Chapter 10 Torts and Product Liability Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

10-2 Categories of Torts Torts fall into one of three general categories: –Intentional torts –Negligence –Strict liability

10-3 Defamation Defamatory statement Dissemination to a third party Specificity Damages

10-4 Trade Libel and Product Disparagement (1) Clear and specific reference to the disparaged party or product, (2) knowledge the statement was false, or reckless disregard for the truth, (3) communicated to a third party.

10-5 Fraudulent Misrepresentation 1)The misrepresentation was a material fact known to be false by the tortfeasor (or reckless disregard for the truth); 2)The tortfeasor intended to persuade the innocent party to rely on the statement and the innocent party did, in fact, rely on it; and 3)Damages were suffered by the innocent party.

10-6 False Imprisonment While the merchant has the right to briefly detain a suspected shoplifter, he must be cautious about giving rise to a false imprisonment claim when detaining an individual. Merchant must follow certain guidelines: –Limited detention –Limited to premises –Seizure of property –Coercion

10-7 Business Competition Torts Tortious Interference with Existing Contractual Relationship (1) Had specific knowledge of the contract (2) Actively interfered with the contract (3) Caused some identifiable damages

10-8 Negligence When a tortfeasor causes harm to an injured party by creating an unreasonable risk of harm, the law provides the injured party a remedy regardless of the tortfeasor’s intent.

10-9 Elements of Negligence Duty: Did the tortfeasor owe a duty of care to the injured party? Breach of duty: Did the tortfeasor fail to exercise reasonable care? Cause in fact: Except for the breach of duty by the tortfeasor, would the injured party have suffered damages? Proximate (legal) cause: Was there a link between the breach of duty and the damages suffered by the injured party? Actual damages: Did the injured party suffer harm?

10-10 Assumption of the Risk 1)The injured party/plaintiff knew or should have known (by virtue of the circumstances or warning signs, etc.) that a risk of harm was inherent in the activity, and 2)The injured party/plaintiff voluntarily participated in the activity.

10-11 Strict Liability Torts Strict liability is a concept rooted in the notion that the general public benefits when liability is imposed on those who engaged in certain activities that result in harm to another party, even if the activities were undertaken in the most careful manner possible (without negligence).

10-12 Abnormally Dangerous Activities Does activity involve a high degree of risk? Is there a likelihood that the harm that results will be great? Is it possible to eliminate/reduce the risk? Is the activity relatively common? Is the location of the activity appropriate? Is there community value that outweighs the danger?

10-13 Products Liability In a products liability case, the injured party may pursue a legal remedy against the seller under one of three theories: (1) negligence, (2) warranty, or (3) strict liability.

10-14 Negligence Courts have found that manufacturers have the duty of care regarding proper design, manufacturing, testing, inspection, and shipping.

10-15 Warranty Warranty laws are important protection for purchasers because they impose liability even in the absence of negligence.

10-16 Strict Liability The seller is engaged in the business of selling such a product, and The product is expected to and does reach the user or consumer without a substantial change in the condition in which it is sold. Imposed on the seller even though seller has exercised all possible care in preparation and sale of the product.