Chapter 19

The Liability Risk

Outcomes
Understand the basis of Legal Liability
Know how to apply
Law of Negligence
Imputed Negligence
Res Ipsa Loquitur

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A lady spilled coffee on herself and

become a millionaire.
Stella Awards
McDonalds Hot Coffee_(360p).flv

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Liability Risk
McDonald Case
Product Liability?
Negligence?

Not just business firms, professionals, pet

owners, drivers or even governments are
liable.

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Dog owner being sued

2 years ago my dog bit a lady that was attempting to pet them. Our
insurance paid for her hospital bills. There was no hospital stay just
some stitches. Our insurance company paid for all of the bills and made
a settlement offer. They declined and we just got served with a civil law
suit.
Source: http://www.lawguru.com/

Dog sitters sued for $1M after pet dies

New York City couple is suing a dog sitting service for $1 million,
claiming the sitter let their pet, Percy the French bulldog, overheat in a
van and then dropped him off to die alone in their Manhattan
apartment.
Bankers Robert Hardon and Laura Garner left 5-year-old Percy with
Doggie Love of Queens for one night in July 2009. The lawsuit says a
sitter drove the pooch from Astoria to the West End apartment in the
back of an enclosed Econoline van and dropped him off in the empty
apartment. Percy was found dead hours later in front of an air
conditioner. When vets examined Percy that night they found that his
body temperature was high and that he had suffered seizures.

The pet sitters told the New York Post that the company expects to be
cleared in the case and that the worker no longer is employed at the
agency.
Source:
http://www.walletpop.com/2010/07/15/dog-sitters-sued-for-1m-after-pe
t-dies/
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Questions
A cat came into your house, and your dog
bit the cat. Can the cat owner sue you for
damages? Or can you sue the cat owner for
damages?
A thief came into your house, of course you
know his intention. He got hurt because of
the environment of your house. Can you be
sued for his injury?
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Basis of Legal Liability

A __________is a violation of a persons legal
rights, or a failure to perform a legal duty
owed to a certain person or to society as a
whole
Legal wrongs include:
Crime (criminal wrongdoing prohibited by the
government, the government initiates the
prosecution, person committing the crime may be
sentenced to jail )
Breach of contract
Tort (civil wrongdoing, the committed person
pay compensatory or punitive damages, initiated by
the injured)
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Basis of Legal Liability

A tort is a legal wrong for which the court allows a remedy in the
form of money damages
The person who is injured (plaintiff) by the action of another
(tortfeasor, wrongdoer) can sue for damages
Torts fall into three categories:
1. Intentional, e.g., fraud, assault
knowingly spreading false information
2. Strict liability: liability is imposed regardless of negligence
or fault (without proof of carelessness or fault)
May be applied to defectively manufactured products
3. Negligence (not the same as "carelessness, even you are
careful)
Your mother bought you a drink, you discovers a bug inside
the drink and then sue the manufacturers.
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Law of Negligence
Negligence is the failure to exercise the
standard of care required by law to protect
others from an unreasonable risk of harm
The standard of care is not the same for each
wrongful act. It is based on the care required of
a reasonably prudent person (who uses good
judgment or ___________in handling practical
matters)

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Law of Negligence
Elements of Negligence
Existence of a legal duty (to protect others from harm)
Drive safely
Failure to perform that duty by law
Someone injured because your failure to replace a flat
tire (negative act, failure to act).
Damage or injury to the claimant
Car collision
Proximate cause relationship between the negligent act and
the infliction of damages
A proximate cause relationship requires an ___________
of events
An construction firm, for example, may not be able to
use no chronological proximity to escape from duty of
care if a distant future tenant inhaled poisonous gas from
the building materials

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Law of Negligence
The law allows for the following types of
damages:
Compensatory damages compensate the victim
for losses actually incurred. They include:
Special damages, e.g.,
General damages, e.g.,
Punitive damages are designed to punish people
and organizations so that others are deterred from
committing the same wrongful act
e.g. McDonald, Exxon, BP
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Law of Negligence-Defenses against

negligence
The ability to collect damages for
negligence depends on state law
Under a contributory negligence law, the
injured person cannot collect damages if
his or her care falls below the standard of
care required for his or her protection
Under strict application of common law, the
injured cannot collect damages if his or her
conduct contributed in any way to the injury

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Law of Negligence-Defenses against

negligence

Under a comparative negligence law, the financial burden of the

injury is shared by both parties according to their respective
degrees of fault
Under the pure rule, you can collect damages even if you are
negligent, but your reward is reduced in proportion to your
fault
If you are 80% at fault, your award is reduced by 80%, you
got $20 for a $100 reward
Under the 50 percent rule, you cannot recover if you are __
percent or more at fault
Under the 51 percent rule, you cannot recover if you are __
percent or more at fault
Note: At common law, if some contributory negligence could be
established on the plantiffs part, the plantiff would not be able
to claim any damages in negligence action. However, the harsh
application of common law has been ameliorated by Law
Amendment and Reform (Consolidation) Ordinance (Cap 23) in
Hong Kong. This is know as comparative negligence
Tort Law in Hong Kong: An Introductory Guide by Stephen D. Mau

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Law of Negligence-Defenses against negligence

Some legal defenses can defeat a claim for
damages:
The last clear chance rule states that a plaintiff who is
endangered by his or her own negligence can still
recover damages from the defendant if the defendant
has a last clear chance to avoid the accident but fails to
do so
You got hit when you are crossing the road at red light and
playing your iphone.

Under the assumption of risk doctrine (Volenti Non Fit

Injuria), a person who understands and recognizes the
danger inherent in a particular activity cannot recover
damages in the event of an injury
You are teaching a ____________how to drive and he
crashes in a hill. He can defend himself by using the
assumption of risk doctrine if you sue him for damages

VolentiNonFitInjuriaLatin:toonewhoiswilling,noharmisdone

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Imputed Negligence
Under certain conditions, the negligence of one person
can be attributed to another
e.g., the negligent act of an employee can be imputed to the
employer

Under a vicarious liability law, a motorists negligence is

imputed to the vehicles owner
You are driving your friends car to pickup his friend, and hit
someone, who is liable?

Under the family purpose doctrine, the owner of an

auto can be held liable for negligent acts committed by
family members
Your 10-year old daughter drives your car ..

Under a dram shop law, a business that sells liquor can

be held liable for damages that may result from the sale
of liquor (note: dramshop = bar in US)
The continual selling of liquor to a drunk man who then injures
someone
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Res Ipsa Loquitur

Under this doctrine, the very fact that the injury or
damage occurs establishes a presumption of
negligence on behalf of the defendant
Means, the thing speaks for itself

Three requirements must be met for res ipsa loquitur

("the thing speaks for itself) to apply:
The event is one that normally does not occur in the absence
of negligence
The defendant has exclusive control over the instrumentality
causing the accident
The injured party has not contributed to the accident in any
way

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Applications of Negligence Law

The standard of care owed to others depends upon the
situation
A trespasser is a person who enters or remains on the
owners property without the owners consent
The duty to refrain from injuring a trespasser is
sometimes referred to as the duty of slight care
A licensee is a person who enters the premises with the
occupants expressed or implied permission
E.g., a door-to-door salesperson
The property owner must warn the licensee of unsafe
conditions or activities which are apparent
An invitee is a person who is invited onto the premises for
the benefit of the occupant
The occupant has an obligation to inspect the premises
and eliminate any dangerous conditions
Mail person
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Applications of Negligence Law

An attractive nuisance is a hazardous
condition that can attract and injure children
The occupants of land are liable for the injuries of
children who may be attracted by some
dangerous condition, feature or article
e.g., a building contractor leaves the keys in a
tractor, and a child is injured while driving it
Or bus driver leaves the keys and

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Applications of Negligence Law

Owners and operators of automobiles who drive in a careless
manner can be held liable for property damage or bodily injury
sustained by another person
An owner who is not the operator can be held liable for the
acts of operators if an agency relationship exists
Today, governmental entities can be sued in almost every
aspect of governmental activity
The doctrine of sovereign immunity has been modified over
time
A governmental unit can be held liable if it is negligent in
the performance of a proprietary function, e.g., the
operation of water plants
Charitable institutions are no longer immune from lawsuits,
especially with respect to commercial activities
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Note(referenceonly):
Moststatesdistinguishbetweengovernmentaland
proprietaryfunctions
Agovernmentalfunctionincludesservicesthatonlythe
governmentdoes,suchasrestaurantinspection,animal
control,healthandsafetypermitsandlicenses,sanitation,
vitalstatistics,andrelatedfunctions.
Aproprietaryfunctionisonethataprivateentitycan
perform
e.g.highwaydesigncanbeproprietaryfunction
http://biotech.law.lsu.edu/
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Applications of Negligence Law

Under the doctrine of respondeat superior (let the
master answer), an employer can be held liable for
the negligent acts of employees while they are
acting on the employers behalf
The worker must be an employee
The employee must be acting within the scope of
employment when the negligent act occurred
A parent can be held liable if a child uses a
dangerous weapon to injure someone
Most states have laws that hold parents liable for
willful and malicious acts of children that result in
property damage to others
Owners of wild animals are held strictly liable for
injuries to others
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Current Tort Liability Problems

Recently, risk managers, business firms,
physicians and liability insurers have been
troubled by:
A defective tort liability system
Medical malpractice
Corporate fraud and lax corporate governance

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Current Tort Liability Problems

Defects in the present tort liability system
include:
Rising tort liability costs
Inefficiency in compensating injured victims
Uncertainty of legal outcomes
Higher jury awards
Long delays in settling lawsuits

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Exhibit 19.1 Types of Damages

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Exercise

Carclash:
manufacturer,negligentdriversweresuited:
themanufacturerofthevehicleis0.5percent
responsiblefortheaccident,itmayberequiredto
payalargepercentageofthedamages.Which
ruledoesitapply?
Jointandseveralliabilityrule.

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Exercises
What is negligence?
What are the four element of negligence?
Explain briefly.

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Exercises
What is strict liability?
Explain
1.Compensatory damages
2.special damages, give example
3. general damages, give example

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Exercises
Application question

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Application question
Hints for part (a): Look at
(1) Existence of a legal duty.
(2) Failure to exercise that duty.
(3) Damages or injury.
(4) Proximate cause relationship.

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 Show Whirlwind Mowers is guilty of negligence. One must

establish the following:
(1) Existence of a legal duty. there is a legal duty not to
produce a product that could harm someone.
(2) Failure to exercise that duty. The product is defective and
harmful: the blade flew off.
(3) Damages or injury. Andrew is injured,
(4) Proximate cause relationship. The proximate cause of
loss is a mower blade that flew off and injured Andrew. An
unbroken chain of event between the negligent act and the
injury
From examination of the facts above, Whirlwind Mowers
appears to be guilty of negligence.
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 (b) Under the doctrine of res ipsa loquitur, the very fact that
the event occurs is sufficient proof that the defendant is
negligent:
The injury would not have occurred if the lawn mower had
been manufactured properly. The injury would not have
occurred if the blade had not torn lose from the machine.
(c) Andrew may receive an award for special damages that
compensate the claimant for determinable and itemized
losses, such as medical expenses, the loss of earnings, and
damage to property. Andrew may also be awarded general
damages for losses that cannot be specifically itemized, such
as pain and suffering, disfigurement, and the loss of future
earnings. Finally, punitive damages may be awarded where
the objective is to punish Whirlwind Mowers so that others
are deterred from committing the same wrongful act.
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