Business Law Chapter 6 Homework Proof Injury an Actual Economic Lossis Required Enhancing

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Chapter 6
Tort Law
INTRODUCTION
Your students may enjoy reading this, and the next, chapterthey should see a relationship between
society’s interest in compensating injured parties and its interest in taking steps against those who cause the injuries.
It may be helpful in analyzing a given situation to note in which circumstances one interest is dominant and those in
which they are equal.
CHAPTER OUTLINE
I. The Basis of Tort Law
Tort law compensates those who suffer a loss or injury due to another’s wrongful act.
A. THE PURPOSE OF TORT LAW
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2 UNIT TWO: TORTS AND CRIMES
B. DAMAGES AVAILABLE IN TORT ACTIONS
1. Compensatory Damages
Special damages cover quantifiable losses, such as medical expenses, lost wages and benefits,
2. Punitive Damages
These punish a wrongdoer and deter others from similar wrongdoing, and are awarded only when
3. Legislative Caps on Damages
At the state level, about half of the states have limited damagesor banned punitive damages
C. CLASSIFICATION OF TORTS
Torts can be classified as intentional or unintentional. Torts committed via the Internet are cyber torts.
D. DEFENSES
Defenses available vary depending on the specific tort involved. And most states have a statute of
limitations that limits the time within which a suit can be filed.
ENHANCING YOUR LECTURE
  TORT DAMAGES IN OTHER NATIONS
 
In contrast to U.S. courts, courts in Europe generally limit damages to compensatory damages; punitive
damages are virtually unheard of in European countries. Even when plaintiffs do win compensatory
damages, they generally receive much less than would be awarded in a similar case brought in the United
States. In part, this is because citizens of European countries usually receive government-provided health
care and relatively generous social security benefits. Another reason, though, is that European courts tend to
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CHAPTER 6: TORT LAW 3
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4 UNIT TWO: TORTS AND CRIMES
FOR CRITICAL ANALYSIS
What impact might the typically greater damages awards in the United States have on a
businessperson’s decision about whether to keep the firm’s operations in the United States or move
them to another country? Does the potential cost of paying damages encourage large corporations
to outsource jobs to other nations? Why or why not?
II. Intentional Torts against Persons
An intentional tort requires intent. Intent means that the actor intended the consequences of his or her
act or knew with substantial certainty that certain consequences would result from the act. The law
A. ASSAULT
An intentional, unexcused act that creates a reasonably believable threat or fear of immediate harmful or
B. BATTERY
A battery is an unexcused, harmful, or offensive physical contact intentionally performed. The con-
C. FALSE IMPRISONMENT
False imprisonment is the intentional confinement or restraint of another person without justification.
The interest protected is the freedom to move without restraint.
Confinement can be by physical barriers, physical restraint, or threats of physical force. Moral
D. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
Infliction of emotional distress is an intentional act that amounts to extreme and outrageous conduct
resulting in severe emotional distress to another.
1. Outrageous Conduct
A single indignity or annoyance may not be enough, but repeated annoyances, coupled with
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CHAPTER 6: TORT LAW 5
2. Limited by the First Amendment
When the outrageous conduct consists of speech about a public figure, the First Amendment’s
ADDITIONAL BACKGROUND
Infliction of Emotional Distress
Imagine that Dave invites Beth to a swimming party. At the party, Dave gives Beth a suit that Dave
knows will dissolve in water. When Beth goes swimming, the suit dissolves, leaving Beth naked in
the presence of the other guests. Beth suffers extreme embarrassment, shame, and humiliation. Is
Dave liable for intentional infliction of emotional distress? Under the circumstances, Dave is liable for
Suppose that while arguing over the telephone with Michelle, an airline reservations operator,
about a full refund for a cancellation, Phil calls her a liar and says that he would punch her in the
mouth if he were there. Michelle suffers emotional distress over Phil’s statements, cannot sleep, and
becomes ill. Is Phil liable for intentional infliction of emotional distress? Phil’s statements may be
insulting, but they are not so outrageous or extreme as to result in liability. The Restatement (Second) of
E. DEFAMATION
Wrongfully hurting another’s reputation is defamation. Doing so orally is slander; doing it in writing or in
a form of communication that has the potentially harmful qualities characteristic of writing (pictures,
signs, statues, and films) is libel. To establish defamation requires proof of
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6 UNIT TWO: TORTS AND CRIMES
CASE SYNOPSIS
Case 6.1: Blake v. Giustibelli
Copia Blake retained attorney Ann-Marie Giustbelli to represent Blake in a divorce proceeding against
Peter Birzon. Blake agreed to pay Giustbelli $300 an hour. After the marriage was dissolved and the related
issues were resolved, Giustbelli sought payment for her services. Blake balked at the amount. She posted
negative reviews of Giustbelli online, including the following.
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Notes and Questions
How does posting a false statement online magnify its effect on a person’s reputation? Posting a
false statement online magnifies its effect on a person’s reputation, at least in comparison to statement
If false statements of fact were not actionable at law, would they be unethical? Yes, if false
statements of fact were not actionable at law, they would still be unethical. One of the reasons for this
In any case, the statements would be founded on deceit, and there is no school of ethical thought that
would justify such lies in these circumstances.
1. Statement-of-Fact Requirement
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2. The Publication Requirement
Defamation requires that the publication of the statement (that is, that it be communicated to
3. Damages for Libel
Because libelous statements are written, can be circulated widely, and are typically a result of
4. Damages for Slander
ENHANCING YOUR LECTURE
  IS ONLINE DEFAMATION SLANDER OR LIBEL?
 
The distinction between slander and libel is important because, as noted elsewhere, a plaintiff must prove
“special damages” to establish the defendant’s liability for slander. How does this letter of tort law apply to
online defamatory statements? This novel question came before a California appellate court in 2003. At
stake was an award of $775,000 in damages, which a trial jury had awarded to Varian Medical Systems, Inc.,
THE BOTTOM LINE
One of the defendants’ arguments in this case was that statements posted on Internet bulletin boards are
“typically freewheeling and irreverent” and that no reasonable person would regard such statements as true.
The appellate court made it clear, however, that defamatory statements, even if made online, are not exempt
from “established legal and social norms” or “the civilizing influence of the law.”
ADDITIONAL BACKGROUND
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8 UNIT TWO: TORTS AND CRIMES
Slander
McClune v. Neitzel, 235 Neb. 754, 457 N.W.2d 803 (1990), provides an example of how thoughtless
comments can become slander.
Robert McCune was a single, 27-year-old man, who grew up in Springfield, Nebraska (population: 800).
He worked in neighboring Gretna with his brother, selling lawn sprinkler systems and managing the instal-
lation crews. McCune’s mother, Betty Holz, was a home health aide. One of Holz’s coworkers was Patricia
When McCune learned of Neitzel’s statement, he began to avoid Springfield, where he had previously
visited his mother and friends at least twice a week. He avoided some family gatherings. A Springfield
resident confronted him regarding AIDS. His work deteriorated dramatically. He had problems with the
5. Slander Per Se
Exceptions to the requirement of proof of special damages are
A statement that another has a loathsome disease (including sexually transmitted diseases).
6. Defenses to Defamation
These include the truth.
a. Privileged Communications
Absolute privilegestatements made by attorneys and judges in a courtroom during a
b. Public Figures
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CHAPTER 6: TORT LAW 9
Statements made about public figures are usually related to matters of general public interest
and will not constitute defamation unless they are made with actual malice (knowledge of
falsity or reckless disregard for the truth).
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10 UNIT TWO: TORTS AND CRIMES
F. INVASION OF PRIVACY
Tort law safeguards privacy rights. To successfully sue for an invasion of privacy, a person must have a
reasonable expectation of privacy, and the invasion must be highly offensive.
1. Invasion of Privacy under the Common Law
Four acts qualify as invasions of privacy. These are
Intrusion into an individual’s affairs or seclusion—Invading someone’s home, illegally
2. Appropriation Statutes
Most states have codified the tort of appropriation or right of publicity. States differ as to the degree
G. FRAUDULENT MISREPRESENTATION
To constitute fraudulent misrepresentation, a statement of fact must be involved. Reliance on an opinion
is not justified unless the person making the statement has superior knowledge of the subject matter,
and puffery, or seller’s talk, is too subjective. The elements are
Misrepresentation of facts or conditions with knowledge that they are false or with reckless
CASE SYNOPSIS
Case 6.2: Revell v. Guido
Joseph Guido bought nine houses in Stillwater, New York, that lacked a functioning waste disposal
system. Guido had a septic system installed. When sewage was later found on the property, Guido had the
system partially replaced. Meanwhile, the Environmental Protection Agency found diesel fuel in samples of
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CHAPTER 6: TORT LAW 11
A state intermediate appellate court affirmed. The facts of the case met all of the requirements for
establishing fraud. The property’s information sheet and Guido’s responses to the bank’s questions
misrepresented the facts. Guido’s intent to deceive was shown by the “cavalier manner” in which he
answered the questionnaire and his knowledge of the problems with the septic system. A visual inspection of
the property did not reveal those problemsthe plaintiffs' reliance on the property information sheet was thus
justified. The evidence of damages included “receipts, invoices, billing statements and canceled checks.
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Notes and Questions
Why did the defendant commit fraud in this case? The most likely motive for the defendant’s
How does the result in this case fulfill society’s interest in compensating injured parties and its
interest in taking steps against those who cause the injuries? Tort law compensates those who suffer a
loss or injury due to another’s wrongful act. The purpose of tort law is to provide an injured party with a
1. Statement of Fact versus Opinion
To constitute fraudulent misrepresentation, a statement of fact must be involved. Reliance on an
2. Negligent Misrepresentation
Unlike ordinary fraud, negligent misrepresentation does not require knowledge that a
H. ABUSIVE OR FRIVOLOUS LITIGATION
Persons have a right not to be sued in the absence of a legally just and proper reason. Torts related to
I. WRONGFUL INTERFERENCE
1. Wrongful Interference with a Contractual Relationship
Any lawful contract can be the basis for this action. The plaintiff must prove that the defendant
actually induced the breach of a contractual relationship, however, not merely that the defendant
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12 UNIT TWO: TORTS AND CRIMES
2. Wrongful Interference with a Business Relationship
Individuals may not interfere unreasonably with another’s business to gain a share of the market.
3. Defenses to Wrongful Interference
Bona fide competitive behavior is a privileged interference even if it results in the breaking of a
III. Intentional Torts against Property
A wrong against property is a wrong against the individual who has legally recognized rights with regard to
the property. The law categorizes property as real property (land and things permanently attached thereto)
and personal property (all other items).
A. TRESPASS TO LAND
Harm to the land is not required. Trespass to land occurs when a person, without permission
Enters onto another’s land.
Causes anything or anyone to enter onto the land.
Remains on the land, or permits anything to remain on it.
1. Establishing Trespass
Trespassers include guests who are asked to leave. A trespasser assumes the risks of the
2. Liability for Harm
A trespasser is liable for property damage. A property owner may be liable for injuries to the
3. Defenses against Trespass to Land
B. TRESPASS TO PERSONAL PROPERTY
When an individual unlawfully harms another’s personal property or otherwise interferes with the owner’s
C. CONVERSION
When a person wrongfully possesses or uses the personal property of another as if it were theirs,
conversion occurs.

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