VI. TORTS. The law of torts provides recovery for conduct which society, through the courts and legislatures, has defined as civil wrongs. Torts, such as intentional torts, can also consti- tute criminal conduct, for which prosecution will result. In a tort action, the injured party sues to recover compen- sation for the injury sustained as a result of defendant's wrong- ful conduct, with the primary purpose of tort law being to compensate the injured party and, in certain instances, to punish the conduct of the wrongdoer by the award of punitive damages. a. Intentional Torts. Intentional torts are perhaps the oldest torts and involve conduct which, in many instances, is also criminal conduct. The "intent" of an intentional tort does not necessarily require a hostile or evil motive, but rather, con- notes that the wrongdoer intends the consequence of his act, or the consequences are believed likely to occur. Therefore, intent still exists where "A" shoots a gun into a crowd and, instead of striking "B", strikes "C". The intent was to strike "B", but the likelihood of someone being injured was high, and therefore, there is sufficient intent. Infants and incompetents are gener- ally held liable for intentional torts. As with tort law gener- ally, new intentional torts are occasionally discovered. i. Intentional torts - person. These include: (1) Battery (offensive bodily conduct to a reasonable person). (2) Assault (objective reasonable apprehen- sion of fear of immediate bodily contact). (3) False imprisonment (intentional confine- ment by physical barrier or threat so person feels unfree to leave). (4) Emotional distress (a more recent inten- tional tort exceeding the bounds of acceptable conduct and considered outrageous, such as sexual or racial insults, horrible (practical) jokes, etc. Courts generally require proof of physical injury to limit fraudulent claims.) (5) Defamation ( false communication regarding a person's reputation,  communicated  without the defense of privilege - literary is liable, including t.v. and radio, whereas spoken is slander). (6) Invasion of privacy, with four distinct sub-torts, including: appropriation of name or likeness (Virginia has a statute); intru- sion upon seclusion; public disclosure of private facts; and false light. ii. Intentional torts - property. Well-estab- lished and old are intentional torts against property interests, such as: (1) Trespass (entering upon land or possess- ing a thing without permission). (2) Nuisance (a non-trespassory invasion interfering with the victim's use and enjoyment of the land). (3) Conversion (damage or a taking of per- sonal property, so award of the price is available, and the lesser trespass on personal property which is short of conver- sion, requiring less damages or deprivation). iii. Intentional torts - business and economic interests. These include: (1) Interference with contract relations (encouraging another to breach an existing contract; note: if contract is at will, plaintiff must also show additional inten- tional conduct, such as fraud, duress, etc.) (2) Disparagement (essentially, defamation against a business or product of business, with the privilege being that of honest competition as opposed to an intent to damage or convey false information.) (3) Fraud and misrepresentation (fraud hav- ing five elements:  a false factual statement,  material in nature,  said with intent to cause reliance,  and causes reasonable reliance,  to victim's damage) (misrepresentation usually in the form that is non-intentional, such as negligent or innocent misrepresentations - frequently occurring where a negligent or innocent mistake has been made as to representation of a product or service). iv. Defenses. Defenses to intentional torts have included: (1) Consent (example: to battery). (2) Privilege (examples: to battery, defamation, and disparagement). (3) Self-defense (to assaults and more egre- gious conduct also constituting crimes, and as to property; special rules apply to the use of reasonable force and, in particular, to deadly force). b. Negligence. Negligence is conduct which falls below the standard established by law for the protection of others against unreasonable risk of harm. Negligent conduct involves creating such unreasonable risk by the failure to exercise reasonable care under the circum- stances for the safety of another person or property, which fail- ure proximately causes the injury or damage. i. Elements of negligence: (1) Duty to use reasonable care under the circumstances. What is considered "reasonable care" and conduct constituting "unreasonable risk" will change over time. Factors that judges and juries consider (con- sciously or not) include: (a) Probability of harm. (b) Seriousness of conduct. (c) Utility of conduct creating harm. (d) Cost of reducing risk. Courts have also discussed duty of reasonable care in terms of whether defendant could foresee this harm to this plaintiff (really a proximate cause issue), sometimes con- cluding "no duty owed". The standard of "reasonable care" is the conduct of an "ordinary person using reasonable care under the circumstances." It is an objective "reasonable person" standard, and is generally a jury question. There are special rules with respect to: (i) Negligence defined by statute (negligence per se). (ii) Negligence where defendant has exclusive control of the cause of the injury (res ipsa loquitur). (iii) Premises liability (focus on plaintiff's status to determine differing levels of duty owed). (2) Breach of duty (failure to use such care). Conduct falling below the standard of reasonable care established constitutes breach of the duty. (3) Cause in fact. The question is whether the conduct, literally in a cause-and-effect manner, contributed or led to the harm complained of, as opposed to harm that would have occurred anyway, regardless of the negligence. The "but for" test has been used. (4) Proximate cause. The public policy ele- ment. There will be liability only for foreseeable consequences of negligence. The question is whether this harm to this plaintiff was a foreseeable consequence of the negligence; that is, whether the defendant knew or should have known of the consequences. Related notions are the doctrines of superseding cause, which breaks the chain of causation, and mere intervening cause, which does not. (5) Damages. Actions for negligence require personal injury or property damages. More modern tort theories, including negligent emotional distress, provide damage proof problems and are limited in fear of fraudulent claims. ii. Defenses. There are numerous defenses applicable, including: (1) Contributory or comparative negligence (did plaintiff exercise reasonable care in plaintiff's own conduct?). (2) Assumption of the risk (a  knowing and  voluntary assumption of the risk). (3) Statute of limitations (was suit brought in time - look for time plaintiff actually knew or should have known of injury and any basis to suspend ["toll"] the running of the period). c. Strict Liability. Strict liability is liability regardless of fault, and is not based on negligent or intentional conduct, but rather, is based on policy considerations, such as the nature of the activity engaged in. Where products are involved, strict liability in tort is imposed for products sold in a defective condition by manufacture or design which are unreasonably dangerous for normal use. i. Abnormally dangerous activity. Old common law has established categories of conduct which are considered of such a high-risk nature and so uncommon as to require imposition of liability regardless of fault, such as blasting and pile- driving, and the keeping of "wild" (as opposed to domestic) animals. Liability for these activities is imposed regardless of fault or reasonable care used. ii. Products liability. In an effort to adjust the law to the realities of the marketplace and distribution of products and unequal bargaining power created and wealed by manufacturers and retailers as compared to consumers, users, and sometimes bystanders, the law of products liability relies upon strict liability in tort as one of many theories of liability to impose liability where there is a showing that: (1) Seller is a merchant of goods of that kind; (2) There is a defective condition (by manu- facturer - failing to meet own specifications or design - by meeting specifications but designed inadequately, or by failing to ade- quately warn); and if such defect renders the (3) Product unreasonably dangerous in normal use. A trend in strict liability cases has been high jury awards, including award of punitive damages, especially where the defendant knew of a design defect which it allowed to continue on the market. Defendants will attempt to inject notions of negligence into strict liability cases, including defendants' use of all due care, compliance with the state of the art, lack of foreseeability, etc. Evidence of the use of reasonable care goes to the issue of fault and should not be pertinent evidence in a strict liability case. iii. Defenses. Defenses to a products liability case include: (1) Comparative negligence (contributory negligence is not a defense, and most states use comparative, which is). (2) Assumption of the risk (voluntary and known). (3) Misuse (danger unknown, but use known to be inappropriate; note: foreseeable misuse may not be a defense). (4) Substantial alteration of the product. (5) Statute of limitations and statute of repose. d. Warranties. The Uniform Commercial Code, Article II, governing the sale of goods, also provides for three categories of warranties which have been used by consumers in personal injury products liability cases, even though there is no privity of contract between defendant-seller and plaintiff-purchaser, the privity defense having been abolished in most states. i. Express warranty - UCC §2-313 - any factual representation, description, sample, or model which is the basis of the bargain and is not mere puffing or opinion). ii. Implied warranty of merchantability - UCC §2-314 - created by law without conduct where seller is a merchant of goods of that kind, warranty being that the goods would be fit for ordinary use). The main warranty claim for defective products liability cases where the product is not fit for normal use, such as a bottle exploding, an appliance shocking, an automobile throttle sticking, and the like. This warranty requires no evidence of reliance. iii. Implied warranty of fitness - UCC 2-315 - seller need not be a merchant, but evidence must show buyer relies on seller's special expertise, skill, knowledge, etc., to create or sell goods for a particular buyer purpose, reasonably known or actually known by seller. Reliance is required. iv. Defenses. (1) Disclaimers. Express and implied war- ranties can be readily disclaimed per UCC 2-316. A merchantability disclaimer must mention the word "merchantability." Both implied warranties can be disclaimed with statements "as is with all faults" and other language indicating no warranty. Express warranties sometimes are hard to disclaim, and the court may find the disclaimer con- tradictory to the express warranty and therefore not enforce it. (2) Limitation of remedy (UCC 2-719) can be used to limit remedies, and, many times, remedies are expressly limited to repair and replace, coupled with a disclaimer of all warranties except "herein made." Such limitation is designed to eliminate liability for consequential damages -- a limitation permitted between commercial parties, but considered prima facie unconscionable with respect to consumer goods that cause a physical injury. Federal legislation (Magnuson-Moss Warranty Act) requires all warranties to be either "full," which is a war- ranty for repair and replace and no disclaimer of implied warran- ties, or a "limited" (where disclaimer exists), or give no war- ranty at all. Note: Even where recovery for consequential damages has been limited, such limitation may be found uncon- scionable and struck. (3) The privity defense (horizontal and ver- tical) are generally gone. There remains an issue of horizontal privity with respect to bystanders. (4) Notice of breach is still required. VII. CONTRACTS. A contract is a promise or set of promises for the breach of which the law gives a remedy, or for the performance of which the law in some way recognizes a duty. e. Early History. The concept of contract came into existence thousands of years ago, and traces to trade conducted in Middle Eastern and European countries. As U.S. law originally emanates primarily from the common law of England, contract law, too, was for many years unmodified by English decisions, which traditionally made contract formation a difficult task, requiring strict adherence to formalities in order for the parties to be bound to contract. Simultaneously, contract law, consistent with its time, had no consumer protection orientation. During the 18th and 19th centuries, most contract relations were handled on a face-to-face basis. The U.S. had not yet experienced significant industrialization, and, consequently, the goods bought and sold were unsophisticated. This allowed a buyer (later known as a "consumer") the opportunity, on his own, to examine the goods and reach a reliable purchase decision. Likewise, public policy favoring the Industrial Revolution (laissez-faire capitalism) encouraged the courts to take a "hands-off" approach to regulating economic relations. In addition, the general common-law rule of "buyer beware" (caveat emptor) allowed sellers in superior bargaining positions to gradually exert considerable influence over buyers. Exculpatory clauses were routinely used to relieve liability for consequential damages caused by defective products. f. Modern Common Law. Modern common law began to consider the growing inequality in bargaining power between merchant sellers and consumers. Modern case law began to break down the formalities of strict adherence to formation, making contract formation easier to find. Simultaneously, contracts became easier to break by the further development of contract defenses. g. UCC - Sale of Goods. In addition, the Uniform Commercial Code (UCC) was drafted and thereafter adopted by state legislatures to conform commercial law with respect to the sale of goods to the modern and reasonable practices existing in business. The UCC (for purposes of this course) deals only with the sale of goods, as opposed to services or interests in land. The UCC changed formation rules, making contracts between merchants and between merchants and consumers far easier to make, and imposes in every case the duty of good faith and reasonableness. h. Classifications of Contract. i. Express and implied. An express contract by actual language. Contract can be oral or written. Implied in fact contracts arising from conduct. A related notion is contracts implied in law (quasi- contract), where no contract exists typically because acceptance is missing, but contract is implied by the law to prevent unjust enrichment if the elements are satisfied. ii. Bilateral and unilateral. Contracts are mainly bilateral - a promise for a promise. Few other contracts are unilateral - a promise (typically, the offer) followed by an act (the acceptance). The UCC, for instance, foresees an offer accepted by any reasonable means, including the promise to ship or prompt shipment -- an acknowledgement of the existence of unilateral contracts in business. Special rules apply to prevent unfair revocation of contract offer prior to acceptance in unilateral contracts. iii. Subject matter. The terms and conditions of a contract will obviously vary, depending upon the subject matter of the contract. A contract for the sale of goods or for personal service will obviously vary from that of real estate or the transfer of stock or securities. i. Elements of Contract Formation. Although contracts vary in their terms, all must have the elements of offer, acceptance, and consideration to be binding. i. Offer. (1) Three requisites for an offer include: (a) Communication; (b) Intent to be bound; and (c) Sufficient definiteness. Jokes, preliminary negotiation, and adver- tisements are usually not considered statements or actions with the intent to be bound. A contract will not be made in the absence of material terms, because it is not sufficiently defi- nite. The UCC radically changes this common-law rule by implying reasonable terms in the place of missing terms in many cases. See UCC §§2-204, 305, 306, 308, 309, and 310. Outputs and requirements contracts have been a common-law exception to the material term requirement, always having a missing quantity term, but are limited by the duty of good faith. UCC §2-306 recognizes these contracts. (2) Duration of the offer: Offer's duration is (1) for a specified time, or, if not specified, a reasonable time under the circumstances, or (2) until revocation (revo- cation can occur at any time before acceptance, unless there is an option contract, a UCC §2-205 firm offer, a statutory bid, unilateral acceptance or promissory estoppel), or (3) rejection by offeree, or (4) counteroffer, or (5) death or insanity of offeror, or (6) destruction of subject matter, or (7) subsequent illegality. All of these terminate the offer. ii. Acceptance. Acceptance presents four main areas to consider, including: (1) Communication of acceptance. An accep- tance generally must be communicated by words or conduct. It is the exception that silence is enough for acceptance. (2) Communication by means specified, and if not specified, reasonable means. (Note: Common law recognizes unilateral contracts, and the UCC allows acceptance by shipment.) (3) Variant acceptances. Common law requires "mirror image" so that any different term in acceptance is counteroffer, and no contract occurs. Compare UCC §2-207, which states that different or additional terms do not prevent contract formation; that, as between merchants, additional terms become part of the contract unless there is a material alteration, the offer expressly limits, or there is an objection made; whereas between merchants and consumers or between consumers and consumers, additional terms are mere proposals. (4) Timing problems. An offer, revocation, and counteroffer are all effective upon receipt by the other party. Acceptance is effective on dispatch (mailbox rule) unless the offer expressly neutralizes. iii. Consideration. Consideration is the legal value which supports a promise in a contract relationship, and may consist of a legal detriment to the promissee or a legal benefit to the promissor. A legal detriment is achieved where the promissee agrees to forebear from doing something he is entitled to do or agrees to perform an act which he is not legally required to do. A legal benefit is something which the promissor receives but has no legal right to claim. The above concepts are difficult to identify and enforce. Look instead for a bargained-for exchange and value given by each side to the contract. Ask whether each party is giving up something new as opposed to something the party was already obligated to receive or to provide. Another way to see the consideration element is by comparing a contract to a gift situation. Because consideration is typically present today, it is many times defined in the negative, with categories of cases showing that it is missing. (1) Legal sufficiency requirement. This is the exchange for value. The long-held rule is that the court will not look to the "adequacy" of consideration. A bad bargain made shall nevertheless be enforced. However, where consideration is so very inadequate as to suggest the presence of fraud, duress, undue influence, and the like, the court may rule not to enforce a given contract for a "failure of consideration," which is a very inadequate consideration given. A related concept is mutuality. Contracts must have a mutuality of obligation, because consideration is an exchange; if one side is bound but the other side is not, there is no exchange and no binding contract. Employments at will lack mutuality, because the employee can quit at any time. The courts therefore say the employer can fire at any time, because contract law requires mutuality. (2) Illusory contracts, where one side is bound but the other side can do what it wants in its discretion, are not enforceable. (3) Pre-existing duty. After a contract is made, the parties have their respective contract duties defined that they must perform. However, during performance, one party may insist on additional pay or different work than addressed by the contract. The pre-existing duty rule avoids such unjustified contract modifications. The proponent of additional money must show an unforeseeable condition has occurred or that the work is of a different nature or additional nature, and therefore not covered by the agreement, and therefore supportable by consideration - that is, additional money for additional work. The UCC modifies this rule as between merchants (UCC §2-209), stating that contract modifications, including price increases, do not require any consideration to be binding. The law of settlements and accord and satis- faction focuses on whether the amount at hand is disputed or undisputed, with different rules applicable to find or not find consideration. (4) Current exchange. The bargain must feature a current exchange of consideration, and one's promise must not be premised upon receipt in the past of "gifts" from the other party or driven by feelings of "moral obligation" to pay back the other party. Past consideration, such as receipt of gifts or favors, is not considered sufficient to make a current new promise. Statutes are modifying this area. Note: Consideration substitutes. Consideration substitutes include special rules with respect to reaffirmation of barred promises (statute of limitations, infancy, and post- bankruptcy), promissory estoppel (promise reasonably expected to cause reliance, reasonable reliance - in the area of some dona- tions and construction bids). jrbrown A:\Highlight.PDF
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