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Chapter 6: Special Tort Liabilities of

Business Professionals
Pages 99-110 Week Four
October 3rd, 2012

The Professional
 Professional: a person with special skills not possessed by most individuals
 Possession of these skills disinguish the professional from other business persons or service
providers in the sense that the person who engages the services of the professional will normally
rely on the professional’s experise to perform services they cannot or do not wish to perform
themselves
 An important number of characterisics disinguish the professional from other service
providers. These include a structured educaional and training program, a system for recogniion
and accreditaion of the person, a standard for the performance of the skills, and an oversight
body (such as law society, insitute chartered accountants or college physicians and surgeons) to
perform these duies and enforce the standards for performance
 The oversight body must also have the authority to revoke the professional designaion from
persons who fail to maintain the standards of performance for the profession

Professional Standards and Professional Associations

 In order to ensure that the public is protected, legislatures have passed legislaion for the
establishment of professional associaions to control and regulate their members
 These duies include the oversight of training and educaion of potenial members to ensure that
they meet a competence level to pracice the profession, to ensure that competence levels are
maintained, and to discipline members who fail to maintain the standards of competence or the
standards of the associaion
 Most of the professional associaions have established standards of competence for their
members, and these are usually set out as a set of rules of conduct. These standards are oten
referred to by the courts in cases where a professional is accused of negligence in the
performance of professional services
 Look at page 100 to see an example
 It also states that a lawyer must recognize the limitaions on his or her ability to handle a legal
mater, and to take steps as may be required to ensure that the client has appropriate advice,
such as direcing the client, to another lawyer with greater experise in the paricular legal
mater

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The Professional-Client Relationship

Contract

 The professional-client relaionship is usually created by a contract between the professional and
the client. Under the terms of the contract, the professional person agrees to perform certain
speciied services for the client in return for a fee
 The contract establishes a contractual duty on the part of the professional to perform the agreed
professional services
 Breach of contract cases usually are a result of careless or negligent performance of the
professional service, but a breach of contract may also apply where a professional person enters
into a contract to perform a service for a client, then refuses to perform the service
 The principle disincion of the professional relaionship as opposed to the ordinary business
relaionship, is the extent of the knowledge imbalance between the paries

Fiduciary Duty of Care

 Fiduciary duty: a duty to place a client’s interests above the professionals own interests
 A professional engaged to provide advice or informaion in a business acivity where the
professional advice would be relied upon by one or both paries to the transacion must ensure
that the professional advice or informaion provided is not only carefully prepared, but that the
advice is open and unbiased

Tort Duty of Care

 Look at cases on page 102

 The professional has a duty to maintain the standard of skill that the profession itself has ixed
for its members
 The standard is that of the competent (skilled) and carful “reasonable person” trained to
exercise the skills of the profession

Informed Consent
 Informed consent: the full and understandable explanaion of the risks associated with a course
of acion, and the clear understanding by the client or paient
 One of the obligaions upon professionals acing in ield which can create tort liability is the
obligaion to explain procedures and obtain consent to acion from the party who will be
afected by the professional service
 If something less than informed consent is given, the professional is exposed to full liability for
foreseeable harm. He or she is relying on luck to avoid harm to the client, which is not
professional or ethical
 Professional negligence extends beyond carelessness in carrying out duies, and extends as well
to statements made and informaion provided to clients
 The court held that an acion could lie for negligent misstatements or negligent
misrepresentaion when a plainif would prove that it relied upon the skill or experise of the
persons or party that made the negligent statements or representaions

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 Negligent misrepresentaion: negligent misstatements made by a professional to a client

 Great Britain has suggested that a threefold test be used to determine liability for economic loss
caused by negligent misrepresentaion. The test would consider 1) whether the harm was
foreseeable, 2) whether there was a relaionship between the paries of suicient proximity, and
3) that in terms of public policy and the circumstances it would be just and reasonable to impose
the duty on the party making the statement

Accountants
 The impact of negligence by a professional accountant may fall on others who did not contract
for the accountant’s services, but who relied upon the accountant’s advice or informaion to
their detriment
 The court ruled than an individual shareholder cannot take acion for a wrong commited against
the corporaion that results in a loss. Only the corporaion can bring such an acion.

Lawyers
 Clients are enitled to expect that the advice that they receive from their lawyers would not only
be carefully considered, but would also be accurate in terms of the client’s rights or duies under
the law
 Clients are also enitled to expect that the documents will legally and accurately carry out the
client’s wishes
 The standard of care imposed on a lawyer is that of a skilled and careful member of the
profession, and the failure to maintain this level of competence in the performance of the
lawyer’s duies to the client may consitute negligence
(Example pg 108)
 Solicitor-client privilege: the duty of a lawyer to keep conidenial informaion provided by a
client

Engineers
 The most common relaionship between a professional engineer and a client is the relaionship
between a building contractor and the civil engineer, but there are many diferent engineering
specialies, each providing engineering experise to a paricular clientele
 The standard of care of the professional engineer is that of a competent and carful engineer
trained in that paricular area of engineering specialty
 The liability of an engineer is not limited to the client that engages the services of the engineer,
but also to the subsequent purchasers of the construcion project
(Example pg 108)

Architects
 Architects are professionals whose area of experise is generally limited to the design and
supervision of the construcion of buildings and structures and the surrounding grounds
 Normal approach for the engagement of the services for an architect is through a contract.

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 If the architect is negligent in designing the project, or fails to properly supervise the
construcion, liability in tort for negligence may arise in either or both instances
 Notes: the relaionship between the architect and the client is contractual, and the architect may
limit his or her liability for loss to a speciic amount in the contract, or the architect may by
contract be only required to prepare the design, and not supervise the construcion of the
project
(Example pg 109)

Semi-Professionals and Other Skilled Persons

 Persons engaged in business aciviies where some experise, special knowledge, or skill is
required may also be held responsible for losses sufered as a result of their careless act or
omissions
 Look at example on page 110
Checklist for professional Liability
1. Is the professional, in fact, a professional in the eyes of the law?
2. Does a relaionship, a contractual or otherwise, link the injured party and the professional?
3. Did the injured party rely on the professional to his or her detriment?
4. Do any damages arise on the Hedley Byrne principle? ( ?????)
5. Do any damages arise on the basis of a iduciary duty?
6. Does any statutory extension of liability apply?
The answers to these quesions may provide an indicaion of professional liability

- Professionals get their standards of care from their governing bodies and their schools
Fidiciary duty: PProfessional has to put the clients interest ahead of his own or else he is breaching
iduciary duty
(Eg: someone asks for best bank and consultant tells him to go to TD because he makes 1000$ of each
referall that the client doesnt know about

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