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An exploration and critique of a selected area/legal issue(contract law or tort law) involving research, discussion, appraisal and analysis of the law, legal risk and need for reform

  • Category:
    Law
  • Document type:
    Essay
  • Level:
    Undergraduate
  • Page:
    6
  • Words:
    4262

Tort Law 16

(University Affiliation)

Introduction

Tort is a branch of private law that makes it possible for a victim of a certain wrong to seek a remedy from the individual who caused him or her injury. Unlike in a criminal case, that is managed and initiated by the state, a tort is initiated by the victim or the survivors. Additionally, successful tort cases will usually consequences in a judgment of liability and not a punishment such as a jail term
(Coleman et al, 2015). Such a judgment would normally come in the form of the defendant giving a financial compensation to the plaintiff. The term Tort means a wrong and it is normal to think that all the wrongs fall under the law of tort. The law of tort does not however deal with all the wrongs that individuals commit (Coleman et al, 2015). Some of the wrongs are dealt with by the criminal law while some are addressed by private law and in some cases both set of laws apply. It is also correct to say that not all the law that falls under the private law can be addressed under the law of tort. A bridge of contract for instance has traditionally not been classified under the law of tort. The law offers some form of relief for a number of set of wrongs such as battery, assault, trespass and defamation (Coleman et al, 2015). 

The main focus for the law of tort is to conceptualize tort in terms of those elements that the victim must prove beyond doubt that in order to benefit from the remedy. For instance, an individual commits battery if he or she acts with an intention of causing harm or offense to the plaintiff and that such a contact has come as a result of his or her act. If the plaintiff achieves the burden of proving these elements, then the individual will have established a prima facie case for the offence, in this case battery. The defendant can escape liability in a case of battery by asserting a defense by, for instance, arguing that they acted in the manner they did I self defense or that the plaintiff consented to the act of contact from the plaintiff (Fayetteville NC Attorneys, 2013).

The intent of the law of tort is to assess if the loss that affects an individual should be placed upon another person for purposes of remedy. Some of the consequences of the contact such as injury or death, hospital bills that have been incurred and so on can be compensated by way of making the defendant pay for the damages. The damages can also be compensated for other non financial injuries such as suffering and pain (Potter, 2010). That explains why the law of tort is normally confused by most people but as an informed citizen, it is important to be aware of the effects that the law has on us as individuals as well as the whole society. The intention of the law of tort is to give an average person the power to influence the key business and institutional changes as well as checking the dangerous policies and practices (Potter, 2010).

The legal governance, management and relationship issues that are shaped by the law of Tort

Legal governance can be defined as the establishment, execution as well as the interpretation of the processes and procedures put in place by the corporate legal functions for purposes of ensuring a smooth legal department and the company. It is a procedure aimed at ensuring theta the organization follows the relevant roles, rules and regulations. The definition of legal governance in reference to the law of tort can be expanded to include the ethical codes within all the professions. The corporations need to be compliant with the law when formulating their policies as well making the law complete with respect to the law (Svensson & Wood, 2007).

The law of tort sets a number of procedures and norms which have to be adhered to for the plaintiff to receive compensation. Before seeking remedy from an individual, one has to prove that the action was not up to the mark. The law however has a limitation in the case of activating the process of seeking the damages (Svensson & Wood, 2007). You have to consider that if the injury to the plaintiff was done indirectly without the suspected party having participated directly, it will be termed a s a remote criterion which implies that if the contact occurs in such a manner that the party and the individual are not liable to accept the liability which are meant to be framed against the party for the failure to exercise the duty of care (Mayer, 2012). The word tort is no longer in use but the suits related to the law are the topics of everyday headlines. More and more people are injured as a result of exposure to a number of risks and are now more than ever seeking legal redress in the court of law. Daily headlines talk of multimillion jury awards on doctors who performed surgical operations without the due procedure, newspapers that ran defamatory stories about individuals, oil companies that devastated the environment and a food joint that served food that compromised the health of an individual (Mayer, 2012) .

The law of Torts is normally assessed in accordance to the relationship it has with other legal areas. This is why the law of tort is usually defined as a cause of action that is not defined in other areas of law such as the law of contracts or fiduciary law (Svensson & Wood, 2007). The law of contracts and the law of torts are similar in the sense that both laws involve the breach of duty. The courts normally have a very tough choice to make as far as deciding whether to prosecute the cases under the law of torts or the law of contracts. This means that the choice will affect the amount of damages because more so given that the amount of damages is normally limited when dealing with the law of contracts, while in the law of torts, the damages such as sufferings and other forms of pain may be awarded (Potter, 2010).

How the law of Torts applies to organizations and any relevant industry or similar bodies

Organizations are involved in a wide variety of activities most of which put the organization, its board of directors, the staff, and volunteers to potential liability as a result of the acts of the people acting on the behalf of the organization (Potter, 2010). Although business organizations and the nonprofit organizations serve the interest of the public, their staff, directors, volunteers may commit injurious acts to other parties exposing the organization to tort claims which also may include un procedural employment practices and the discrimination of members among other issues (Arora, 2012).

Most courts of law have applied the traditional principle of superior in actions against an organization for damages caused by its employees. There is a considerable amount of cases that addresses the issue of the law of tort. In order to make an application of the principle of respond eat superior there are three requirements that have to be made. 1) There has to be an injury that has been caused by either the negligence or the will of the organization’s employee. 2) there has to be an employee and employer relationship existing between the two parties under consideration (Arora, 2012). The employee or representative has to have been acting within the scope of his or her employment.

The negligence of the servant

The first requirement in the application of the doctrine is that there has to be a credible proof that the conduct of the employee amounted to negligence. In establishing the negligence, the courts of law will have to consider whether there was a breach of the standards of care by the employee of the person representing the organization (Arora, 2012). In such a case, the expected standards of performance of care may be lower if the person that caused the injuries was a volunteer especially in the case of non-profit organization (Arora, 2012).

Employer- employee relationship

A master and servant employee is also a requirement in the application of the doctrine of repondeat superior. It is expected in theory that the employer has to have the right to have control over the physical conduct of the employee and have to consent to be a recipient of the employee’s services and a volunteer in cases of nonprofit organizations and at the same time expecting a number of benefits from the services offered by the employee (Arora, 2012).

In addressing the issue, the courts of law require that only the presence of that right of the master to control the servant rather than the existence of the control itself. Additionally, the court might consider the supervision of the director over the employee as being irrelevant in the process of finding the concept of supervision (Arora, 2012). Finally, the court might take into consideration how the3 organization presents its relationship with the volunteer for a nonprofit organization to the public in the determination of the existence of the right to have control over the volunteer.

The scope of employment

The third requirement to be fulfilled for the application of the doctrine of repondeat superior is on whether the employee causing the damage was acting within their job description at the time of the occurrence of the damage. In most cases, the criterion for establishing these requirements are not uniform across most parts of the country (Arora, 2012). The court of law has to prove beyond a reasonable doubt that the act that gave rise to the injury leading to the complaint was committed for the sole purpose of carrying out the work assigned for the benefit of the organization (Arora, 2012).

Areas of high legal risk for organizations that emerge from the law of tort

The organizational understanding of the legal risks should include both the legal consequences of business risks and the corporate risks with the law of tort origins. The organization and the allocation of the responsibilities for the understanding would normally reflect the structure of the organization and the ability to influence the key catalyst of the risk (Mark, 2014). The best practice indicates that the cultural significance of how legal risk is defined and managed on the perception and actual approaches to risks within and outside the organization. The broader framing of the legal risks concerning the law of torts go beyond the compliance with the law towards a wider ethical or commercial operations; to a sustainable corporate relationship and being perceived to be doing the right thing by a number of stakeholders (Mark, 2014) . Reputational and cultural understanding of risk, seek to prevent corporate entities from being viewed as aggressive, sharp and tricky in their approach to legal obligations. Additionally, the definitions of legal risks have both the practical importance and the cultural significance (Dennings & Chen, 2011).

The definition of legal risk and management seeks to contribute to corporate governance in a number of ways. First, it seeks to facilitate enabling the management to understand and respond to the most material legal risks they are exposed to then providing information concerning those risks (Dennings & Chen, 2011). While a few controllers and corporate administration principles either straightforwardly or in a roundabout way empower legitimate risks administration, they once in a while give direction on what is implied by legal danger. Unless and until they do, organizations are allowed to characterize and oversee legitimate risks in ways which fit their business settings. There is the potential for there to be between what a controller considers as legal and what an organization considers as legitimate danger. Another key issue is whether corporate risks procedures are adequately complete and vigorous. The organization in general should be overseeing the legitimate risks that begin from law and legal items and those organizational risks that have legal consequences (Dennings & Chen, 2011). Also, great practice proposes they ought to consider the reputational and social measurements of legitimate danger. The civil argument between the limited and more extensive meaning of legitimate risks highlights the third component of risks definition which is about possession: trying to indicate which part of the business claims that danger, rather which part of the business assumes lead liability for dealing with that sort of danger (Dennings & Chen, 2011). Part responsibility for appraisal of legal danger, and responsibility for and control, is conceivable and may regularly be sensible. Thus, maybe risks with legal consequences which are created by a non-legal part of the business ought to be the main duty of the business, and should be the obligation of legitimate. In any case, both sorts of risks offer ascent to legal outcomes, with the potential for legitimate staff to add to the understanding, alleviation and administration of that result regardless of whether they are essentially in charge of the everyday administration of that danger (Dennings & Chen, 2011). It takes after that we think this split between legitimate risks characterized from consequences and legal risks characterized from sources is best seen as an issue of association and not one of definition. What few pieces of information we can gather from administrative endeavors to characterize legitimate risks recommend they think about a blend of the two methodologies (Mark, 2014).

There are a number of high risks that the organization is exposed to, that emerge as a result of the law of torts. The risks include negligence of the servants, its board of directors, the staff, and volunteers to potential liability as a result of the acts of the people acting on the behalf of the organization (Mark, 2014). For the case of directors in the law of torts, directors and the staff need to exercise due care so that they do not behave in a negligent manner. As a general doctrine of law, it is possible for a director to have a joint tortuous liability alongside the business enterprise. The conditions under which this may take place are difficult to precisely pinpoint. the courts of law have always tried to strike a balance between the principles of law that: 1) a registered company is a legal entity distinct and separate from the shareholders, staff and the directors. 2) that each and every individual acting on behalf of the organization should take responsibility for their tortuous acts (Mark, 2014) .

In the famous case of Williams and Another vs. Natural Life Health Foods Ltd in 1998, there was a consideration of whether the director of a company would personally be held liable for negligence on misrepresentation. A decision by the House of Lords held that in accordance with the law of torts, a director would only be held liable if in the process of discharging their duties, they assumed responsibility. Concerning the facts of the case it was held that the director in question did not assume personal responsibility (Mark, 2014). However the court of law has made it clear in the 2007 case of Contex Drouzhba vs. Wiseman that in an instance where the director was involved in fraud, the director involved will not use the limited liability and the separate legal entity argument as their defense. the key argument which elicited the concept of fraudulent in the Contex case was that of the director consenting to a contractual provision that specifies that the payment for products ordered have to be made thirty days after the day of shipment, when intact the defendant knew that the company was not going to pay for those goods at all let alone paying at the stated time period (Mark, 2014).

The reasons and implications of this legal risk for such organizations both short –term and those that may arise in the long-term

Historically, it was perceived that organizations had a very limited set of legal risks and in most cases it was considered that those liabilities could be civil in nature. However, in the recent events it has been established that it is no longer the case (Panaggio, 2014). Organizations have always been held liable for obligations that directors engage in on behalf of the organization. It is also important to note that contracts that have been entered into before the actual period of the company’s registration may be considered as the responsibility of the organization. Such pre incorporation contracts committed by the promoters of the company become the obligation of the organization the moment the commitment is adopted by the organization or when the organization accepts to receive the benefits that accrue from the contract (Panaggio, 2014).

Given the potential legal risk of the company director and the fact that many organizations will usually register bad results by simply choosing the wrong risk, who on earth would like to be a director if being one would exposé one to a degree of legal risk to individual wealth or position each time they make a decision? For this reason, corporate law has undergone tremendous changes to come up with a system where the liability of the director and other organizational officers is limited to the extent of the liability such that organizations will still retain a healthy board to run its operations (Panaggio, 2014).

Concerning the effects of the legal risk of the director’s liability on the organization, these effects could vary depending on the nature of the liability as well as the interpretation of the contact. It is important to note that most of the director liabilities are normally borne by the individual director causing the injury depending on the extent of the liability (Webster, 2010). Any liability attributed to the directors of the company could be in the process of discharging their duties which could be assumed by the company in whose name the contract was committed by the concerned officer. What is clear however is that notwithstanding the incidence of the liability, there are consequences both in the short run and in the long run to the organization (Panaggio, 2014). In the short run, any legal suits will have a negative effect on the organization. Any manager would like to run an organization with a good reputation. Bad publicity is a demarketing factor that could take a very long time to correct (Panaggio, 2014).

The long term effects of the legal risk will usually be in financial terms. This because all the negative effects that end up affecting the reputation of the company as a result of negligence from a director will be reflected at the end of the financial period in form of reduced profitability. The main objective of the organization is to maximize profits and ultimately maximization of shareholder wealth (Panaggio, 2014). Although the law gives the director some form of immunity, the shareholders of the organization may take legal action against a director on behalf of the organization for the misuse of the privileges given to them. The effect is that organizations will struggle to attract the best brains to manage organizations as individuals will shy away from the legal risks that corm with director liability (Panaggio, 2014). The other long term effect is that the organization is likely to attract law suits that could lead to a requirement for the organization suffering financial damages.

Strategic options for management of this legal risk and evaluate those options in terms of cost and benefit to organisations

  1. Risk avoidance

Risk avoidance is a legal risk management strategic option that involves the elimination of risks, activities and the exposures that can negatively affect an organization’s wellbeing. While acknowledging that the elimination of risks is rarely achievable, risk avoidance is meant to deflect the risks in order to avoid the costs and the consequences that could affect the normal operations of the organization (Panaggio, 2014). The strategy attempts to achieve this by minimizing the vulnerabilities that have to do with the law of torts such as negligence that can pose a threat. Risk avoidance can be made possible by training, policy framework and the use of technology. The organization has to quantify the cost of the potential risk visa avis the benefits that the organization would get by assuming the risks. Whichever is more beneficial should be taken as a strategy by the organization (Svensson & Wood, 2007). The benefit of risk avoidance as a legal risk management strategy is that there are no costs involved in its execution.

  1. Liability insurance

In the law of tort, liability insurance is key for an organization to protect itself and its assets. Those organizations and individuals that are found liable without the benefit of insurance in most cases find that it takes time and money to pay the damages (Panaggio, 2014). More and more people are injured as a result of exposure to a number of risks and are now more than ever seeking legal redress in the court of law. Daily, we talk of multimillion awards on service providers who performed shoddy work without the due procedure etc .This strategy is a fairly common way of dealing with common risks since it ensure indemnation on the part of the organization that ensures continuity of the business (Svensson & Wood, 2007).

  1. Risk control

This is another common way of minimizing the effects of a liability that arise from a legal risk. There are a number of risks that the organization is exposed itself to, that emerge as a result of the law of torts (Panaggio, 2014). The risks include negligence of the servants, its board of directors, the staff, and volunteers to potential liability as a result of the acts of the people acting on the behalf of the organization Though very expensive, the method involves making sure that the losses that would accrue to an organization that result from liabilities are minimized in the best possible way (Svensson & Wood, 2007).

Recommendations as to how this legal risk might be managed, the most appropriate option and the rationale for those recommendations

Some contend that the management of the law of tort could yield less successful safety control by government. To the extent that these contentions are substantial, agencies may require more power and labour without tort (Panaggio, 2014). However, we could give an expansive thought by exchanging a humble extent of the general population who control the tort framework to the administrative organizations and still accomplish an uncommon net decrease in authoritative expenses. The following are therecommendations as to how this legal risk might be managed, the most appropriate option and the rationale for those recommendations

Tort suits can some time recognize issues for organizations to deal with. Regardless of the possibility that organizations just at times depend on prosecution for this reason, new procedures might be expected to advise organizations of wellbeing issues as they create. By publicizing issues, tort activities can weight organizations to act. A few cases that show this point appear to be very remarkable (Panaggio, 2014). It may be tempting to give the victims and staff new powers to drive organizational activity. Apprehension of tort liability may bring about deliberate consistence with office directions. This worry recommends that all the more effective organization sanctions might be required, or that organizations may need to send more grounded assents that now go unused.

Tort legal advisors may work as open prosecutors. Without a doubt, generally offended parties’ attorney hours are given to car crash cases, where open direction is as of now considerable more office legal advisors. A hefty portion of these could be employed with the income of a couple of noticeable individual lawyers (Panaggio, 2014). Tort attorneys and their staff can reveal injurious practices.

Once more, while this presumably from time to time happens, maybe new motivating forces are expected to urge organizations to recognize risky behaviour and more secure choices. Regardless of the possibility that it can’t avert risky businesses at the beginning, the law of tort may have the capacity to abridge certain current perils. For instance, apprehension of case could reduce further advertising (Panaggio, 2014). Henceforth, maybe, organizations need expanded forces to square found perils not at first stopped. Also, there might be a proceeding with part for private prosecution looking for orders as opposed to harms.

Reference

Arora, A. (2012). The law of business organisations. Retrieved 6th Oct. 2016 from http://www.londoninternational.ac.uk/sites/default/files/programme_resources/lse/lse_pdf/subject_guides/mn3027_ch1-3.pdf

Coleman, J., Hershovitz, S., & Mendlow, G. (2015). Theories of the common law of torts. Retrieved 6th Oct. 2016 from http://plato.stanford.edu/entries/tort-theories/#OveTorLawTorThe

Dennings, R. & Chen, W.L. (2011, December 8). Integrated legal risk management — opportunities for the transport and logistics industry part 2 — knowledge. Retrieved 6th Oct. 2016 from https://www.claytonutz.com/knowledge/2011/december/integrated-legal-risk-management-opportunities-for-the-transport-and-logistics-industry-part-2

Fayetteville NC Attorneys. (2013, April 7). Understanding the importance of tort law. Retrieved 6th Oct. 2016 from http://fayettevillencattorneys.com/?p=61

Mark, L. (2014, May 2). How to measure and manage legal risk. Retrieved 6th Oct. 2016 from https://www.berkmansolutions.com/blog/item/how-to-measure-and-manage-legal-risk

Mayer, D. et al. (2012). Legal Aspects of Property estate planning and insurance: Chapter 7. introduction to tort law. Retrieved 6th Oct. 2016 from http://2012books.lardbucket.org/pdfs/legal-aspects-of-property-estate-planning-and-insurance.pdf

Panaggio, T. (2014, February 4). The cost of risk avoidance. Retrieved 6th Oct. 2016 from http://www.business2community.com/leadership/cost-risk-avoidance-0766173#MixsgXl7pwMLrTPt.97

Potter, S. (2010, March 22). The Importance of Tort Law to Minimize Liability. Retrieved 6th Oct. 2016 from http://ezinearticles.com/?The-Importance-of-Tort-Law-to-Minimize-Liability&id=3972059

Svensson, G., & Wood, G. (2007). Strategic approaches of corporate codes of ethics in Australia: A framework for classification and empirical illustration. Corporate Governance: The international journal of business in society7(1): 93–101. doi:10.1108/14720700710727140

Webster, D. (2010). Personal liability for directors. Retrieved 6th Oct. 2016 from http://www.russell-cooke.co.uk/media/2004/personal_liability_for_directors_-may_2010.pdf