engaged in similar practices in the area.
6. Liability of Insurance Agents and Brokers
Insurance agents and insurance brokers are deemed to possess superior knowledge of
insurance and to have the ability to use their expertise to protect buyers against various
kinds of losses.
7. Other Professionals’ Liability
Most other types of professionals are subject to lawsuits for negligence when they fail to
perform according to the standards expected of them. Educators and their schools have
been sued for failure to educate students to an expected level. Travel agents have been
sued for selling substandard hotels and tours.
E. Reducing Professionals’ Risk of Liability
Nearly all professionals carry some form of liability insurance to protect against the possibility of being
adjudged negligent. However, professionals need to consider additional precautions. Many professional
groups conduct workshops and training sessions to help members of the profession reduce the risks that
lead to negligent actions and the lawsuits that frequently result.
INSTRUCTOR NOTES
A resulting answer or explanation is provided below for each Learning Outcome in Chapter 34. Every
outcome is also mapped to corresponding text page numbers, PPT slides, and relevant chapter
assessment exercises and activities for ease of reference and use.
LO1. Explain the characteristics of a professional.
A professional is a person who performs highly specialized work that depends on special abilities,
education, experience, and knowledge. Professionals generally are members of state and national
professional societies, such as bar associations or medical societies, that establish entry requirements,
set levels of competence for performance, accredit educational institutions, develop ethical standards,
and discipline members. Many professionals must pass a state-administered examination and gain
accreditation, certification, or a license before they are permitted to work in their field.
Text Pages: 568
PowerPoint: Slide 2
LO2. Distinguish between the malpractice of professionals and other forms of negligence by
nonprofessionals.
Malpractice is a specific type of negligence; that is, the malpractice lawsuit is really a
negligence lawsuit in which a professional is the defendant. The distinction that developed between
malpractice and other forms of negligence in part stems from the fact that the performance of certain
professionals is known as a “practice” and the people served are referred to as “patients” or “clients”
rather than customers.
Text Pages: 568
PowerPoint: Slide 3
Discussion Questions: 21
LO3. Explain how the elements of a malpractice lawsuit are applied to professionals.
In a malpractice lawsuit, the professional owes his or her client, as well as all third parties who are
foreseeably impacted by the professional’s work, a duty to either perform an action or not perform an
action. In determining whether a defendant has breached his or her duty, the defendant’s act or failure
to act is measured against the standard of care required by a reasonable professional in the same field.
The plaintiff must show that the professional defendant’s act or failure to act directly caused the injury
or loss and that he or she was injured or sustained some other loss as a result of the professional
defendant’s act or failure to act.
Text Pages: 568-569
PowerPoint: Slide 4
Discussion Questions: 22
LO4. Provide examples of professional malpractice that might be caused by health care providers,
accountants, financial planners, architects and engineers, attorneys, insurance agents and brokers,
and others.
Examples of professional malpractice include a physician who fails to prescribe the proper treatment, a
psychiatrist who fails to alert the authorities and intended victim of a client’s plan to cause harm, an
accountant who fails to file a tax return in a timely manner, a financial planner who fails to explain
investment risks, an architect who fails to design a structure with proper materials, an attorney who
fails to inform a client of his or her legal options, and an insurance agent who fails to recommend the
correct kind of insurance.
Text Pages: 569-574
PowerPoint: Slides 5-17
Discussion Questions: 23-25
Thinking Critically About the Law: 30-31
Case Questions: 32-34
Case Analysis: 35-38
LO5. Explain how professionals protect themselves against the losses that might result from being
found liable for malpractice or negligence.
Professionals can protect themselves against the possibility of being adjudged negligent by purchasing
liability insurance. In addition, many professional groups conduct workshops and training sessions to
help members of the profession reduce the risks that lead to negligent actions and the lawsuits that
frequently result. Many states require continuing education for certain professionals in order for the
individuals in the professions to retain their licenses.
Text Pages: 574
PowerPoint: Slide 18
Discussion Questions: 26
Thinking Critically About the Law: 27-29