(and the Law)
[A stand-alone module on ethics by
Law 122: Business Law
• A. What is ethics?
– Cases 1, 2.
• B. Ethical reasoning.
– Cases 3, 4.
• C. Ethics and the law
– Case 5.
• D. Ethical and Legal Reasoning.
A. What is Ethics?
• Def: Ethics is the critical, structured
examination of how individuals and institutions
should behave when their actions affect others.
– “Critical” because it is about more than just
describing existing patterns of behaviour.
– “Structured” because it is about more than
intuitions and gut reactions.
• It is about providing reasoned arguments for why we
should (or should not) behave certain ways.
Examples of Ethical Statements
• “I stopped to help at the accident scene
because it was the right thing to do.”
• “It is good to donate to charity.”
• “A good person doesn’t lie to her friends.”
• “It’s wrong to lie to your customers.”
• “Taking advantage of someone’s weaknesses
• “I admire him because of his integrity.”
Case 1: Ethics in Life
“Sami is an undergrad. While standing in line at
Starbucks one day, she sees an iPod fall out of the
side pocket of the backpack being worn by the girl
in front of her. The girl wearing the backpack
doesn’t notice. Sami picks up the iPod, and looks
around. No one else has seen.”
– What do you think is the right thing to do, here?
• Why, specifically?
– What would you think of Sami as a person if you knew
she had kept the iPod?
– Would giving the iPod back be “basic ethics,” or would it
be something special that would make you admire Sami?
– What if, instead of an iPod, it had been a $100 bill?
Case 2: Ethics in Business
• “Johnny works as a cashier at a 7-Eleven. One day
a well-dressed woman comes into the store to
buy a coffee. She hands Johnny a $20 bill, and he
hands her her change. She rushes out the door.
As she walks across the parking lot, Johnny
realizes she has handed him not one but two $20
– What should Johnny do?
• Why, exactly?
– If you were Johnny’s manager, what would you want
Johnny to do?
– If you were the customer, and you realized later what
had happened, what would you think of Johnny? Of 7-
B. Ethical Reasoning
• Figuring out the right thing to do is usually
easy: you were raised well, and so you do the
right thing most of the time!
– You are all basically decent, honest people!
• Can you think of everyday examples?
• Ethics becomes harder when important ethical
values or principles conflict.
• Ethical judgment involves weighing competing
values or principles.
– There is no formula for doing this!
Principles & Values
• In ethical reasoning, we appeal to principles
• A value is something good that we ought to
– Examples: honesty, kindness
• A principle is a rule, usually grounded in a
value, that tells you what you should do.
– “You should tell the truth most of the time.”
– “You should help people when you can.”
Ethical Principles & Values
• We can summarize a great deal of ethical thinking
by pointing to the following 4 kinds of ethical
– Consequences: we should promote good consequences
and avoid bad ones, for all concerned, in the long run.
(Happiness is good; pain is bad!)
– Fairness/justice: we should make sure that good & bad
consequences are distributed fairly. We should pay our
debts and treat like cases alike.
– Rights and Duties: we should protect rights and perform
duties. These are often “nearly absolute.”
– Character/virtue: we should consider what kind of
people we want to be, and what example we want to
Balancing Principles & Values
• Sometimes the relevant principles and values point
in the same direction, to the same ethical judgment.
– Example: when a rich person promises a poor person
some money, she has a duty to keep that promise, and
doing so is likely to do a lot of good.
• But sometimes, the relevant principles & values are
in tension, pointing in different directions.
– Example: police beating suspects might be effective in
fighting crime (a good consequence!), but would violate
• In such cases, we need to do our best to balance
competing principles and values, to figure out which
reasons are most weighty.
– There is no formula for doing so!
An Ethical Reasoning Process
1. Get your facts straight.
2. What are the options?
3. Next, ask:
A. Who will stand to lose/gain from each option? Who
will be helped or hurt in some way?
B. Will any option violate someone’s rights, or break a
C. Are there any special duties of loyalty here?
4. Weigh the importance of A, B, and C. (Again,
there’s no formula for doing that!)
5. Make a decision.
6. Is it a decision you could explain and stand by?
Right & Wrong?
• Sometimes there is a clear best answer.
• But sometimes there is not!
– Maybe all the answers you can think of involve some
• Your goal should be to think it through and
provide good reasons for a better – rather than
worse! – course of action.
– Even if your choice isn’t perfect.
• Consider: If you make a bad decision, and are
asked about it, the worst answer you can give is
“Gee, I never thought about it!”
Ethical Reasoning: Case 3
• “Imagine you are in charge of sales for a small ad agency,
and have been told by your boss that you have a bonus
budget of $5000 to divide between the two salespeople
on your team. Hardeep has generated 20% more in sales
revenue this year than Mike has. But Mike has brought in
more new customers. Mike also seems to put in more
effort per hour on the job, but Hardeep puts in longer
hours. Both could really use the money: Hardeep is still
paying off her student loans, and Mike’s wife just had a
baby. You can divide the money any way you want: it’s
– How would you divide up the bonus money?
– What ethical principles or values do you think matter here?
– Are those reasons you could explain to Mike and Hardeep? To
your boss? To your mother? To a newspaper?
Ethical Reasoning: Case 4
• “Imagine that a co-worker of yours, Katie, has been late
for work several days in a row. Your boss, Lena, has
noticed, and is clearly not happy. One day, you overhear
Lena on the phone telling the President of the company
that if Katie doesn’t shape up, she’ll fire her. The next day,
you happen to see a piece of paper on Katie’s desk – an
appointment slip from a local cancer clinic, showing a
series of morning appointments for treatment. What
should you do with this information?”
– What reasons (ethical values or principles) might
you take into consideration?
– Does the ethical duty to respect Katie’s privacy
outweigh your desire to help her keep her job?
C. Ethics and the Law
• Can you name a few activities or behaviours
that are both unethical and illegal?
• But then…
– Can you name a few activities or behaviours that
are legal, but typically considered unethical?
– Can you name a few activities or behaviours that
are probably ethically OK, but illegal?
Ethics and the Law
? ? ?
Dickenson v. Dodds (from your textbook)
• The court ruled that Dickenson had no legal
rights. Dodds’s promise was merely gratuitous. It
was not a contract, because there was no
– Do you think it was unethical of Dodds to go back on
his promise? What reasons would you give?
• Consequences? Fairness? Rights & duties? Character?
– Are there competing reasons in this case? Can you
name a reason that weighs against your own view
• Asking that question can be an important reality check!
D. Ethical and Legal Reasoning
• Ethical and legal reasoning share a lot in
– Both involve reasoning about what it would be OK
to do, or about whether past behaviour was right
or wrong (legally or ethically).
– Both kinds of reasoning require:
• An understanding of the relevant facts;
• An appreciation of relevant principles;
• Some consideration of precedent and analogy, in order
to achieve sufficient consistency of judgment.
Ethical and Legal Reasoning
• Where do we see ethics in the law itself?
– In the justification for legislation:
• Ideally, all legislation should be aimed at promoting
ethical values & principles, including:
– Promotion of social well-being;
– Protection individual rights.
• Check the preamble of any piece of legislation!
– In the reasoning of courts:
• At all levels, legal reasoning requires interpretation of
laws and constitution, in light of fundamental values and
• Judges at all levels appeal to what is “fair” and
“reasonable” and “just”.
Law-Like Sources of Ethics
• In some cases, ethical principles get written
down by various institutions.
– In such cases, the line between ethics and the law
may seem fuzzy.
– University policies;
– Professional codes;
– Corporate policies;
– International conventions.
Questions for Discussion
1. What is the social role of law? What is the
social role of ethics?
2. What is the business role of law? How does
ethics make business (the market) work
3. Why does the law not forbid everything that is
4. When the ‘letter of the law’ is not clear, how
should courts decide cases?
• The Business Ethics Blog:
• Guide to Moral Decision Making:
SOURCES OF LAW
The law does not consist of a long list of rules. The Law is constantly evolving to reflect changes in society. These changes are introduced by human agents, typically judges and legislators, who struggle to strike a delicate balance between competing interests. A statute that prohibits the sale of violent pornography violates freedom of choice, but it is nevertheless justifiable given the current state of Canadian society. What is important is not the memorization of rules, but rather an understanding of the process. You should realize that while there is considerable overlap between law and morality, those two categories are not always consistent. Within the broad class of obligations, it is possible to distinguish between moral obligations and laws. The duty to perform an easy rescue is generally a moral obligation. Moral obligations may receive severe sanctions, such as shame and guilt, if they are not met. Those sanctions, however, are informal in the sense that they are not mediated through a central body. Laws involve sanctions that are usually more severe and that are centrally mediated.
Public and Private Law
Public law is concerned with governments and the ways in which they deal with their citizens. It includes the topics of constitutional law, administrative law, criminal law, and tax law.
Private law is concerned with the rules that apply in private matters. It includes the topics of contract law, tort law, and property law. Private law is often divided into three units: tort, contract, and property. Each is critically important to business. A tort is a private wrong. It is an offence against a particular person. Like the law of contracts, the law of torts covers a great deal of territory. It can be split into three categories: (i) intentional torts, such as assault and false imprisonment, (ii) business torts, such as deceit and conspiracy, and (iii) negligence, which covers most situations in which one person carelessly hurts another.
Although there is a tendency to assume that the government is only ever involved in public law, it may also be a party in a private law matter. First, it is also possible for a private person to sue a public body. That may occur, for instance, if a person’s house is damaged as a result of a municipality’s failure to honour its duty of care in negligence by properly inspecting the construction of the building. The government is also subject to the private law when it enters into private transactions. That is true, for instance, when a government contractually agrees to purchase paper from a store.
Division of Powers
The Constitution contemplates two levels of government: federal and provincial. The division of powers is an essential element of Canadian federalism. Sections 91 and 92 of the Constitution lists topic areas in which each level of government, the federal and provincial (or territorial), can legislate or make laws.The residual power gives Parliament authority over everything not specifically allocated to the provinces. Please refer to your text book for a sampling of provisions from sections 91 and 92.
If a government attempts to make a law outside of the scope of its authority, it acts ultra vires (which means “beyond the power). Section 52 of the Constitution states: “The Constitution of Canada is the supreme law of Canada, and any law that is inconsistent with the provisions of the Constitution is, to the extent of the inconsistency, of no force or effect.” Consequently, an ultra vires law is inconsistent with the Constitution and is not really a law at all.
Many issues, however, require decisions to be formulated and implemented at a more local level. Provinces therefore create subordinate legislation that create municipalities and, in turn, that allow the municipalities to create local rules. Those local rules are known as by-laws. Although municipalities are the lowest level of government, their impact on business can be significant. Among other things, by-laws are used to license businesses, impose some sorts of taxes, plan commercial developments, and regulate parking. City hall is a powerful place.
The Canadian Charter of Rights and Freedoms – part of the Constitution
Business people are often directly affected by Charter decisions. Every Canadian, including every business person, is deeply affected by its provisions. The Charter provides the backdrop against which everything else plays out. The Charter generally does not apply against private corporations. It may not apply in favour of them either. It depends upon the circumstances. For example, notice that section 2(b) refers to “everyone,” while section 15(1) refers to “every individual.” A company is a kind of “person,” but it is not an “individual.” As a result, it enjoys freedom of expression, but not the right to equality.
In 1982, the Canadian Charter of Rights and Freedoms was written into the Constitution. As its name indicates, the Charter (as it is usually called), was introduced to protect basic rights and freedoms, such as freedom of religion, freedom of expression, and the right to equality. Consequently, even if a law was intra vires the government that enacted it, it may be struck down or modified by a court if it is found to violate a provision of the Charter. Remember, the Charter is part of the Constitution, and section 52 of the Constitution states that “any law that is inconsistent with the provisions of the Constitution is, to the extent of the inconsistency, of no force or effect.”
Although many of its rights and freedoms are quite broad, the Charter is also subject to several restrictions.
1. Government Action Section 32(1) of the Charter states that the document applies to “Parliament” and “the legislature … of each province.” Consequently, its rights and freedoms have full effect only if a person is complaining about the government’s behaviour.
2. In contrast, the Charterdoes not directly apply to disputes involving private parties. For instance, the right to freedom of expression that is found in section 2(b) does not entitle a union to picket a private corporation. The Charter generally does not apply against private corporations. It may not apply in favour of them either. It depends upon the circumstances. For example, notice that section 2(b) refers to “everyone,” while section 15(1) refers to “every individual.” A company is a kind of “person,” but it is not an “individual.” As a result, it enjoys freedom of expression, but not the right to equality.
3. Reasonable Limits Section 1 of the Charter states that the rights and freedoms are subject to “such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.” The Constitution therefore recognizes that it is occasionally acceptable to violate a person’s rights. In one famous case, the Supreme Court of Canada held that a shop owner’s freedom of expression was infringed by a law that prevented him from selling violent pornography. However, the judges also held that society was justified in banning that sort material because it is degrading, dehumanizing, and harmful to women. The law was therefore enforceable and the shop owner was prohibited from selling the offending material.
4. Notwithstanding Clause Finally, section 33 may allow Parliament or a legislature to create and enforce a law “notwithstanding” the fact that it violates the Charter. In practice, however, the notwithstanding clause is almost never used. The section requires the government to expressly declare that it isoverriding fundamental rights and freedoms. Of course, that sort of declaration is usually bad politics. It tends to upset voters.
Property Rights and Economic Rights
It is important to realize that the Charter does not contain property rights (to enjoy property) or economic rights (to carry on economic activities). The people who drafted the Charter rejected a right to “the enjoyment of property.” They were concerned that such a right would, for instance, hamper the government’s ability to protect the environment, regulate the use of land, control resource-based industries, or restrict foreign ownership of Canadian land. They were also concerned that economic rights would allow wealthy individuals to frustrate government plans to act in the public’s best interests. The Supreme Court of Canada has consequently said that there is no right under the Charter to “unconstrained freedom” in economic activities, nor is there an “unconstrained right to transact business whenever one wishes.” The denial of economic rights has also made it difficult for disadvantaged Canadians to force governments to provide social assistance
Changing the Constitution
While the Constitution does provide the basic rules for Canadian society, it is very difficult to change. A Constitutional amendment requires consent of Parliament plus two-thirds of the provinces, where those consenting provinces represent at least 50 per cent of the country’s population. The explanation for that high standard consists of the fact that a society cannot be stable if its basic rules are constantly in a state of flux. Citizens, businesses and governments cannot confidently plan for the future if they are worried that their basic assumptions may be incorrect
Reasonable Limits, Section 1
Reasonable Limits Section 1 of the Charter states that the rights and freedoms are subject to “such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.” The Constitution therefore recognizes that it is occasionally acceptable to violate a person’s rights. In one famous case, the Supreme Court of Canada held that a shop owner’s freedom of expression was infringed by a law that prevented him from selling violent pornography. However, the judges also held that society was justified in banning that sort material because it is degrading, dehumanizing, and harmful to women. The law was therefore enforceable and the shop owner was prohibited from selling the offending material.
Notwithstanding Clause Finally, section 33 may allow Parliament or a legislature to create and enforce a law “notwithstanding” the fact that it violates the Charter. In practice, however, the notwithstanding clause is almost never used. The section requires the government to expressly declare that it is overriding fundamental rights and freedoms. Of course, that sort of declaration is usually bad politics. It tends to upset voters.
The inter-related concepts of a court hierarchy, the doctrine of precedent, and the rule of law lay at the heart of the Canadian legal system.
To say that the courts are in a hierarchy simply means that they are arranged according to importance. One court is on top, some are in the middle, and several are on the bottom.
The doctrine of precedent requires a court to follow any other court that is above it in a hierarchy.
The rule of law states that disputes should be settled on the basis of laws, rather than personal opinions. The concept of a hierarchy and the doctrine of precedent support the rule of law by requiring judges to follow the courts above them.
That system has a number of benefits. One of the most important is consistency. Once an issue has been decided by a court, every court that is lower in the hierarchy must apply it. Consequently, similar cases are decided in similar ways. That sort of consistency also creates another important benefit: respect for the legal system. Even if a litigant disagrees with the trial judge’s decision in a particular case, he or she can be confident that the decision was based on law, and not merely on the judge’s personal preference.
Public Offence vs. Private Wrong
A crime is a public offence, committed against the community as a whole. Consequently, legal action generally is taken not by the individual victim, but by the Crown prosecutor. Furthermore, the usual remedies focus on punishment of the criminal. That person may be fined or imprisoned, for instance.
In contrast, a tort or a breach of contract is a private wrong, committed by one person against another. Consequently, action is taken by the victim personally. Furthermore, the remedies that are imposed on the defendant generally reflect the private nature of the proceedings. The plaintiff is usually entitled to compensatory damages for losses that he or she suffered as a result of the wrong.
While compensation is available in both tort and contract, it is calculated differently depending upon the operative cause of action. Because a contract is based on the parties’ voluntary promises about the future, compensation is forward-looking. It monetarily provides the plaintiff with the expected benefit of the agreement. In contrast, because a tort obligation is imposed by law, generally without regard to the defendant’s volition, compensation is backward-looking. It monetarily places the plaintiff in the position that existed before the wrong was committed.
Tort Law and the Balancing of Interests
As compared with contract, tort law is more obviously concerned with balancing competing social interests. Freedom of choice vs. deterring harmful behaviour; encourage innovation and efficiency vs. compensating for injury due to manufactured goods; controlling activities that threaten physical harm vs. showing leniency for economic risk (not physical)
It is also important to note that tort law creates risk management issues that generally are not seen in contract. Tort has a tendency to take people by surprise in a way that contract does not. Contractual obligations are generally voluntarily and expressly created by the parties. Tort obligations, in contrast, are generally imposed by law. They exist regardless of volition or even knowledge, i.e. the defendant may be held liable for buying stolen goods, even if he or she acted honestly and reasonably in the belief that the property truly did belong to the thief.
They are therefore more difficult to predict, identify, and manage. Tort law often takes business people by surprise, there is a heightened need for risk management.
Damages and Injunctions
The text discusses three types of damages: compensatory, nominal, and punitive. Those possibilities cover most cases. The damages in tort and contract have one feature in common. They are both generally limited by the principles of remoteness and mitigation.
Compensation is not available for every loss that the plaintiff suffered. First, the defendant is only responsible for losses that its tort in fact caused. Second, even if the defendant’s tort caused the plaintiff to suffer a loss, the court will not award damages if the connection between the tort and the loss is too remote. A loss is remote if it would unfair to hold the defendant responsible for it. The judge will ask whether a reasonable person in the defendant’s position would have realized that a particular activity might cause the sort of harm that the plaintiff suffered. There is, however, an important limitation on the remoteness principle. The concept of remoteness applies to most types of torts, but not to intentional torts. People who intentionally do wrong do not deserve any leniency in tort law. (Note more on this to follow in the next chapter below)
The various torts can be classified on the basis of on the defendant’s mentalculpability. Because tort law needs to strike a different balance in different circumstances, some torts require proof that the defendant acted with a guilty mind, while others do not. There are three possibilities.
1. Intentional torts occur when a person intentionally acts in a certain way. As we will see in the next two chapters, however, the law sometimes uses a rather odd definition of “intention.” Some torts require proof that the defendant intended to hurt the plaintiff. Others are satisfied by proof that the defendant merely intended to do the act, even if he did not realize that he would hurt the plaintiff.
2. Negligence torts occur when a person acts carelessly.
3. Strict liability torts occur when a person does something wrong without intending to do so and without acting carelessly. It is enough that the defendant was responsible for the situation that resulted in the plaintiff’s injury. Strict liability torts create special risk management problems because they do not require proof that the defendant acted intentionally or carelessly. The plaintiff merely has to show that she was injured as a result of a dangerous situation over which the defendant had control.
It would, however, be wrong to over-estimate the risk of strict liability. Tort law is dominated by intentional torts and negligence torts. Strict liability torts are rare. Strict liability is limited to situations in which the defendant is involved in some extraordinarily dangerous activity.
Tort law strikes a balance. It allows the defendant to engage in that activity, but it also requires the defendant to pay for any damage that occurs. That is the idea behind the rules that impose liability on: (i) a person who uses land in a dangerous and unnatural way, under the tort of Rylands v Fletcher, (ii) the owner of livestock who have trespassed on another person’s property, and (iii) the owner of a wild animal that has injured another person.
An injunction is a court order that requires the defendant to do something or to refrain from doing something. In the context of a claim for trespass to land, an injunction presumably requires the defendant to either refrain from trespassing in the future or, more specifically, to remove a trespassing object (e.g. a building) from the plaintiff’s land.
Personal liability occurs when the obligation to pay damages is imposed upon the very person who acted wrongfully and inflicted the injury upon the plaintiff. Whereas, vicarious liability occurs when one person is held responsible for the actions of another. The most common example arises when an employer is held liable for torts that were committed by an employee. In that situation, the employee will be personally liable and the employer will be vicariously liable. Finally, it is important to note that a person can be held personally liable and vicariously liable with respect to the same accident. That would be true, for example, if an employee carelessly caused an accident and if that carelessness was caused in part by the fact that the employer had not properly trained the employee. The employer would be held personally liable for its own wrong (i.e. failing to properly train the employee) and vicariously liable for the employee’s wrong.
The doctrine of vicarious liability may be justified on a number of grounds.
1. It serves the compensatory function of tort law because it allows the plaintiff to claim damages from both an employee (who may not have any money) and an employer (which is more likely to have money or, at least, liability insurance).
2. Vicarious liability may serve the deterrence function of tort law by providing employers with an incentive to avoid unusually hazardous activities and to hire the best people available.
3. As a matter of fairness, it may be appropriate to require a business to take responsibility for the losses that its activities create, even if those losses are caused by employees who misbehave.
An employer will be held vicariously liable for acts that it authorized an employee to do and other closely connected acts. It will not, however, be held vicariously liable if an employee commits a tort completely outside the scope of employment. An employer will not be held vicariously liable for the torts committed by its independent contractors. A worker is more likely to be considered an employee if:
• the employer controls what is done, when it is done, how it is done, and where it is done,
• the worker uses the employer’s equipment and premises,
• the worker is paid a regular wage or salary, as opposed to a lump sum at the end of each project, and
• the worker is integrated into the employer’s business and not in business for him or herself.
The vicarious liability of an employer does not relieve the employee of responsibility. Vicariously liability allows the plaintiff to sue both the employer and the employee, and to recover some or all of its damages from either defendant.
Intentional torts involve intentional, rather than merely careless, conduct. The plaintiff does not have to prove that the defendant intended to cause harm or commit a tort. It is enough to say that the defendant knew that a particular form of behaviour would have particular physical consequences. For instance, you may commit the tort of trespass to land merely because you intended to stand on a particular piece of ground, even if you did not know that that land actually belongs to me rather than you. The courts adopt a broad definition of “intention” because they want to strongly protect the interests that people have in themselves and their property.
The tort of assault consists of an act that causes a person to experience a reasonable apprehension of imminent harm or offensive bodily contact. Battery consists of offensive bodily contact. You may commit an assault, but not a battery, against me by swinging your fist at me without actually touching me. In contrast, if you punch me from behind, you will have committed the tort of battery, but not assault, unless I somehow knew that the blow was coming.
The tort of battery is not limited to actions that cause harm or injury. Instead, the tort is formulated more broadly to protect the plaintiff’s right to physical integrity. The threshold is set much lower not only because small incidents may easily escalate into large disputes that do result in physical injury, but also because physical integrity is important in itself. The individual’s body is inviolate.
The tort of battery is defined broadly, it may be committed by acts that cause no harm. Normal social interaction, such as a tap on the shoulder or a light jostle on a crowded bus, are excepted from liability. Nevertheless, a simple kiss, if unwanted, constitutes a battery. Going even further, battery may consist of acts that are enormously beneficial to the claimant. Accordingly, liability was imposed upon a physician who performed a lifesaving blood transfusion despite knowing that the patient, as a Jehovah’s Witness, did not consent to the procedure
A business is entitled to remove a trespasser. In doing so, however, it must not use anything more than “reasonable force.” If the business stays within that limit, then it cannot be successfully sued by the trespasser who was removed. If, however, the business uses more than reasonable force, then it commits the tort of battery and may be held liable in tort to the trespasser. (Depending upon the circumstances, a person who uses excessive force may also be convicted of a crime.) That rule is especially important for businesses (such as taverns and stadiums) that hire security guards to protect their premises and remove unwanted trespassers.
It is not true that a business person can use any amount of force to remove or arrest an undesirable customer. A business person is entitled to use reasonable force only. As a matter of risk management, a business person should consider several factors before attempting to forcibly remove an undesirable customer. Most of those factors pertain to the danger that something might go wrong, either physically or legally. Forcible ejection, for instance, may injure the unruly customer, the business person, employees, or bystanders. Moreover, injury or improper action may result in litigation.
In most situations, a business person should try to calm the situation while calling the police. If a situation requires more immediate action, the business person should, if practicable, first ask the customer to leave voluntarily. If that request is ineffective or obviously pointless, then the business person should use only as much force as is reasonably necessary to remove the customer.
The tort of trespass to land occurs when the defendant improperly interferes with land that the plaintiff possesses. If the defendant’s wrong is of a continuing nature, a court will often impose an injunction. In some circumstances, however, the courts must choose between protecting the plaintiff’s property interests and avoiding economic waste. In deciding whether or not to grant an injunction, a judge will consider a number of factors, including the defendant’s motivation in committing the wrong, the extent to which monetary damages would adequately protect the plaintiff, and the costs associated with removing the trespass.
As a general rule, a trespass to land is committed every time that the defendant interferes with the plaintiff’s property without permission. There are, however, exceptions to that rule. Public officials (e.g. meter readers) are entitled to enter onto private property for the purpose of doing their jobs. In other situations, the law assumes that a property owner has consented to behaviour that would otherwise constitute a trespass. There is, for instance, as assumption that property owners have consented to everyday forms of interaction (e.g. door-to-door solicitors). The situation is even clearer with respect to businesses, which not only permit, but invite, people onto their premises for the purposes of doing business. In that situation, however, the land owner is generally entitled to revoke its consent and to bar certain individuals from entering, or remaining, on its premises. In doing so, however, it must respect human rights laws that preclude discrimination on certain grounds (such as race).
Most jurisdictions have legislation that allows a property owner to arrest a trespasser in certain circumstances. That legislation generally does not, however, expressly allow for the use of force in making the arrest. The Supreme Court of Canada held that an occupier is entitled to use reasonable force while arresting a trespasser. The amount of force that is reasonable will depend upon the circumstances. Binnie J explained that since the legislature granted the special power of arrest, it must have intended to protect people who exercise that power in a reasonable way. However, he also stressed the need for private citizens to use caution.
The tort of False Imprisonment. Police officers, security guards, and private citizens do not have the same rights. The right of arrest differs depending upon whether the persona making the arrest is a police officer or a private citizen (including security guards). When it comes to arresting criminals and suspected criminals. A police officer is permitted to arrest anyone who is: (i) reasonably suspected of being in the act of committing a crime, or (ii) reasonably suspected to have committed a serious crime in the past. Private citizens, including security guards, can only arrest a person who is actually committing a crime. Unlike police officers, private citizens and security guards therefore can be held liable for false imprisonment if they detain a person, even if they honestly and reasonably believed that that person was in the act of committing a crime.
Generally speaking, a restaurant owner cannot detain a customer who refuses to pay the full amount of the bill. The reason is that the failure to pay a bill is often a breach of contract, but not a crime. Consequently, detaining the customer may lead to false imprisonment. To protect itself from tort liability, the restaurant owner should simply sue the customer for the amount that is owed.
A complete defence entirely exonerates the defendant from liability. In contrast, partial defences, such as contributory negligence provocation, merely reduce damages so as to reflect the plaintiff’s own responsibility in creating a loss. The four complete defences are consent, legal authority, self-defence, and necessity. .
Consent is the most important defence for the purposes of the intentional torts. It exists if a person voluntarily agrees to experience an interference with his or her body, land, or goods. Consent may be express or implied, but in either event, it must truly be free and informed in the sense that it must not be the product of coercion or deception. Consent also requires mental capacity. Finally, consent generally is revocable.
Legal Authority provides a person with a lawful right to act in a certain way. Acts that are legally authorized cannot lead to liability in tort. The authority may be provided by the common law (i.e. judge-made law) or legislation. .
Self-defence consists of the right to protect oneself from violence and the threat of violence. The courts strike a balance between respecting the natural reaction to fight back and the danger of giving people an excuse to cause harm. The defence therefore is entirely defensive. It is available only if a person was at immediate risk. Acts of self-defence must be reasonable, in light of all of the circumstances.
Necessity exists if the defendant’s actions were justified by an emergency. The concept is restricted to situations in which immediate action is required in order to avoid some calamity. The court must consider all of the circumstances and decide whether the benefits flowing from the defendant’s conduct outweigh the harm that was caused. Although the defence of necessity generally is classified as a complete defence, the defendant sometimes may be required to pay compensation for any loss or damage that is created in responding to a necessity.
MISCELLANEOUS TORTS AFFECTING BUSINESS
From a risk management perspective, it is critically important for business to be aware that, in the normal course of operations, they may be exposed to liability for, say, interference with contractual relations (if they over-zealously pursue a competitor’s employees), conspiracy (if they collaborate with another organization in undermining a competitor), deceit (if they intentionally mislead customers or investors), or defamation (if they make a false and unflattering statement about a competitor).
The torts have been grouped by themes:
Morality in the Marketplace The torts of conspiracy, intimidation, interference with contractual relations, unlawful interference with economic relations, and deceit all deal directly with the idea of morality in the marketplace. They regulate, in various ways, the means by which a business person can gain an advantage over competitors or customers.
Torts Related to Land. Every business person is affected by the use and occupation of land. Consequently, it is important for students to appreciate the various bases upon which an owner or occupier can sue or be sued. The tort of trespass to land was examined in Chapter 4. This chapter includes a discussion of the torts of occupiers’ liability, nuisance, and Rylands v Fletcher.
Defamation. As typically is true in tort law, defamation stands on its own. It is concerned with the need to strike an appropriate balance between protecting the plaintiff’s reputation and respecting the defendant’s freedom of speech.
Torts that commonly affect business people:
Interference with Contractual Relations — The tort of interference with contractual relations occurs when the defendant disrupts a contract between the plaintiff and a third party. A company may be in danger of committing direct inducement to breach of contract if it hires a person away from a rival company. That is true, however, only to the extent that four requirements are satisfied.
1. The defendant must have known about the contract that the third party shared with the plaintiff. The defendant does not, however, have to know all of the details of that contract.
2. The defendant must have intended to cause the third party to breach that contract. In that regard, it is irrelevant whether the defendant was motivated by a desire to help itself or hurt the plaintiff.
3. The defendant must have actually caused the third party to break its contract with the plaintiff. A difficult issue often arises, however, if the defendant merely presented the third party with information and allowed that party to decide for itself whether or not it would break its contract with the plaintiff.
4. The plaintiff must have suffered a loss as a result of the fact that the defendant induced a breach of contract. That requirement is usually satisfied by the fact that the third party left the plaintiff’s employment.
An indirect inducement to breach of contract occurs when the defendant indirectly persuades a third party to break the contract with the plaintiff. Liability depends upon the same four factors above PLUS proof that the defendant’s actions themselves were unlawful
In a case of indirect inducement to breach of contract, however, the defendant must have committed both the tort and some other wrong. For instance, the defendant might have indirectly induced a breach of contract by criminally detaining the third party from going to work for the plaintiff, or by stealing the tools that the third party intended to use in performance of its contract with the plaintiff.
Deceit occurs if the defendant: (i) makes a false statement (can be written, spoken, hand signals, puppetry), (ii) which it knows to be untrue, (iii) with which it intends to mislead the plaintiff, and (iv) with which it actually causes the plaintiff to suffer a loss. The final part of that definition is satisfied if the plaintiff suffers a loss by reasonably relying on the defendant’s statement.
A reasonable person, however, normally relies only upon statements of fact and not upon opinions, predictions, and puffs.
Liability normally cannot arise if the defendant remained silent. There are exceptions to that rule, however. Those exceptions allow the plaintiff to couple the defendant’s silence in one respect with the defendant’s statement in another respect.
Half-truth The defendant may be held liable for a half-truth. For example, if I am selling my business to you, I may provide figures representing gross profits as if they reflect net profits.
Failure to Update Information The defendant may be held liable for failing to update information. For example, if I am selling my business to you, I may provide information that is accurate when I give it, but that later becomes inaccurate because of a dramatic change in the market. If that change happens before our deal closes, I may have to tell you about it. If I do not, my silence may amount to a representation that the circumstances have stayed the same.
In rare circumstances, the defendant may be liable to the plaintiff despite not saying anything at all. The general rule of caveat emptor (“let the buyer beware”) means that, in a sale situation, the buyer bears the risk of disappointment. The seller is not required to disclose defects in the sale property. As a matter of public policy, however, the seller comes under a positive obligation to speak up if, for instance, a defect renders a house dangerous or unfit for habitation.
Historically, the degree of care that a property owner or occupier owed to a person on the owner/occupier’s property depended on who the person on the property. Different rules applied if the person was an invited guest, a salesperson, a trespasser, a salesperson-turned-guest, etc. The rules were complex and confusing. So the Ontario Legislature enacted legislation to codify what duties were owed to whom. The result is a much simpler approach to occupier’s liability.
The OLA sets out the standard of care that will be expected of occupiers of premises to prevent accidents and injuries occurring on the premises in question. The types of situations that might engage the OLA include, for example, a “slip and fall” because a person did not shovel the ice on his/her driveway; an injury caused when someone trips over toys left inside a house or in the yard; an injury caused when someone slips on a wet floor; or an injury caused when someone falls down a set of stairs that are in poor repair (e.g., uneven boards).
Occupier includes a person who has physical possession of premises (including a tenant or owner) and a person who has responsibility for and control over the condition of the premise (e.g., property manager, superintendent, etc.). In other words, you can be an “occupier” if you just rent an apartment. You are also the occupier if you own the property (although there are special provisions for landlords) or if you are in charge of maintaining the property.
Premise includes lands and structures subject to a few exceptions that are mostly related to water and various forms of transportation. Any house and yard would be captured within the meaning of “premise”.
The general duty: an occupier has a duty to take reasonable care under the circumstances to ensure that people on the premises (and the property that such people may bring with them) are kept reasonable safe while on the premises.
Note that an occupier can restrict, modify, or exclude his or her duty under the Act. For example, when you ski at Blue Mountain, Blue Mountain has excluded its duty to keep you reasonably safe. The OLA permits restrictions, modifications, and exclusions of the duty of care set out in the Act and thus we have trees to ski around at Blue Mountain.
Also note, that the OLA states that a person who is on the premises with the intention of committing a criminal act or who is in the process of committing a criminal act, is automatically deemed to have assumed all risks and therefore is subject to this lower duty of care (i.e. the duty not to act with the deliberate intent of doing harm or damage to the person and his/her property).
Nuisance. A nuisance occurs when the defendant unreasonably interferes with the plaintiff’s enjoyment of property. In each instance, the court has to balance the parties’ competing interests. Generally speaking, a nuisance occurs when the defendant unreasonably interferes with the plaintiff’s ability to use and enjoy its own land. A nuisance occurs only if the defendant’s interference is unreasonable. In deciding that issue, the courts look at a
• number of factors, including:
• the nature of the interference
• the nature of the neighborhood
• the time and day of the interference
• the intensity and duration of the interference
• the social utility of the defendant’s conduct
• the defendant’s motivation
The most important factor is the nature of the interference. The defendant’s conduct is almost always considered unreasonable if it causes substantial physical damage. In contrast, the courts are less likely to hold the defendant liable if it merely impairs the enjoyment of the plaintiff’s property. That is especially true if the defendant’s interference is non-intrusive (i.e. if the defendant does not cause anything to travel onto the plaintiff’s property).
The rule in Rylands v Fletcher is strict. The legal system has decided that while the defendant may be entitled to bring a special and unusual danger on to its land, it must readily accept the consequences of doing so if the dangerous thing escapes and causes the plaintiff to suffer a loss or injury. Because the defendant’s activity is ultra-hazardous in itself, the plaintiff is not required to prove that the defendant acted either carelessly or intentionally. In the circumstances, liability is available on a strict basis in order to further the goals of compensation and deterrence. If the plaintiff suffers a loss as a result of an ultra-hazardous activity, it should have relatively easy access to damages. Moreover, the threat of such liability discourages the defendant from using its land in a particularly dangerous manner. .
Defamation.Defamation occurs when the defendant makes a false statement that could lead a reasonable person to have a lower opinion of the plaintiff. The tort of defamation is intended to protect reputations. It is therefore committed only if the defendant makes a false statement that could lead a reasonable person to have a lower opinion of the plaintiff. The critical point is that the tort is based on the manner in which other people perceive the plaintiff. Publication is therefore necessary. Publication occurs when the defendant coveys an unfavourable statement about the plaintiff to a third party. Without publication, there is no chance that anyone will think less of the plaintiff as a result of the defendant’s opinion. For that reason, I would not commit the tort if I made unflattering comments about you in the course of a private conversation that no one else overheard.
Fault and Strict Liability
As explained in the text, liability for the tort of Rylands v Fletcher is strict. The defendant may be held liable even though it did not carelessly or intentionally cause the plaintiff to suffer an injury. Indeed, the defendant may be held liable even if it took every reasonable precaution to avoid hurting the plaintiff. Rylands v Fletcher therefore presents an ideal opportunity to encourage students to reflect on the proper role of fault in tort law.
With some exceptions (such as vicarious liability, as discussed in Chapter 3), liability in tort is always premised upon the fact that the defendant did something that it was not supposed to do – that it breached an obligation. There are, however, variations within that broad explanation. Most torts require proof that the defendant broke its obligation either carelessly (as in the tort of negligence) or intentionally (as in the case of battery). Some torts, however, may be committed merely because the defendant committed the prohibited act, even if it took every reasonable precaution. Rylands v Fletcher is illustrative.
Considerations of fairness usually favour a fault-based form of liability. Tort law is almost always required to strike a balance between the parties’ competing interests. Depending upon the circumstances, however, it may do so in different ways. The tort of negligence, which is the most common basis of liability today, strikes the most sensitive balance between the parties’ interests because it requires proof that the defendant’s conduct was, having regard to all of the circumstances, careless.
The approach under the intentional torts is somewhat more harsh. Liability is imposed only if the defendant acted “intentionally.” As discussed in Chapter 4, however, “intention” carries an unusual meaning. It is enough if the defendant knew that a particular act would have particular consequences. The plaintiff does not have to prove that the defendant intended to either cause harm or commit a tort. (For instance, I may commit the tort of trespass to land by walking on your lawn, even if I honestly believe that that land belongs to me.)
The approach under strict liability torts like Rylands v Fletcher is harshest of all. The plaintiff is not required to prove that the defendant acted either carelessly or intentionally. It is enough to show that the defendant somehow breached its obligation.
There are, then, various ways in which tort law strikes a balance between the parties’ interests. To a large extent, the precise explanation for the approach that is used in any particular case reflects historical considerations and the somewhat haphazard development of the common law. However, there also seems to be a fairly clear relationship between the purpose of a given tort and its elements of proof.
The tort of negligence is aimed, in a very general way, at the prevention and reparation of preventable injuries. Such injuries may occur in a remarkable variety of ways. The law therefore uses the flexible standard of carelessness. Interestingly, there is a general trend toward bringing other torts under the negligence umbrella. That is clearly true with respect to the traditional torts of occupiers’ liability and nuisance. The courts and legislatures increasingly want judges to have as much flexibility as prudently possible when trying to strike an appropriate balance between competing interests. .
Statutory authority is a defence to the torts of nuisance and Rylands v Fletcher. The basis of the defence is that the defendant cannot be held liable for behaving in a manner that was authorized by statute. In practice, however, the defence is very limited in scope. The defendant must prove that its behaviour the inevitable result of the statutorily authorized activity. The defence consequently is not available if the defendant could have performed the statutory activity in a way that did not otherwise amount to a tort. 13. The main remedies for nuisance are compensatory damages and injunctions. A court is usually willing to grant an injunction in order to stop a nuisance. Occasionally, however, the court may exercise its discretion to refuse an injunction. That is clearly true if the nuisance causes relatively little damage to the plaintiff and if damages can provide an adequate remedy. It may also be true if an injunction would create an intolerable hardship for the defendant or, more importantly, for the community as a whole. Finally, the courts sometimes award both compensatory damages and an injunction. The damages will take care of past losses and the injunction will prevent future losses. 14. The definition of the phrase “non-natural use” is important because it determines the scope of the tort. “Non-natural use” has been interpreted in two different ways. Some courts have said that the requirement refers to any use of land that creates a special danger. Other courts, however, have said that the requirement refers only to a use of land that creates a special danger and that is unusual. Judges have recently preferred the second interpretation. As a result, the defendant cannot be held liable simply because it creates a special danger while acting in the normal course of a business operation. For instance, the act of burning scrub grass on a farm creates a special danger, but it is not unusual. It therefore cannot form the basis for an action in
Absolute PrivilegeQualified PrivilegeFair Comment
A privilege is immunity from liability.
Absolute privilege provides a complete immunity. It applies even if the defendant knowingly made a false statement for a malicious purpose. That defence is only available, however, when the law needs to encourage people to communicate without any fear of being sued. It is therefore usually limited to statements made:
• during parliamentary proceedings
• between high government officials dealing with government business
• by a judge, lawyer, litigant, or witness in the context of legal proceedings
• between spouses
Qualified privilege is not limited to specific situations. It may apply any time that two elements are satisfied:
• The defendant had a legal, moral, or social obligation to make a statement.
• And the person to whom it is made had a corresponding duty or interest in receiving it.
Unlike the defence of absolute privilege, the defence of qualified privilege is limited to statements that the defendant made in good faith. It is not available if the defendant knew that its statement was untrue or if the defendant was motivated by some malicious purpose.
A fair comment is an honest expression of an opinion regarding a matter of public importance. The defence is intended to protect honestly held, informed opinions concerning an issue of public interest. The defendant therefore has to prove that a reasonable person would have interpreted the statement as an opinion based on fact, rather than as a fact.
The defence is especially important to businesses like newspapers, magazines, and television programs because such organizations are primarily concerned with disseminating information on significant social issues. Moreover, those businesses often publish the opinions of readers and viewers that are potentially defamatory. In certain provinces, legislation allows the publisher to use the defence of fair comment as long as an honest person could have held the same opinion. In provinces without such legislation, the publisher can use the defence only if it shares the opinion contained in the editorial. In any event, the defence is not available if the defendant acted maliciously.
The tension between the desire to provide compensation and the desire to encourage socially useful activities appears in all areas of tort law. For instance, as we saw the tort of defamation attempts to strike an appropriate balance between the plaintiff’s desire to receive compensation for a damaged reputation and the social desire to promote freedom of speech. The relevant tension is, however, particularly pronounced in negligence. That is true for several reasons and in several respects. First, the tort of negligence must be flexible because it is used to resolve disputes in a remarkably wide range of circumstances. Moreover, courts often want, even in the context of a single case, sufficient flexibility to reach a desired conclusion. For those reasons, the tort of negligence relies, in many respects (i.e. duty of care, standard of care, remoteness), upon the reasonable person test. That test provides courts with generous latitude. Because it refers to a hypothetical person, rather than to a real person, it is malleable. Within limits, it can be stretched or compressed, as the occasion requires.
Duty or Care (Foreseeability, Proximity, Policy) +Standard of Care (breached) + Causation of Loss (but for test, remoteness) = Liability unless there is a defence
Canadian courts now use a four stage test in order to determine whether or not a duty of care exists in a particular case.
• Pre-Determined Answer — The judge will first ask whether the issue has already been settled. The test for a duty of care applies to types of cases, rather than to individual cases. The judge may therefore find that there is already a binding precedent to the effect that a duty does or does not exist. If that question has not already been answered, then the judge will ask three questions.
1. Reasonable Foreseeability — A duty of care cannot exist unless it was reasonably foreseeable that the defendant’s carelessness would hurt the plaintiff. The reasonable foreseeability test is objective. The issue is not whether the defendant personally knew that its activities might injure the plaintiff. It is whether a reasonable person in the defendant’s position would have recognized that possibility. Significantly, the concept of reasonable foreseeability does not refer to “probable” or “likely” risks. As long as it is not fanciful, something may be reasonably foreseeable even if it is unlikely to occur
2. Proximity — Even if there was reasonable foreseeability of harm, a duty of care will not exist unless there was proximity between the parties. That means that the parties must have been so closely and directly connected that it would be appropriate to impose a duty of care. The concept of proximity is difficult to define, but if generally deals with the relationship that exists between the plaintiff and the defendant.
3. Policy — If there is reasonable foreseeability and proximity, then a duty of care prima facie will exist. Nevertheless, the judge may still refuse to recognize a duty of care on policy grounds. The concept of policy is very broad. It allows the judge to refuse to recognize a duty if the possibility of liability in negligence would adversely affect the legal system (e.g. by opening the floodgates to litigation) or society as a whole (e.g. by imposing an intolerable burden on taxpayers by exposing public officials to liability.)
Standard of Care
The standard of care is an objective standard. It does not take the defendant’s personal characteristics into account. A naturally clumsy adult, for instance, is held to the standard of a naturally careful adult. A slight exception to the general principle applies, however, with respect to children. A child is not expected to act like an adult. A child instead is expected to act like a reasonable child of similar age, intelligence
The reasonable person test gives the judge a great deal of flexibility in deciding whether or not the defendant breached the standard of care. The following is a non-exhaustive list of the factors that may be considered in deciding whether the defendant acted carefully enough.
• Subjective characteristics As a general rule, the reasonable person test does not take account of the defendant’s subjective characteristics. It is no excuse, for instance, for the defendant to say that he or she is unusually slow or clumsy. However, in some situations, the reasonable person test does take account of some of the defendant’s personal characteristics. A child is generally not expected to live up to the standard of an adult (unless the child is involved in an adult activity, such as driving a boat). It is enough to satisfy the standard of a reasonable child of similar age, intelligence and experience. Likewise, a person with a disability is not expected to overcome that disability. A blind person, for instance, is not required to see. However, a person with a disability is expected to recognize his or her limitations. A blind person therefore should not attempt to drive.
• Foreseeability of harm The judge will be influenced by the degree to which harm was reasonably foreseeable. As long as the risk was a possibility, a danger may be reasonably foreseeable, even if it is unlikely to occur.
• Likelihood of injury and severity of harm The judge will also be influenced by the foreseeable likelihood of harm and potential severity of the injury.
• Affordable precautions The judge may take into consideration whether the defendant adopted affordable precautions.
• Social utility The judge may take into consideration the social utility of the action that the defendant was engaged in when the risk occurred.
• Sudden peril doctrine The reasonable person test requires the defendant to act as a reasonable person would have acted in similar circumstances. The standard of care therefore encompasses the sudden peril doctrine. Even a reasonable person may make mistakes in an emergency.
A professional must also act as the reasonable professional would in similar circumstances. As a general rule, a professional who follows an approved practice cannot be held liable. That means that the standard of care is usually met if the defendant complies with requirements established by a professional organization or does what other professionals in the same field normally do. Sometimes, however, an approved practice is itself careless. A court can only reach that conclusion if the activity in question can be judged by common sense and does not involve technical or complex matters.
The but-for test requires the plaintiff to prove that it would not have suffered a loss but-for the defendant’s carelessness. The plaintiff must prove causation on a balance of probabilities, which means there must be at least a 51 percent chance that the defendant’s carelessness caused the plaintiff’s loss. If that is the case, the defendant is liable for 100 percent of the plaintiff’s loss. If that is not the case—say, for example, that there is only a 40 percent chance that the defendant caused the plaintiff’s losses—then the court will not award any damages for the plaintiff’s loss.
Joint Liability and Join and Several Liability
Joint” liability means that all of the defendants are liable for the same tort. “Several” liability means each defendant is individually liable to the plaintiff for the entire amount. “Joint and several” liability therefore means that while all of the defendants are liable for the tort, the plaintiff is entitled to decide which of the defendants she will collect from.
Joint and several liability would arise if two or more defendants carelessly combine to cause the plaintiff to suffer a single injury. Assume that you slip on my neighbour’s sidewalk after leaving my party. You lost your balance and fell only because (i) I secretly drugged your drinks, and (ii) my neighbour, Shannon, failed to shovel her sidewalk. Shannon and I will be held jointly and severally liable. That means that you can recover all of your damages from her, or all of your damages from me, or some of your damages from each of us. The choice is yours. As between ourselves, Shannon and I are responsible in proportion to our share of the blame. Suppose the court said that she was 30 percent to blame and that I was 70 percent to blame. If you recovered all of your damages from Shannon, she could demand 70 percent of that money from me.
Even if the defendant’s carelessness in fact caused the plaintiff to suffer a loss, liability will not be imposed if that loss was too remote from the breach of the standard of care. A loss is remote if it would be unfair to hold the defendant responsible for it. The test used in a negligence action is whether or not the type of harm that the plaintiff suffered was a reasonably foreseeable result of the defendant’s carelessness. As always, the phrase “reasonably foreseeable” does not mean “probable” or “likely” – it simply refers to a possibility that is not completely unlikely. The plaintiff is not required to prove that a reasonable person would have foreseen both the type of harm and the manner in which it occurred. If the type of harm that the plaintiff suffered was reasonably foreseeable, it is irrelevant that the manner in which it occurred was not.
An intervening act is an event that occurs after the defendant has been careless and that causes the plaintiff to suffer a new injury or an additional injury. For instance, the defendant may cause an accident that breaks the plaintiff’s leg. Several days later, the plaintiff breaks her arm after falling down a flight of stairs because she was unaccustomed to walking with a cast on her leg. As a matter of fact, the defendant is causally responsible for that ultimate injury. The question, however, is whether the defendant should also be held legally responsible. That question is answered, under the rubric of remoteness, on the basis of the reasonable foreseeability test. A court would ask whether or not it was reasonably foreseeable that the defendant’s act of carelessness would cause not only the initial injury, but also the injury that was ultimately caused by the intervening act.
Contributory negligence occurs when a loss is caused partly by the defendant’s carelessness and partly by the plaintiff’s own carelessness The defence of contributory negligence allows the courts, under statute, to apportion responsibility for the plaintiff’s loss between the parties. Consequently, if the defendant was 75 percent to blame, and the plaintiff was 25 percent to blame, the plaintiff’s damages will be reduced by 25 percent. That approach allows the courts to strike a sensitive balance between the parties.
Voluntary Assumption of Risk and Illegality
In contrast, voluntary assumption of risk and illegality are complete defences. That means that if either applies the plaintiff cannot recover any damages, even if the defendant’s carelessness was the predominant cause of a loss. Because those defences insensitively work on an all-or-nothing basis, the courts have greatly narrowed their scope such that they seldom apply.
The defence of voluntary assumption of risk applies if the plaintiff freely agreed to be exposed to a risk of injury. The defendant has to prove that the plaintiff expressly or impliedly agreed to be exposed to both the physical risk of injury and the legal risk of injury. The last part of that test is not satisfied unless the plaintiff agreed to give up the right to sue the defendant for negligence. Consequently, the defence rarely succeeds.
ESSAY ON ETHICAL REASONING ASSIGNMENT INSTRUCTIONS
1. Review the following fact pattern and respond to the question at the end of the fact pattern by writing a brief (maximum 500 words, excluding footnotes) essay.
2. This is an individual assignment. You may not work in groups; you may not submit the same essay as any of your classmates.
3. Your essay should be typed and, if there are multiple pages, stapled. Please double-space your essay and use Times New Roman 12point font.
4. Please review the definition of “plagiarism”. It is set out below, along with other information about academic integrity. There is also a link to a style guide to show you the proper format for footnotes.
5. You must submit this paper to turnitin.com. Further instructions about submitting the paper to turnitin.com will be provided soon.
6. The rubric that will be used to grade your paper is set out below.
FACT PATTERN AND QUESTION
Wally is in the building and renovation business. He has incorporated a number of corporations, each of which provides one key service needed in the construction business. For example, there is Wally’s Plumbing Inc, Wally’s Dry Wall Inc, Wally’s Electrical Services Inc, and even a Wally’s Welding Inc. Wally is the sole shareholder, sole director, and sole officer in each corporation. Wally has structured his business in this way in order to minimize his exposure to liability. He wants to ensure that the assets in, say, his plumbing business cannot be used to satisfy liability incurred by the work done through his dry wall business.
Wally’s business structure proved to be very important when Wally’s Electrical Services Inc was sued for work it had done for Eli. Eli had hired Wally’s Electrical Services Inc to do some rewiring that was needed for a renovation in his home. Unfortunately, a careless error made during the rewiring resulted in an electrical fault that caused a fire. Eli’s entire house burned to the ground.
Most of Eli’s losses were covered by his insurance policy, which was provided by Beta Insurance Corp (BIC). BIC has paid Eli’s claim, and now it is planning to sue Wally’s Electrical Services Inc to recover damages. (Insurance policies like Eli’s usually contain a subrogation clause that allows the insurance company to sue a person who has caused a loss to an insured party like Eli on behalf of the insured. The insurance company basically steps into the shoes of the insured party and brings an action to recover damages for the loss.) Wally’s Electrical Services Inc admits liability for the fire. The problem is that Wally’s Electrical Services Inc does not have many assets. It does not even own its own tools or trucks; it leases everything for its business from Wally’s Construction Equipment Ltd, another one of Wally’s corporations. While some of Wally’s corporations do hold significant assets, Wally’s Electrical Services Inc is not one of those corporations.
BIC would like the court to disregard the corporate existence of Wally’s Electrical Services Inc so that BIC can sue Wally directly and access the wealth of resources Wally holds through his various corporations. BIC argues that since Wally is the sole shareholder, director, and officer of every single one of his corporations, it should not matter which corporation’s assets are used to satisfy its claim; what matters most is compensating the wronged victims of Wally’s Electrical Services Inc’s carelessness.
For his part, Wally argues that BIC’s only recourse is to sue Wally’s Electrical Services Inc. Since Wally’s Electrical Services Inc is not the same person as Wally, Wally cannot be and should not be responsible for any damages payable by Wally’s Electrical Services Inc.
Who is right? Can BIC legally access the assets of Wally personally and Wally’s other corporations in order to satisfy the debt owed by Wally’s Electrical Services Inc due to this latter corporation’s negligence? Ethically, should BIC be able to do so? Write a brief essay [maximum 500 words, excluding footnotes] that provides a legal and ethical analysis of this situation.
You should ensure that you do the following in your essay:
1. (a) Identify the central issue in this case that has both a legal and an ethical dimension. Clearly state both the legal dimension/question and the ethical dimension/question raised by the issue.
2. (b) Explain how the legal issue will be resolved by stating the law and then applying it to the facts to support your conclusion.
3. (c) Discuss the ethical dimension of this issue using one of the ethical forms of reasoning that we have discussed in class. (For your convenience, the four types of ethical reasons discussed in class are set out below.) In particular, make an argument about whether the likely legal result in this case is also an ethical result. If the result is unethical, what could be done to address the situation?
ADDITIONAL RESOURCES Four types of ethical reasoning
• ?? Consequences: we should promote good consequences and avoid bad ones, for all concerned, in the long run. (Happiness is good; pain is bad!)
• ?? Fairness/justice: we should make sure that good & bad consequences are distributed fairly. We should pay our debts and treat like cases alike.
• ?? Rights and Duties: we should protect rights and perform duties. These are often “nearly absolute.”
• ?? Character/virtue: we should consider what kind of people we want to be, and what example we want to set
Remember that if you quote the above or paraphrase it, you must provide a citation. You can cite the above as follows: Chris MacDonald, “Law 122 Ethical Reasoning Module”, Toronto, 2013.
Important reminders about academic integrity and plagiarism
• Plagiarism is a serious academic offence and penalties range from zero in an assignment all the way to expulsion from the university. In any academic exercise, plagiarism occurs when one offers as one’s own work the words, data, ideas, arguments, calculations, designs or productions of another without appropriate attribution or when
one allows one’s work to be copied. Students should review the guidelines regarding
• It is assumed that all examinations and work submitted for evaluation and course credit will be the product of individual effort, except in the case of team projects arranged for and approved by the course instructor.
• Students must ensure that they understand the conventions for referencing sources in footnotes and bibliographies. In addition to citing quotations from all sources, whether from written materials, interviews, or electronic networks, students must credit with footnotes or in-text references all facts and ideas that are not their own, even if they are in their own words. If you do not, it is considered plagiarism.
• Submitting the same work to more than one course, without instructors’ approval, is also considered plagiarism.
Unsatisfactory (0) Satisfactory (1) Exceeds Expectations (2)
Ethical Issue Identification Is unable to articulate the ethical dimension of the problem Recognizes the ethical dimension of the problem Recognizes the ethical issue and articulates how the issue is related to/differs from the legal dimension
Identification of the law relevant to the ethical dilemma and understanding of what the law requires Unable to recognize legal issue or apply law Recognizes legal issue, but has difficulty articulating the application of the law/legal resolution Both recognizes the legal issue and arrives at the likely legal outcome by appropriately applying the law
Articulates a position about whether the character has acted ethically or not Fails to appreciate that an ethical outcome may require more than mere adherence to the law and/or focuses exclusively on business reasoning (e.g., reputation). Provides a position on whether the character has acted ethically or not, but fails to provide much elaboration Elaborates on/discusses the reasons for his/her position on whether the character has acted ethically or not; identifies what the character could have done differently, if applicable.
Justifies choice of position using ethical Fails to justify decision in terms of Defends position using ethical Coherently defends his or her position
reasoning ethical reasoning (eg uses business considerations such as reputation and goodwill) reasoning; may display some weakness in application of ethical reasoning using an argument that draws on typical ethical reasoning; elaborates on reasons. Discusses alternative option for the character, if relevant.
Grammar and Style Incoherent. No introduction, conclusion, or thesis statement. Standard essay format is evident (intro, body, conclusion, with a thesis). Proficiency in common rules of grammar (punctuation, sentence structure, etc). Strong written skills. Essay is cohesive and arguments are integrated well into overall body of essay. Mastery of basic rules of grammar and evidence of advanced capabilities (e.g., knows how to use a semi-colon).
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