The Legal Environment of BusinessFINA 2244 Christina Sheppard Futrell, Esq.Chapter Seven:Business Torts and Products LiabilityI. Torts Law and Business- A. Cost of Tort Litigation- B. Fraud (Intentional Misrepresentation)- when a person suffers aninjury by some other perception or false info from another person.1. A Misstatement of an Important Material Fact- hype2. An Intent to Defraud- the party that made that misleading statement meant to make that statement 3. The Statement Made is Knowingly Untrue- if a realtor told you our offer was accepted for a house when really your offerwas not accepted.4. The Recipient Justifiably Relies on the Bad Information- 5. The Parties Must be in a Relationship that Created a Legal Obligation- In other words the parties are in privity with one another.6. There Must be Causation- A logical link must exist between reliance on the bad information and loss by the recipient.7. Damages- There must be some loss as a result of the relianceon the bad information.C. Interference with Contractual Relations- The elements of this common business tort are:1. The Existence of a Contractual Relationship Between the Injured Business and Another Party- ex: owns own business, hires some one with an employee contract, a competitor coming in and try’s to steal said hired person to work with them for more money. 2. The Wrongdoer Knew of the Contractual Relationship- 3. The Wrongdoer Intentionally Interfered with that ContractualRelationship- D. Interference with prospective Advantage- Occurs when a business attempts to improve its place in the market by interfering with another’s business in an unreasonable and improper manner. There has to be some sort of intentional interference and also knowledge.The Legal Environment of BusinessFINA 2244 Christina Sheppard Futrell, Esq.II. Products Liability- Tort law that concerning the liability that producers and sellers of goods have to those injured by their products. Defendant has to be a merchant of the product. You have to be able to show that the product is defective. The defect has to have existed when the product left the defendant.A. Consumer Products and Negligence- 1. Caveat Emptor-Meaning, “buyer beware”. 2. Negligence in Tort- A manufacturer is required to exercise reasonable care under the circumstances in the production ofits product. Negligence may apply in:a. Failing to inspect or test materialsb. For below normal quality workmanshipc. For failing to discover possible defects, ect.B. Strict Liability Under Contract Law- Is based on the relationshipbetween the injured party and the manufacturer because of the existence of a warrant, i.e., an assurance by the manufacturer that a product will meet certain standards.1. Strict Liability Based on Implied Warranty-2. Strict Liability Based on Express Warranty-C. Strict Liability in Tort-1. Restatement (Second) of Torts-2. Restatement (Third) of Torts-D. Primary Areas of Product Liability Law-1. Manufacturing Defect-2. Failure to Warn- Where the manufacturer knows of a danger caused by the products use but fails to warn the consumer of the danger.3. Design Defects- Focuses on whether an injury to users could have been prevented by a better design, not necessarily whether the product has been manufactured wrong.4. Unknown Hazards- Based on dangers that were not known ornot fully appreciated at the time the goods were manufactured. a. Joint and Several Liability- legal concept that allows an injured party to sue any and/or all of the manufacturers of a defective product where the identity of the actual manufacturer is not clear. The several manufacturers areThe Legal Environment of BusinessFINA 2244 Christina Sheppard Futrell, Esq.then left to determine amongst themself through legal proceedings or otherwise who is responsible for the cost. E. Defenses in Products Liability Suits- 1. Misuse-2. Assumption of the Risk-3. Bulk-Supplier Doctrine and Sophisticated User Defense-a. Bulk-Supplier Doctrine- Holds that when a supplier sells a product to an intermediary in bulk, the supplier can discharge its duty to warn the ultimate user if it provides adequate instructions to the distributor next in line, or determines that the intermediary party is adequately trained in the use of the product.b. Sophisticated User- Relieves a manufacturer of liability forfailing to warn of a products characteristics or dangers when, “the end user knows or reasonably should know of aproducts dangers”F. Statutory Limits on Liability-G. Ultrahazardous Activity- The negligence of other parties is irrelevant in a case involving an ultrahazardous activity, i.e., explosives, etc.H.