Section 1 - The Law - An introductionTwo types of law: Criminal Law and Civil LawCriminal Law: A wrong that is considered to be harmful to the stateCivil Law: The body of law concerned with civil or private rights and remedies. Civil law deals with wrongs originating in tort law or contract lawTort Law: A private or civil wrong or injury, other than a breach of contract, for which the court will provide a remedy in the form of an action for damagesTwo types of tort; intentional torts(assault, conversion of goods, and deceit) and unintentional torts(negligence, defamation, false arrest, nuisance, and trespass)Contract Law: Civil wrongs such as a breach of contract can be remedied by court action instituted by the injured party.For the majority of Canadians, the law relating to both criminal and civil matters is established in common law and statute law.Common Law: The basic concept is that current court decisions must follow those made in cases having similar circumstances. This custom of standing by previous decisions is known as the Rule of Precedent. This ensures that justice is dispensed in an even-handed and consistent fashion. However Rules of Precedent are subject to change; sometimes precedent is overturned and a new one established. Circumstances change and a precedent established many years ago may no longer be considered legally, socially, or equitably valid.Statute Law: Statute law is the written law and seen to be the most effective form of law. Statute law is created by federal and provincial legislation and supersedes or amends the common law. Statute laws emerge to address the need for changes to laws which are outdated or archaic and which no longer represent the values of a changing society.The award determined by the courts constitutes damages for which the insured has been judged legally liable. As the point of an action in tort is to compensate victims for their losses, damages has come to mean compensation in money for the loss or damage suffered. The courts may award the following damages: Compensatory Damages: Compensatory damages are intended to compensate the injured party for the bodily injury or property damage suffered. Compensatory damages awarded for bodily injury claims may be sub-classified as general or special in nature General Damages: Damages which cannot be exactly determined in monetary terms, but reflect an amount that the court believes necessary to fairly compensate the aggrieved party. General damages are awarded for both pecuniary (economic) and non-pecuniary loss and include payment for: Pain and suffering, humiliation, embarrassment, loss of services and consortium, inconvenience, disfigurement, permanency, future earnings, future care Special Damages: Damages which can be measured to an amount, and are often referred to as out of pocket expenses. They include: Doctor, dentist and specialist charges, hospital, clinic, or nursing home charges, nursing fees, charges for ambulance, medication, and prosthetics, travel expenses to and from doctors and hospitals, loss of earning capacity (from the date of accident to the date of settlement) The amounts claimed for general and special damages must be contained in the statement of claim made by the plaintiff. The following factors can also impact on the amount of general and special damages awarded for bodily injuries: Extent of financial support provided by the injured party to his or her family, social position, reputation, financial circumstances, ability of the plaintiff's legal representativeThe amount of the damages awarded for property damage is measured by the amount of the loss occasioned by the plaintiff. To determine this amount the same procedure is followed as would be used in assessing any claim to property insured under a property policy, essentially. The measure of loss is:The difference in the value of tangible property before and after damage and; actual losses incurred as a result of loss of use of tangible property.Exemplary or Punitive Damages:Exemplary or punitive damages may be awarded to the plaintiff over and above those provided as compensatory damages. They often involve circumstances of violence, oppression, malice, fraud, wanton, or callous conduct on the part of the defendant. The purpose of such award is to punish defendants for their behavior or to make an example of them(it is also expected that others will notice the extent to which the courts view such wrongs and be deterred from committing the same tort). * Exemplary or punitive damages are very rarely awarded in Canada*Nominal Damages: In some cases a court award may be sought, if for no other reason than to establish the validity of the plaintiff's claim when a question of principal is at stake. When there is no substantial loss or injury to be compensated, the courts have awarded damages of a nominal sum. The awarding of such minimum amounts as $1 serves to discourage the pursuit of litigation when the costs of plaintiff's legal fees alone will exceed the amount of the potential award. Once an award for damages has been made the plaintiff is entitles to use whatever means as are available to collect such sums. This can include registering a writ of execution against the defendant's property and a garnishee of wages.Remedies for Breach of Contract:Generally, a contract is seen as a private matter between the parties and only those parties are permitted to take action for breach of contract. When there is a breach or failure to fulfill contractual obligations, the courts may rule in the following manner: Provide for payment of damages to the injured party *An award for damages aims at placing the injured party in the same position as if the contract has been completed - The award is intended only to compensate the injured party for the loss, and not to punish the party responsible for the breach* Enforce specific performance of the terms of the contract Grant an injunction prohibiting a party to the contract from performing certain acts, or ensuring a party to the contract performs certain acts Permit rescission of the contract so as to return the parties substantially to their pre-contract positions *Actions for breach of contract must be commenced within a certain time or else the right to sue will be taken away. Each province has general limitations statute which prescribes the limitation period for taking legal action on certain contractual matters.
Section 2 - Commercial of Business Liability ExposuresThe broker will conduct a survey of the business's liability exposures. It is extremely important that the survey not overlook any potential exposure.All business's have the potential to cause injury or damage to others, the determination of one's legal liability is established in common law or statute law.Liability in Common Law: The most significant wrong for which a business owner may be liable is the tort of negligence. Negligence must be proven. The plaintiff must show fault or failure of the defendant to exercise reasonable care. The plaintiff must show the following three conditions existed: The defendant owed the plaintiff a legal duty of care Duty was breached as a result of the defendant's negligence The plaintiff suffered damages as a proximate result of the defendant's negligence Liability in Statute Law: Certain statues exist to ensure that business owners comply with the laws that affect them. For example, there are statutes that regulate the standards used in building construction which can apply to: builders, electricians, gas fitters, plumbers, and other trades. When these statues are breached the owner of the business will be help legally liable.People can sometimes be held strictly liable for wrongs caused by them. The Doctrine of Strict Liability is based on the assumption that certain activities are so hazardous that, in the even or injury or damage, the person conducting the activity shall be presumed to be legally liable. Strict liability can be a matter of 1) Common Law or 2) Statute Law. Common Law: In cases of negligence the particular activity is not in itself considered dangerous if conducted with reasonable care. However, some activities are dangerous regardless of the care taken. The occupiers or persons doing such work shall be help strictly liable. There is no requirement for the plaintiff to prove negligence. Statute Law: Major sources are the statuses of both provincial and federal governments. Generally persons breaching these statutes will be subject to fines or penalties. Damages may also be assessed when such breaches result in injury or damage. The following are examples of strict liability: The setting off of explosives The lighting of fires The operation of aircraft The keeping of a dangerous thing on the premises, such as water in a dam or cistern; gas; electricity; wild animals *The defendant is entitled to establish a defense against strict liability. However, the defenses available are usually severely limited by law.Occupiers of property may be liable for bodily injury or property damage to 3rd parties for such losses originating out of the occupancy of the premises and operations conducted there. Occupiers of land include: owners, tenants, and persons conducting work there. The law regarding occupier's liability applies to land, structures on land, and moveable structures.The law makes occupiers of land of buildings responsible for damages arising out of both the condition and the operations conducted. Here are some examples of conditions which may lead to bodily injury claims: A loose railing or faulty stairwell, wet or slippery floors, protruding nail(s) in entryway, disrepair of the sidewalk leading into the premises, general disrepair of the building, inadequate identification of building exits The operations also expose the occupier to claims arising out of negligence which can be established in either common law or statute law.Occupier's liability acts provide for a common duty of care in relation to the condition of the premises and the operations conducted there. If occupiers fail to act reasonably or prudently, they can be found legally liable.Exceptions: Common duty is not owed to visitors in respect of risks willingly accepted. For example, a roofer who is engaged to repair a faulty roof would willingly accept the risk of going up on the roof.There are instances in which an occupier's liability for injury or damage originating on their premises may be limited or removed altogether: Liability for independent contractors: In the event or injury or damage arising out of the independent contractor, who is liable becomes important. Usually the one that does the hiring(the principal) will not be liable for the negligence of an independent contractor if: Reasonable care was exercised in the selection of the contractor It was reasonable that the work the contractor was engaged to do should have been undertaken The principal will share in any liability arising out of the following instances: When the work being contracted is inherently dangerous When injury or damage results from the contractor's use of defective fixtures, machinery, or equipment supplied by the principal When the principal controls the manner in which the work is to be done This is so owners or tenant's of land cannot insulate themselves from liability by hiring an independent contractor to do the work.Liability for injuries resulting from condition of rented premises.Single Occupancy Buildings: Usually landlords are not liable to tenants or their customers for injuries caused by the condition of the premises. Exceptions:If the landlord fails to notify the tenant of any dangerous conditions they were aware of, or should have been aware of, that existed at the time the lease was made.If the landlord covenants to make repairs and fails to do so after receiving noticeMultiple Occupancy Buildings: The landlord is responsible for the condition on the common areas only to both the tenant and persons who enter onto the premises. Ex, building entrances, hallways, stairways, elevators, etc.There is a duty owed to those outside the premises as well, the occupier is required to maintain the premises in a manner which will protect persons from all chance of harm arising from the occupier's use of them. There may be other liability exposure's other than negligence such as nuisance and trespass.To maintain a claim for the tort of nuisance, plaintiffs must show that: There has been physical injury to, or substantial interference with, their use of enjoyment of land; and That the injury of interference was unreasonable Trespass would be erecting a building so that a part of it overhangs onto a neighbor's land of the dumping of waste materials on the land of another.Anyone who sells products of any kind faces a products liability exposure, when these products are defective they may cause injury or damage to others. A defective product is normally on which: Contained something it should not have; or Something was omitted in its manufacture that should have been there. A products liability claim can arise only when it is shown that the injury of damage: Occurred away from the premises of the seller, and The seller had clearly relinquished possession of the defective product. Action may be brought in Contract of Tort Action in Contract: Generally, the law holds that buyers must exercise care as to the suitability and quality of the goods purchased by them. However, there is an important exception to this general rules. When the buyer makes known the particular purpose for which the goods are required, and relies on the seller's skill or judgment, there is an implied condition that the goods will be reasonably fit for such purpose. Action in Tort: A manufacturer must prove it was not negligent, rather than requiring the injured party to show that it was. Some general rules respecting the duty of manufacturers to consumers include: Manufacturers are liable for all product defects of which the present state of technology can reasonably be expected to make them aware. The manufacturer has a duty to ensure: safe design; and safe manufacture, construction, assembly, and packaging. Even when a product is not defective, there may be dangers if it is not properly used. The manufacturer owes a duty to consumers to: Give proper warning of dangers which can occur in using the product; and provide instructions, if needed. Duties of sellers:Sellers are considered at law to be experts when it comes to the ingredients and properties of the articles they sell, and are expected to tell the truth about them. If these products do not meet the standards claimed, the seller may be held liable for damages. If sellers intentionally mislead consumers about their products, such misrepresentation is fraudulent and amounts to the tort of deceit.Completed Operations Liability Exposure: A completed operations exposure arises out of the work performed by a business. When work is defective and causes injury or damage, the person who performed the work may be sued for damages.It is important to establish the difference between an ongoing and a completed operation. The ongoing operation falls within the premises and operations hazard. The completed operations represents an entirely different exposure to loss. A completed operation claim can only arise when it is shown that the injury or damage: Occurred away from the premises of the person(s) doing the work; and That such work has been completed or abandoned Most claims for injury or damage arising out of the completed operations exposure allege: Improper performance of a completed task Use of defective materials, parts or equipment Work not as warranted, even though not performed erroneously of with inappropriate materials Damage to completed work arising out of the work or out of the materials or equipment furnished Failure of the contractor to withdraw, inspect, repair or replace any defective work which has been completed Personal Injury Liability Exposure: Personal injury claims do not deal with allegations of physical harm, but rather, with such matters as wrongful arrest, wrongful entry, malicious prosecution, libel, slander, unlawful interference with one's property and actions causing severe mental and emotional distress. The amount of the damages awarded will consider factors such as: inconvenience, embarrassment, suffering, harm to reputation, and economic loss, if any.Liability for Property in the Business's Care, Custody or Control: Real Property: The business which operates out of rented premises faces the potential of liability for loss to the building, and where applicable, any fixed equipment. In most instances, the extent of the tenant's liability for loss will be stated in a contract, such as a rental or lease agreement with the building owner. In the absence of such agreement, the common law position is that the owner is entitles to the same remedies in law that would be available without such agreement. In other words, if a tenant is liable in tort for loss to the building, the owner is entitled to compensation. Personal Property: The legal duty owed to customers by a bailee for hire is a matter of tort law, but it can also be established in contract. A bailee for hire is one who has temporary custody of the personal property of another for a purpose other than sale and who is compensated as a condition of such custody. Liability in Tort:Generally, a bailee for hire is expected to take the same care of the goods of others as would be taken by a prudent and diligent owner of such foods. When goods in the care , custody or control of a bailee are lost or damaged, it is difficult for the owner of the goods to establish the cause of the loss. In these circumstances, the bailee is better able to provide the facts. Therefore, the courts place upon the bailee the burden of showing that it was not negligent in causing the loss.Liability in Contract:The contract entered into by the parties establishes the bailee's duties and liabilities for the goods in its possession. The law does not expect that the parties can foresee all the possibilities of ham that may arise. For this reason, the standard of care required in tort law will extend in circumstances not directly addressed by the contract.Employer's Liability Exposure: Employers Liability for Torts of Employees: In common law, employers shall be held liable for the torts of their employees while in the course of their employment. Employers need not have authorized the wrongful act - they are liable even though such conduct has been forbidden. All the injured party need establish is that the employee caused the damage while in the course of employment. However, employers are not liable when employee's are acting outside the scope of their duties. There is not liable upon the employer for damages when employees: Delegate any part of their authority, or arrange for someone who is not an employee to actually do their work, without the employers consent. Are on a "frolic" of their own(such activities include taking time off from their duties to attend personal matters) Use the employer's property without authorization for their own purposes. 2. Employer's Liability for injuries to Employees: The plans established by worker's compensation laws provide employees with no fault insurance benefits for injuries received on the job. In exchange for these no fault benefits, the employee is considered to have waived the right to sue the employer. Most occupations fall within the jurisdiction of these Acts. However, there are certain classes of employees who do not. These occupations vary by province.Contingent Liability Exposure:A contingent liability exposure can exist when: Work is done by persons who are not employees. When employees work in another province for longer periods than are permitted by the Worker's Compensation plan. Contractual Liability Exposure:Contractual liability refers to the liability of others assumed by the insured under contract. The effect of such agreement is to create additional liabilities for itself. As a general rule, the courts will enforce an agreement in which the tort liability of one party has been voluntarily assumed by another. Examples of contracts with tort liability assumption include: Construction contracts - For example, government departments awarding building contracts will normally require that the contractor assume all liability arising out of the work required to fulfill the contract. Purchase orders and sales agreements - Purchase orders and sales agreements may contain terms intending to shift or transfer liability. Sales contracts between manufacturers and retailers may contain clauses under which one party agrees to hold the other harmless for injury or damage arising out of the product involved, whether the claim is based on negligence or violation of an implied warranty. Other contracts - The liability assumed under other contracts such as a lease or a rental agreement may extend beyond that resulting from the tenant's or lessee's negligence. Automobile/Aircraft Liability Exposure:Almost all business's have an exposure to liability suits arising out of the ownership, use and operation of automobiles. This exposure can originate out of both owned and non-owned automobiles.Pollution Liability Exposure:Generally, all business's which have waste as a by-product that must be disposed of have a pollution liability exposure. The costs of environmental clean-up are a major concern to business's. Contaminated properties are financial time-bombs for current and future owners. A business located on premises formerly used as a gas station or battery depot may well be faced with clean-up costs that it can ill afford. In many cases, the guilty parties are long gone, leaving behind properties that need to be decontaminated. It is the duty of the broker to determine if their client's business contains the potential to cause such loss.Incidental Medical Malpractice Exposure:Firms that maintain first aid services may be subject to damages for injuries arising out of the rendering or failure to render proper medical services. Meant processing plants, manufacturers and industrial operations normally provide on-site first aid facilities. The broker must ensure that such exposure is identified.