Dear bloggers, in this month’s release, we are going to attempt to understand the importance of American tort law from a business point of view. This issue is often reported in the news from the consumer’s point of view. We believe that the manufacturer is liable for the defects of their products, but the real issues go much deeper than that. For those different issues, we will devote some detailed discussions during this month’s blog.

Why do torts liability exists? The reasons are numerous, and in my opinion, it is reasonable if we consider the most important functions that scholars have identified on tort liability

• Compensation for injuries. Perhaps the most important question that it is addressed by tort law is who is responsible for the payment of a wrongdoing. Is the responsible party the victim or the actor? One does not need to understand law in-depth to answer that the victim should not pay. Tort law is the practice that lets us define in which cases and circumstances actors would have to assume the burden of paying for damages.

• Deterrence or prevention of injurious conduct. Another function of tort law imposes fear of the consequences of negligent actors. The fear of tort law might condition one’s behavior to a more appropriate level of care, that the actor otherwise would not use, without the possibility of a tort claim.

When we speak of tort law, the first thought that comes to mind is negligence liability caused by accidents, but tort law is much more detailed than that. Even further, we can find several cases of liability in which negligence has nothing to do with the case per se. However, negligence is a direct consequence of problems with the product or the service provided by the company.

For a business person, the most important part of tort law is usually the products liability because this rule will determinate the level of responsibility that he or she will owe to one’s customers.

However, the category of products liability is considered to be part of the inadvertent physical injury in tort law, along with negligence and strict liability. One of the main differences between products liability and negligence liability is payment. In negligence liability, payment is given because firstly, one looks to reimburse the losses of the victim, and secondly, because of deterrence.

Products liability, on the other hand, looks to generate action of the manufacturer, forcing him or her to review his production process in order to avoid as many mistakes as realistically possible in order to protect the general public.

This means that it does not matter if the manufacturer can prove that he or she was not negligent, and that the defect product was only a minor mistake, or an accident. Such facts are not important to determine responsibility; a harmful result caused by a faulty product is enough proof to claim that the manufacturer is liable for the harm. Other claims could be important after the fact, as will be discussed in the punitive damage trial post.

Reference: Legal > What Level of Care Should a Service Provider have towards its Consumers to Avoid Liability under Tort Law?

As we discovered, the general rule under tort law is negligence liability, in which the defendant will be held liable for one’s actions if a jury determines that the level of care used by the defendant under the case’s circumstances was unreasonable.

Sometimes, in exceptional cases and always based on public policy reasons, the law applies a higher standard of liability. This means that the level of care used by the actor in the incident that resulted in damages is inapplicable. This rule focuses on the level of risk that the activity itself creates for others.

When the law applies a standard that any wrong outcome will result in liability for the actor, regardless of one’s care level, one is faced with a strict liability rule.

In all these cases, the law permits a plaintiff to recover damages from a defendant without proving that the defendant acted unreasonably. One only needs to prove that the defendant was engaged in the activity, and that the damages are a result of the actions of the defendant; or, in other words, that the action of the defendant directly resulted in the wrongdoing.

For example, in many states, if you drive over the permissible speed limit, you are liable under strict liability standards for any damages you cause to others during an accident. This is because one chose to violate the rules established for driving.

There are two main arguments that justify this kind of liability. Some argue that such liability is a kind of corrective justice because the person that creates the dangerous situation is the one that pays for its consequences. The second argument suggests that by imposing strict liability, people will use an appropriate level of care, which develops one’s civic conduct. In most strict liability cases, the actor is the only individual in a position to exercise control over a certain activity. For example, if a company wants to build nuclear reactor facilities to preserve and create energy, it will be liable for any accident concerning the reactor.

One of the traditional cases of strict liability it is a fire, where an individual intentionally starts a fire on one’s own land. Imagine a case where the owner of a lot wants to burn excess brush, and the fire spreads onto neighboring land. The individual will be held liable under a strict liability rule because he or she created the risk, which resulted in wrongdoing and damages.

On a modern approach, strict liability rules are based on the creation of abnormally dangerous activities, which are exceptional activities that most individuals would not engage in. This theory is based on the argument that because the risk is unreasonable, we can recognize it since the risk has the potential to greatly harm others. In addition, there is no alternative for diminishing the harm by exercising greater care, etc.

Reference: Legal > Exculpatory Agreements: How to Avoid Some Causes of Liability

One of the most important ways in which tort law is applicable on a day to day basis for any business is through its employees. From the moment a business makes the decision to hire an individual, that person is connected to the company, in more ways than simply providing services for the organization. For this reason, a good personnel selection can avoid several legal problems for any employer.

The question of whether or not a company should be liable for damages incurred by its employees is the kind of speculation that provokes very different answers, depending on one’s personal view and one’s answer. For a consumer, the response is clear; of course, a company should be held liable for the actions of any employee. For the management of the organization, on the other hand, this situation depends on the circumstances. The company will try to reduce, to the extent possible, the number of situations in which the company pays for any damages resulting from the consequences of its employees’ actions.

The general rule would be that a person cannot be held liable for the actions of another. But in this case, tort law provides a solution based on public welfare, creating an exception to this general rule.

We need to consider that in some exceptional cases, it is possible to hold one person liable for the actions of another, if one is in a situation applicable to strict liability to a third party, which is called “vicarious liability.” Under this law, the main point of interest and that requires examination is not the actor that generated the wrongful act. The responsibility is not based on a simple fault.

According to the vicarious liability doctrine, an employer is responsible for the actions of an employee because the company is the responsible party of the employee that committed the wrongful act.

Does vicarious liability mean that an employer is liable for any tort action of an employee? Of course not! An employer will only be liable for an employee’s actions that were carried out by the employee based on the scope of their employment.

For example, say you own a pizzeria. For that reason, you need to hire a driver to deliver your pizzas. If the driver hits a pedestrian while delivering a pizza, the company can be held liable under vicarious liability. But, if the delivery person hits a pedestrian after one’s shift at the pizzeria is over, the driver is the only responsible party for the wrongdoing.

What elements help us determinate if the employer is potentially liable for the tort? This involves a case by case review. One aspect that can always help to answer this problem relates to the actions that the employee is directly responsible for.

Was the tort committed under the scope of employment? If the actor was carrying out the assignment that one was hired to perform, the employer could be held liable for the damages suffered by the pedestrian in the pizzeria case.

Also see: Legal > Why the Implied Warranty of Merchantability is a Tort and not a Breach of Contract

Products liability it is a specific area of tort law, which covers contract law previsions, and this matter is important to the general public. The creation of this field of law originated during the Industrial Revolution based on the breach of warranty of products. In essence, this is a breach of contract, but courts soon realized that this approach limited the liability of the manufacturer, negatively impacting consumers with less power in the contractual agreement.

This approach of tort law is based on simple principles, namely that products are bought by consumers to satisfy a certain need. The basic expectation of a consumer is the ability of the purchased product to meet one’s needs.

Two arguments are used by this doctrine to establish when a manufacturer has breached his or her responsibilities, triggering a products liability cause:

• Implied warranty of merchantability: According to the rules of the Uniform Commercial Code 2-314, the base to determine a product’s viability is based on how the product is ordinarily used. In order to be acceptable, the product needs to be made of an appropriate, average quality. This means that the product fulfills consumer expectations, and does not cause any damage to consumers.
• Negligence: On the other hand, the manufacturer has to take all possible precautions in order to prevent and to avoid physical harm resulting from the use of one’s products.

How can we determine if the courts will believe that a certain product, which allegedly harmed a consumer, was not the fault of the manufacturer? A manufacturer could use “the risk-utility test” to clarify one’s argument. If the costs of redesigning the product are ignored or if the manufacturer does not properly warn the consumer of a product’s possible risks, then the manufacturer will be held liable for any damages based on product negligence.

However, we can point out that if the product does not fulfill the expectations that a consumer would reasonably expect, the manufacturer should be responsible for the inefficiency of the product. Again, we need to address reasonableness as a potential factor in determining a claim. If a consumer buys a car, it can be reasonably assumed that one would use the car for transportation. In this case, if the car does not work, one would use the implied merchant warranty approach to recover damages. On the other hand, if a consumer goes to a restaurant and suffers food poisoning, and the food was poorly prepared, then the customer can expect to recover damages based on the negligence of the establishment.

There are three potential causes of wrongdoing that can be used as arguments in a products liability claim, and these can be avoided by improving the policies and practices of a production process. The next three blogs discuss these causes of action in detail, which are: manufacturing defects, design error and failure to warn the consumer.

Reference: Legal > Requirements for Punitive Damages

To recognize a tort, a potential plaintiff needs to find several elements in order to identify if he or she has a case. First, one needs to prove that the defendant neglected a law/duty. One finds this law in rules and general standards because they are obligations that everyone is forced to observe. Second, it must be proved that the actor breached said duty, or in other words, did not obey the rule. Third, one must show that the breach of the duty was the proximate cause of the tort, meaning that the legal breach was the primary reason why the wrong occurred. And finally, there must be damage, which can be represented by the losses of the victim.

In order to understand products liability, we need to first understand two basic concepts of tort law that reveal some instances where public policy decides to allocate the loss expenses in any tort law case.

The first is negligence, which makes the actor liable only if one was not using proper care when performing the activity that caused the damage. And second, strict liability, which establishes that the amount of care an actor used when one’s action generated the damage does not matter. This is applicable if one’s actions when the damage was incurred are considered by the law as risky.

To understand negligence liability, consider your car. Anyone that has being involved in a car accident that was not one’s fault, yet still was liable for the car´s repair expenses, will understand the concept. It is only fair that if a person acts negligently, generating damages to a third party, one is held liable for that action, and, as a result of these actions, must pay for damages.

Every time that we face a negligent action, the basic issue that we need to understand is that the actor did not intend for the action to consequently harm anyone. If this was not the case, one would enter other field of tort law, governed by intentional torts. This blog will not discuss intentional torts because no manufacturer intentionally tries to cause damage to his consumers.

But how can we tell that we are facing a negligent act? There are several principles that help one establish liability in such cases. The most important law used by US courts is the reasonable person standard. This principle means that one will only be held liable if a reasonable person would have used a higher level of care.

When is an actor supposed to exercise any level of care? One has a duty to exercise reasonable care every time that one’s conduct might potentially cause physical harm to others. This means that any activity that involves any risk to a third party could potentially generate negligence liability under such rules.

In conclusion, for any tort claim, the question of whether the care exercised by the defendant meets reasonable person standards will always be determined by a jury. A jury’s members will be able to appropriately determine if a common person, under the same circumstances, would have acted as the defendant did.

Reference: Legal > Consumer’s Negligence and with Manufacturing Defects?