Fundamentals of Business Law, 9E: Roger Leroy Miller

FUNDAMENTALS OF
BUSINESS LAW, 9E
ROGER LEROY MILLER
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TORT LAW
CHAPTER 4
LEARNING OBJECTIVES
1. What is the purpose of tort law? What types

of damages are available in tort lawsuits?
2. What are two basic categories of torts?
3. What is defamation? Name two types of
defamation.
LEARNING OBJECTIVES (CONT’D)
4. Identify the four elements of negligence.

5. What is meant by strict liability? In what
circumstances is strict liability applied?
INTRODUCTION
• Torts are wrongful actions.

• Through tort law, society tries to ensure that
those who have suffered injuries as a result of
the wrongful conduct of others receive
compensation from the wrongdoers.
THE BASIS OF TORT LAW
• The Purpose of Tort Law

• To provide remedies for acts that cause:
• Physical injury or interfere with physical security and freedom.
• Destruction or damage to property.
• Harm to intangible interests, such as personal privacy, family
relations, reputation, and dignity.
• Damages Available in Tort Actions

• Compensatory damages—intended to compensate
or reimburse plaintiffs for actual losses.
• Punitive damages—may also be awarded to
punish the wrongdoer and deter others.
TYPES OF COMPENSATORY
DAMAGES
• Special Damages – compensate the plaintiff
for quantifiable monetary losses
• Such as medical expenses, lost wages, cost of
repairing or replacing damaged property
• General damages – compensate individuals for
nonmonetary aspects such as pain and
suffering
EXAMPLE
• Seaway Marine Transport owns the Enterprise,

a large cargo ship with 22 hatches for loading
coal
• When the Enterprise positioned itself to
receive a load of coal on Lake Erie, it struck a
land based machine operated by Bessemer
• Court found Seaway liable for negligence and
awarded 500K special damages
PUNITIVE
• May be awarded to deter others from similar

behavior
• Only appropriate if defendant’s conduct
particularly bad or unacceptable
• Mainly intentional torts, some gross
negligence
• Classifications of Torts
• Intentional torts result from the intentional
violation of person or property (fault plus intent).
• Unintentional torts (torts involving negligence)
result from breach of a duty to act reasonably (fault
without intent).
• Defenses
• Reasons why the plaintiff should not obtain
damages.
INTENTIONAL TORTS
AGAINST PERSONS
• Intentional torts against persons:
• Assault and battery
• False imprisonment
• Intentional infliction of emotional distress
• Defamation (libel or slander)
• Invasion of privacy
• Fraudulent misrepresentation
• Abusive or frivolous litigation
• Wrongful interference
INTENTIONAL TORTS
AGAINST PERSONS
• Assault and Battery
• An assault is an unexcused and intentional act that causes
another person to fear immediate harm.
• A battery is an assault that results in physical contact.
• Example: Threatening someone with a gun is an assault.
Firing the gun (if the bullet hits the victim) is a battery.
INTENTIONAL TORTS
AGAINST PERSONS
• False Imprisonment
• The intentional confinement or restraint of another person’s
movement without justification is false imprisonment.
• The person under restraint does not wish to be restrained.
• Undue force or unreasonable detention can lead to liability
for a person or business.
INTENTIONAL TORTS
AGAINST PERSONS
• Intentional Infliction of Emotional Distress
• An extreme and outrageous act, intentionally committed,
that results in severe emotional distress to another.
INTENTIONAL TORTS
AGAINST PERSONS
• Defamation
• Defamation of character involves wrongfully
hurting a person’s good reputation.
• Libel—written defamation (or another permanent
form, such as a digital recording)
• Slander—oral or spoken defamation
PUBLICATION REQUIREMENT
• The tort of defamation requires publication of

a statement or statements
• Publication means that the defamatory
statements are communicated to persons other
than the defamed party (even if its just one
other person!)
DAMAGES FOR LIBEL & SLANDER
• Once a defendant’s liability for libel (written

defamation) is established, general damages
are presumed
• However, to prove damages for slander
(spoken defamation), the plaintiff must prove
special damages, ie that the slanderous
statement caused actual economic losses
SLANDER PER SE (4 TYPES)
• 1. A statement that another has a particular

type of disease (historically leprosy and STDs,
but now mental health)
• 2. Statement that another has committed
improprieties while engaged in a business or
trade
SLANDER PER SE
• 3. A statement that another has committed or

been imprisoned for a serious crime
• 4. A statement that a person (usually a woman)
is unchaste or has engaged in serious sexual
misconduct
DEFENSES AGAINST DEFAMATION
• TRUTH!
• The truth is normally an absolute defense
against a defamation charge
PUBLIC FIGURES
• Public officials or anyone in the public

limelight are considered public figures
• In order for a public figure to bring a
defamation suit, must prove actual malice
• Actual malice is when a statement is made
with either knowledge of a falsity or reckless
disregard for the truth
INTENTIONAL TORTS
AGAINST PERSONS
• Invasion of Privacy
• Wrongful intrusion into a person’s private activities
• Publication of information that places a person in a false
light
• Disclosure of private facts that an ordinary person would
find objectionable
• Using a person’s name, picture, or other likeness for
commercial purposes without permission
INTENTIONAL TORTS
AGAINST PERSONS
• Fraudulent Misrepresentation
• A false representation made by one party, through
misstatement of facts or through conduct.
• The intention is to deceive the other party to his or her
detriment.
5 ELEMENTS OF FRAUDULENT
MISREPRESENTATION
• 1. Misrepresentation of facts or conditions with
knowledge they are false or reckless disregard for the
truth
• 2. An intent to induce another to rely on the
misrepresentation
• 3. Justifiable reliance by deceived party
• 4. Damages suffered as a result of the reliance
• 5. A causal connection between the misrepresentation
and the injury suffered
INTENTIONAL TORTS
AGAINST PERSONS
• Abusive or Frivolous Litigation
• Malicious prosecution—When a person initiates a lawsuit
out of malice and without probable cause, and loses the suit
can be sued for malicious prosecution
• Abuse of process—When a person uses a legal process
against another improperly or to accomplish a purpose for
which it was not designed
INTENTIONAL TORTS
AGAINST PERSONS
• Wrongful Interference
• The knowing, intentional interference by a third party
between other parties for the purpose of advancing the
economic interests of the third party
• Business torts involving wrongful interference are
generally divided into two categories:
• A contractual relationship
• A business relationship
3 ELEMENTS NECESSARY FOR
WRONGFUL INTERFERENCE WITH A
CONTRACTUAL RELATIONSHIP
• 1. A valid, enforceable contract must exist
between two parties
• 2. A third party must know that the contract
exists
• 3. The third party must intentionally induce a
party to breach the contract
INTENTIONAL TORTS
AGAINST PROPERTY
• Wrongful actions that interfere with
individuals’ legally recognized rights with
regard to their land or personal property
include:
• Trespass to land
• Trespass to personal property
• Conversion
• Disparagement of property
PROPERTY
• Real property is land and things “permanently”

attached to the land
• Personal property consists of all other things,
which are basically moveable
INTENTIONAL TORTS
AGAINST PROPERTY
• Trespass to Land
• Trespass to land is the invasion of another’s real
property without consent or privilege.
• Examples: Walking or driving on someone else’s
land without permission or constructing a building
so that part of it is on your neighbor’s property.
TRESPASS
• Before a person can be a trespasser, the

property owner must establish that person as a
trespasser (ex: posted no trespassing signs)
• Anyone who enters land to commit an illegal
act is presumed a trespasser
DEFENSE TO TRESPASS
• One defense is to show the trespass was

warranted, ex: entering property to help
someone in danger or peril
• Another defense is a license
• A licensee is one who is invited onto the
property of another for the licensee’s benefit
(ex: meter reader)
INTENTIONAL TORTS
AGAINST PROPERTY
• Trespass to Personal Property
• Trespass to personal property is unlawfully damaging or
interfering with the owners’ rights to use, possess, or enjoy
their personal property.
INTENTIONAL TORTS
AGAINST PROPERTY
• Conversion
• Conversion is wrongfully taking or using the personal
property of another without permission.
• Conversion is the civil side of crimes related to theft, but it
is not limited to theft.
NEGLIGENCE
• The tort of negligence occurs when someone

suffers injury because of another’s failure to
live up to a required duty of care.
• Central to the tort of negligence is the concept of a
duty of care, the principle that people are free to
act as they please so long as their actions do not
infringe on the interests of others.
NEGLIGENCE
• When someone fails to comply with the duty

to exercise reasonable care, a potential tort
may have been committed.
• The tortfeasor neither wishes to bring about
the consequences of the act nor believes that
they will occur.
NEGLIGENCE
• In order to succeed in a negligence action, the

plaintiff must prove:
1.Duty
2.Breach
3.Causation
4.Damages
DUTY
• Basic principle underlying the duty of care is:

• People in society are free to act as they please
so long as their actions do not infringe on the
interests of others
• When someone fails to comply with this duty,
a tortious act can occur
DUTY
• Failure to live up to a standard of care may be

an act or an omission
• It can be a careless act or a carefully
performed act that is dangerous and results in
injury
REASONABLE PERSON STANDARD
• In determining whether a duty of care has been

breached, the court will use the reasonable
person standard
• How would a reasonable person act in the
same circumstances
DUTY OF LANDOWNERS
• Expected to exercise reasonable care to protect

persons coming onto their property from harm
• Business invitees – persons who come to the
premises of another for business purposes (ex:
grocery store slip and falls)
• Owners of premises have a duty to keep
premises safe
LANDOWNER
• Has a duty to discover and within a reasonable

time, remove any hidden dangers that might
injure a customer or other business invitee
• Store owners have a duty to protect customers
from slipping and injuring themselves on
merchandise that has fallen off the shelves
• Like grapes or bananas
PROFESSIONALS
• Professionals such as doctors, dentists,

engineers, accountants, etc. who are required
to have a certain level of knowledge and/or
training will be held to a higher standard of
care
• Breaching this standard could result in
malpractice
CAUSATION
• If a person fails a duty of care and someone

suffers an injury, the wrongful activity must
have caused the harm for the activity to be
considered a tort
• 2 questions
• 1. Causation in fact
• 2. Proximate cause
CAUSATION IN FACT
• Did the injury occur because of the

defendant’s act, or would it have occurred
anyway?
• If an injury would not have occurred without
the defendant’s act, there is causation in fact
• Also known as ”but for” cause
• But for the wrongful action, the injury would
not have occurred
PROXIMATE CAUSE
• The legal cause of the injury

• Exists when the connection between an act and
an injury is strong enough to justify imposed
liability
• Used by judges to limit liability when cause is
too far away from the injury
• Palsgraf v. Long Island Railroad
DAMAGES
• For a tort to have been committed, plaintiff

must have suffered a legally recognizable
injury
• To recover damages, plaintiff must have
suffered some harm, loss, or wrong
• If no harm or injury results from a given
negligent action, there is nothing to
compensate and thus no tort
NEGLIGENCE
• Defendants often assert that plaintiffs failed to

prove the existence of one or more of the
required elements for negligence.
• Basic affirmative defenses are:
•Assumption of risk
•Superseding cause
•Contributory or comparative negligence
DEFENSES
• Assumption of the risk

• A plaintiff who voluntarily enters into a risky
situation, knowing the risk involved, will not
be allowed to recover
• Requirements for this defense are:
• 1. knowledge of the risk
• 2. voluntary assumption of the risk
SUPERSEDING CAUSE
• An unforeseeable intervening event can break

the connection between an act and the injury
• The event acts as a superseding cause and
relieves a defendant of liability for the injuries
caused by the intervening event
CONTRIBUTORY AND
COMPARATIVE NEGLIGENCE
• Contributory – common law doctrine which
stated that a plaintiff who was also negligent
could not recover anything from defendant
• Comparative – mostly replaced contributory,
states that a plaintiff can only recover to the
percentage the defendant was negligent
NEGLIGENCE
• Special Negligence Doctrines and Statutes

• Res ipsa loquitur
• Negligence per se
• Special negligence
NEGLIGENCE
• Res ipsa loquitur—plaintiff need not prove

negligence on the part of the defendant
because “the facts speak for themselves”
• Negligence per se—when a person violates a
statute or an ordinance and the violation
causes another to suffer the kind of injury that
the statute or ordinance was intended to
prevent
NEGLIGENCE
• Special negligence—prescribe duties and

responsibilities in certain circumstances
• Violation of these statutes will impose civil
liability.
• Examples of special negligence statutes: dram
shop acts and Good Samaritan statutes are
examples.
STRICT LIABILITY
• Under the doctrine of strict liability, a person

may be held liable, regardless of the degree of
care exercised, for damages or injuries caused
by their product or activity.
• Liability without fault
STRICT LIABILITY
• Strict liability includes liability for harms

caused by:
• Abnormally dangerous activities
• Exotic or domestic animals
• Defective products (product liability)
• Blasting

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Fundamentals of Business Law, 9E: Roger Leroy Miller

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FUNDAMENTALS OF

1. What is the purpose of tort law? What types

4. Identify the four elements of negligence.

• Torts are wrongful actions.

• The Purpose of Tort Law

• Damages Available in Tort Actions

• Seaway Marine Transport owns the Enterprise,

• May be awarded to deter others from similar

• The tort of defamation requires publication of

• Once a defendant’s liability for libel (written

• 1. A statement that another has a particular

• 3. A statement that another has committed or

• Public officials or anyone in the public

• Real property is land and things “permanently”

• Before a person can be a trespasser, the

• One defense is to show the trespass was

• The tort of negligence occurs when someone

• When someone fails to comply with the duty

• In order to succeed in a negligence action, the

• Basic principle underlying the duty of care is:

• Failure to live up to a standard of care may be

• In determining whether a duty of care has been

• Expected to exercise reasonable care to protect

• Has a duty to discover and within a reasonable

• Professionals such as doctors, dentists,

• If a person fails a duty of care and someone

• Did the injury occur because of the

• The legal cause of the injury

• For a tort to have been committed, plaintiff

• Defendants often assert that plaintiffs failed to

• Assumption of the risk

• An unforeseeable intervening event can break

• Special Negligence Doctrines and Statutes

• Res ipsa loquitur—plaintiff need not prove

• Special negligence—prescribe duties and

• Under the doctrine of strict liability, a person

• Strict liability includes liability for harms

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