Torts: Intentional Torts and Negligence

■​ Intentional torts
○​ Highest degree of fault (“intentional”), civil = 51% burden of proof
○​ Protect individuals from harm to person, property, reputation and privacy
○​ Types: assault (causing eminent fear), battery (actually hit you, unwanted touch), intentional infliction of
emotional distress (e.g. very malicious prank → proof: cannot work, pain, therapy), false imprisonment
(kidnap, can’t leave), defamation, invasion of privacy, trespass to land and nuisance (neighbors have to be
quiet), trespass to personal property and conversion
○​ Plaintiff has to prove that fear is caused fear (freeze/escape response), from the victim’s perspective
○​ Usually if battery then there was assault when victim saw it coming (unless hit from the back)
○​ Transferred intent: if u want to hit sb but accidentally hit sb else, still intentional (cuz the act)
○​ Can have unwanted touch in life-threatening situations, e.g. drowning, but not a broken arm
■​ Unintentional Torts = Negligence
○​ More common than intentional torts, need to satisfy 4 requirements
○​ Standard of reasonable care
▪​ Behave like a reasonable person, e.g. drive slowly if raining, change tire if snowy, obey law
▪​ Duty arises when risk of harm is foreseeable and there is special relationship (responsibility)
▪​ Didn’t meet = negligence, but tort of negligence is all 4
○​ Breach of duty
▪​ Failure to act like a reasonable person, standards are determined through case law
▪​ PL > B (P = probability of injury, L = seriousness of loss, B = Burden of taking precautions)
▪​ Factors : Foreseeable risk of injury, Utility of the conduct, Extent of the risk, Likelihood of the risk
actually causing harm, Possible alternatives
▪​ A waiver cannot waive all responsibility (u didn’t check if parachute works in 5 years=still liable)
▪​ Some cases are Res ipsa loquitur (“the thing speaks for itself”), e.g. cockroach in salad
→ no need to go through the proofing process, directly move to causation and damages
→ there are times when you don’t know clearly whose responsibility it is
○​ Causation
▪​ Actual: direct cause and effect
▪​ “But for”, only bc of the banana skin that I slipped AND/OR
The defendant’s action is a substantial factor in the harm caused (40%+)
▪​ Case: one small fire by negligence, one fire by nature, tgt burned down a farm
▪​ The split of compensation is just how much the cause % is
▪​ Proximate causation: establish limits of defendant’s responsibility (cut off a chain)
Anything beyond foreseeability → no liability
○​ Resulting damages
▪​ Actual physical/psychological damages (nature and cost of injury, e.g. loss of wages/future earnings)
▪​ Usual remedy is compensatory but sometimes also punitive
▪​ You need proof to sue (if you didn’t eat the cockroach then you can’t sue)
→ tort law can’t fix everything, you can tweet about it, there are regulations…
○​ Defenses
▪​ Contributory negligence: cannot recover if victim is more than 50% at fault
▪​ Comparative fault: can recover even if more than 50% at fault
▪​ Assumption of risk (did victim expect it to be risky)
▪​ Superseding intervening cause
■​ Palsgraf v. LIRR (1928)
○​ The staff should not push a late person onto a moving platform (diff if their foot is stuck)
○​ We should behave like a reasonable person (risk averse)
○​ Defines proximate cause, the staff not liable for the scale
Torts: Product Liability
■​ Consumer/user is owed a duty
○​ Imminent, foreseeable risks are covered under product liability suits
○​ Duty intact regardless if the person who bought it is the final user
○​ Purchasing components from a third party doesn’t let them off the hook
■​ Cause of Action #1: Negligence
○​ Duty of care (depends on foreseeability, the target audience dictates how much duty of care, i.e. children)
○​ Breach of duty (did the company do enough?)
○​ Causation: direct/proximate
○​ Damages: compensatory/punitive
■​ Types of defects
○​ Manufacturing: Doesn’t perform in the way expected
○​ Design: Foreseeable risks that could’ve been eliminated by a reasonable alternative design
○​ Warning: risks could’ve been avoided by reasonable warnings and instructions
▪​ may open up to more liability)
■​ Cause of Action #2: Strict Liability
○​ held liable no matter how much care they exhibited if a defect is unreasonably + unexpectedly dangerous
○​ Bc products are too sophisticated for consumers to reasonably detect the foreseeable risks
○​ Mostly used for manufacturing defect case, no burden of proving negligence, e.g. asbestos (fatal)
■​ Cause of Action #3: Warranty
○​ Express statements about warranty–Often limited to specific limitations or time bound
○​ Implied: Always applies, “fit for ordinary use” or Can be limited, e.g., to “any natural person who is in the
family or household of his buyer or who is a guest in his home…” or first owner
○​ Implied for a particular purpose (specialized goods)
○​ Sue for breach of warranty
■​ Defenses
○​ Comparative fault: fault divided between the manufacturer and consumer
○​ Assumption of the risk: consumer knowingly assumed the risk of harm (e.g. knife is sharp)
○​ Open and obvious dangers: self-evident risks
○​ Product misuse: product not used in a normal manner (e.g. eat a tide pods)
○​ State of the art defense: product meets current safety standards (for pharmaceutical products)
■​ MacPherson v. Buick (1916)
○​ Lost trust in business and corporation → self-regulation (creation of product liability law)
○​ Industrial revolution: longer and more complex supply chain → increase consumer protection
■​ Daniell v. Ford Motor (1984)
○​ Is it foreseeable that someone will be stuck in the trunk of the car? (kidnap/prank) → flexibility
Contracts: Offer, Acceptance, Consideration
■​ Basics
○​ A legally enforceable promise (or set of promises) to act or refrain from acting in a specified way, that is
made with words either written or oral, or inferred wholly or partly by conduct
○​ Reason: Pacta Sunt Servanda = “agreements must be kept” (moral obligation to keep promises)
Facilitates trust and reliability between parties (for business)
Mechanism of resolving disputes, Encourage socially and economically desirable behavior
○​ Courts were laissez-faire (no regulations) in the 19th century for common law
○​ Contracts became more complex and parties unknown to each other
▪​ Emphasis shifted to protecting consumers and workers to counter “injustice”
○​ All states adopted the Uniform Commercial Code (Default rules that parties can contract around)
○​ Contract law is international (business is US/NY based), sometimes uk law
○​ NY courts have the best adjudicators of conflicts, sophisticated law
○​ The company signs a contract and it goes on even if the board changes
■​ Offer
○​ (1) intent​ (2) communicated (open offer can be cancelled anytime)​ (3) material terms set out
○​ Can fill in the blank reasonably if there is vagueness (whatever paint =/= very expensive and rare paint)
○​ Advertisement is an invitation, never an offer (unless there is limiting language, e.g. first 50 customers)
■​ Acceptance
○​ (1) intent​ (2) communicated​ (3) mirror-image rule (you can only accept what is offered)
○​ Somethings can have the same mirror value (venmo vs cash) but mirror-image rule still violated
○​ Counter-offer can be made but it is not acceptance, the offerer switches, terms are updated
○​ Acceptance can be communicated through action (like the person sees you doing the offer)
■​ Consideration
○​ exchange of legal value between the parties (money, action, forbearance, promise)
○​ Legal value: things you wouldn’t have done otherwise
○​ Generally courts will not investigate the adequacy of the consideration (unless implies not serious/legal)
○​ Past performance is generally not consideration; gifts and reversible things don’t count
○​ Extended time/extra money needs new consideration, can be a dollar
■​ Lucy v. Zehmer (1954)
○​ “Meeting of the minds”: how much agreement (offer + acceptance) is necessary?
○​ “The mental assent of the parties is not requisite for...a contract.”
○​ Outward manifestation of intent determines assent
■​ Fiege v. Boehm (1956)
○​ “Forbearance to sue for a lawful claim or demand is sufficient consideration for a promise to pay for the
forbearance if the party forbearing had an honest intention to prosecute litigation which is not frivolous,
vexatious, or unlawful, and which he believed to be well founded.”
○​ change in assumptions does not undermine the validity of a contract
→ add condition in the contract (more thought you put into the contract before = better after)

Contracts: Quasi-Contract and Equitable Relief

■​ Promissory Estoppel
○​ Promise reasonably expected to induce action or forbearance in a significant way (foreseeability)
○​ Did such action or forbearance with detrimental reliance occur?
○​ Can injustice be avoided only by enforcement of promise?
■​ Types of contract
○​ Express: written or oral
○​ Quasi-contract: When a benefit has been conferred but there is no written or oral “contract,” the courts may
find that there is a quasi-contract in order to avoid unjust enrichment (e.g. treatment to unconscious patient)
○​ Implied contract: not spoken or written down), intent demonstrated by action (e.g. accepting paint job)
○​ All promissory estoppel (one party is making a promise) are quasi contracts but not vice versa
■​ Hoffman v. Red Owl Stores, Inc. (1965): They want to make a change to punish some actions
Contracts: Statute of Frauds; Parol Evidence Rule; Defenses and Equities
■​ Statute of Frauds
○​ Certain contracts have to be written down to be enforceable
○​ Covered: marriage, performance is more than 1 year, land. Goods more than $500
○​ Exception of specially-made goods that are already substantially underway, pay up to amount performed
■​ Parol evidence rule
○​ For written contracts, everything within the 4 corners of the contract is the entirety
○​ Discount prior statements unless terms or ambiguous or unclear or Integration/merger clause
○​ “Prompt delivery” = 3 days from prior convo, but if warranty not included in contract, oral promise x count
○​ “The Agreement constitutes the entire agreement and understanding between the parties hereto and
supersedes any and all prior agreements and understandings, oral or written.”
■​ Enforceability: capacity
○​ Prima facie for no capacity: Under 18, Mentally incompetent, Intoxicated beyond decision-making ability
▪​ Prima facie evidence = accepted unless unproven
■​ Defenses → void contracts
○​ We want to make sure the contract was made with voluntary, genuine assent from both parties
○​ Mistake
▪​ Material mistake (date is immaterial), if mutual → generally unenforceable/voidable
▪​ If unilateral, contract is generally enforceable, unless one party with an obligation to the
▪​ other knew of factual mistake and did not disclose → violation of contract
▪​ We consider if there is a common understanding at the time of the contract, seller owes buyer
○​ Fraudulent misrepresentation
▪​ Material fact justifiably relied on to the detriment of the reliant party (x sign contract otherwise)
▪​ Caveat emptor (“let the buyer beware”) unless material defect that rises to fraud
▪​ Depends how easy it is for buyers to discover (e.g. leaking roof is on buyer they can do inspection)
○​ Duress
▪​ One of the parties, by making a threat of harm (created by this party!!), forces the other party to
enter into an agreement that s/he would not otherwise have entered
○​ Undue influence
▪​ Old and sick people are not reliable + a previously existing confidential relationship
▪​ This is a very hard to win case, the line is murky, are they doing what they rly wanna do
▪​ E.g. an old man cut ties with all his kids and gave all his money to a young lady
■​ Vokes v. Arthur Murray (1968)
○​ they made up assessments thats too much, beyond encouragement
○​ The court did something special, described personal characteristics (51 and widowed) = sympathy
■​ Stambovsky v. Ackley (1991)
○​ The reputation is well known, does the seller still have responsibility, but it is important info
○​ Back in the days, they didn’t have google so bar may be higher
○​ Buyer normally do inspections but they dun always check for ghosts so seller should disclose
Contracts: Breach and Remedies
■​ Illegal contracts
○​ The court is unwilling to enforce illegal acts (e.g. buying and sellling drugs)
○​ Unconscionability: unequal bargaining power → a bad deal that shock the conscience
○​ Non-compete/exclusivity clause in employment contracts (can pay them to not work)
○​ Stay at the job otherwise unemployed = overpowered employers (NDAs are fine except harassment)
■​ Performance
○​ Complete performance
○​ Substantial performance: Non-breaching party pays their part of the bargain minus costs of curing defect
○​ Material breach: serious defect → sue for damages (cost of obtaining the original performance)
○​ Anticipatory breach: One party tells the other they will not perform → Sue for damages or wait and see
○​ Excuses for non-performance
▪​ Impossibility (death or illness, contractual duties made illegal, destruction of subject matter)
▪​ Impracticability (unforeseen developments make performance unreasonably expensive)
■​ Remedies
○​ Mitigation of damage: Duty of non-breaching party to try to lessen the losses
Type of Damage Meaning Relief

Compensatory Damages from breach of contract Difference between value of contract

damage promise and received

Consequential Special circumstances cause damages that Special losses caused by the breach that
damage would not be ordinarily foreseeable can be measured

Liquidated Damages specified in advance, especially Parties agreed in the contract what the
damages when damages are hard to ascertain amounts would be, to be paid
○​ Specific performance: force ppl do what they don’t want to do, e.g. selling things
▪​ unique circumstances, may not be used to compel personal service (naming ur kid/labor)
○​ Injunction: Refrain from doing certain acts
○​ Rescission and restitution: both parties legally discharged from carrying out the contract
▪​ put back into original positions pre-contract, very common
○​ Reformation: Allows rewriting of part or all of contract to more accurately reflect intent
■​ Jones v. Star Credit Corp. (1969)
○​ contract unconscionable bc the freezer was crazily expensive
■​ Jacob and Youngs v. Kent (1921)
○​ The pipes are similar enough
Agency Law and Fiduciary Duty
■​ What is agency?
○​ By mutual consent (formal/informal, express/implied)
○​ One person/entity (e.g. employee → employer, Partners are agent and principal of each other)
○​ Undertakes to act on behalf of another person or entity (rationally review, more lenient with WFH)
○​ Subject to principal’s control (working hours and how does the agent work) → establishes relationship
○​ VS independent contractor: benefits, employment law protection, liable for torts of agent, fiduciary duties
○​ Agency itself is not contractual but many agency relationships can be formalized in a contract
▪​ Contracts can limit the term of agency or areas of principal’s control
▪​ Cannot Relinquish all of the principal’s control, Say that the agent cannot bind the principal at all,
Give unilateral power to end the relationship to only one party (“underperformance” is ok)

■​ Fiduciary Duties
○​ Effective once you start working
○​ Duty of loyalty (most important): Agent must put the principal's duty over her own and act “solely for the
benefit of the principal in all matters connected with the agency” (R. 2d. Sec. 387)
▪​ e.g. keep confidential information, no competition, no self dealing
○​ Duty of care: Act in good faith, Principal can sue for negligence
○​ Duty of obedience (Exception is in cases of fraud or wrongdoing)
■​ Authority and contractual liability
○​ If it is within “scope of authority” that the agent can do so, principal is bound, can ratify scope
○​ Express, implied, apparent (agency by estoppel, e.g. companies stop look alikes) authority
○​ Third party’s duty of inquiry (should know first year marketing analyst can’t sign sales contract)
■​ Liability for torts
○​ Respondeat superior: direct liability if principal is negligent in hiring/supervision
indirect liability if within scope of employment
○​ Deeper pockets, risk spreading (principal can mitigate thru maybe insurance), risk avoidance (safer society)
○​ Dalliance: small break that keeps you going = still at the job OR Detour (end of job)
▪​ Connection between time, place, and occasion for the act
▪​ History of the relationship between employer and employee
▪​ Whether act is commonly done by an employee or authorized
▪​ Extent of departure from normal methods of performance, still in the interest of the employer?
▪​ If employer could have anticipated the specific act
■​ Meinhard v. Salmon (1928)
○​ They are partners, they should be looking out for each other (he made the new deal during the 20 years)
■​ Edgewater Motels v. Gatzke (1979)
○​ His cigarette burnt down the hotel but he is known to be on call 24/7 so employer can be liable
■​ Riviello v. Waldron (1979): Is knife trick related to a bartender job
Employment Law
■​ Most employees are in employee-at-will relationships
■​ Employment discrimination
○​ Federal (Equal Employment Opportunity Commission) and state laws
○​ Federal laws apply only to employees who fall within one of the “protected classes”
▪​ Equal Pay Act of 1964: Gender
▪​ Title VII (of the Civil Rights Act of 1964):
Sec. 703: “It shall be an unlawful employment practice for an employer (1) to fail or refuse to hire or
to discharge any individual, or otherwise to discriminate against any individual with respect to his
compensation, terms, conditions, or privileges of employment, because of such individual’s race,
color, religion, sex, or national origin...” – inquires into motive, shld hv reasonable accommodation
▪​ Age Discrimination in Employment Act of 1967: Age
▪​ Pregnancy Discrimination Act of 1978: Pregnancy
▪​ Americans with Disabilities Act of 1990: Disabilities
○​ Not covered under federal law: some classes (15-20 employees) and independent contractors
○​ Can list skills requirement but not discriminate (✖french, ✔speak french and cook good french food)
○​ Immigration is ability to work, basic requirements/separate from employment
■​ Basic structure
○​ Plaintiff (EEOC takes cases) must prove a prima facie case by a preponderance of the evidence
○​ Applied for, An available employment opportunity, For which they were qualified, But did not receive,
Under circumstances that give rise to an inference of unlawful discrimination
○​ Defendant demonstrates a legitimate, nondiscriminatory explanation
○​ Plaintiff demonstrates this reason is a pretext for intentional discrimination
■​ Proving disparate treatment
○​ Not facially neutral act/policy OR refusal to make certain accommodations (intentional)
○​ Proof of intent to discriminate can be inferred + – Direct evidence and circumstantial evidence
○​ Has material effect on the terms and conditions of employment
■​ Proving disparate impact
○​ Facially neutral policy (unintentional)
○​ “Police officers must weigh at least 150 lbs and be 5’8” tall”
○​ “All ER doctors must be potentially available 7 days of the week.”
○​ There is a adverse impact on a certain protected class with no business necessity (+ available alternative)
■​ Employer’s defenses
○​ Challenge the fact and/or impact
○​ Business necessity (not preference, overturned by Fernandez, e.g. fitness test for firefighters)
○​ Bona Fide Occupational Qualification (BFOQ): Hiring a certain type of person is essential to the job
▪​ E.g. actors, santa claus (had to be white until 20 years ago, still men)
■​ Wilson v. Southwest Airlines (1981)
○​ The essence of the business is flight and flight attendants only need to serve food, fail BFOQ test
■​ EEOC v. Abercrombie and Fitch (and dissent) (2015)
○​ “An employer may not make an applicant's religious practice, confirmed or otherwise, a factor in
employment decisions.”
Business Entities and The Modern Corporation
■​ Forms of business
○​ Sole proprietorship
○​ Partnership (flow through debt!)/limited partnership
○​ Corporation/PLLC/LLC/S-Corp
○​ Differences in taxation, Liability, Funding, Governance, Complexity, Agency (and fiduciary duties)
○​ The default rules (contribute more = more return) will apply if you dun contract around that
■​ Corporations/LLC
○​ Advantages: tax benefits, no personal liability, raise money (corp), easier to sell/transfer, perpetuity
○​ Disadvantages: expensive and complicated to establish, paperwork every year, less freedom in structure
○​ Owners: individual/companies shareholders (x owe fiduciary duty to the company)
○​ Board of directors: “big picture” strategic thinking, not all members vote, hire officers
▪​ owe fiduciary duty (cannot be on board of two immediate competitors)
○​ Officers: executive leadership (c-suite), run day-to-day
○​ Employees: everyone else in the company
○​ Duties are owed to the company not shareholders (new form: B-corp/public benefit corp/PVC)
○​ treated as a legal “person” = can be sued, enter contract, own property, free speech, religious freedom
■​ Duty of care – Business judgment rule (BJR)
○​ Must act in “good faith” = reasonably believes to be in the best interests of the corporation
○​ Shields directors and officers from personal liability (encourage them to take risk and innovate)
○​ Courts will not second-guess decisions even if they turn out to be bad (employer may be unhappy)
○​ Suspended if Illegality/fraud, conflict of interest, waste, gross negligence, inattention
■​ Duty of loyalty: no conflict of interest (no BJR but can disclose and ratify)
■​ In other countries, there are representatives from diff stakeholders (union to represent workers)
■​ Geringer v. Wildhorn Ranch (1988)
○​ He was not operating like a firm (smaller companies), its like an alter-ego (separate asset)
○​ Need regular board meetings with record (e.g. minutes) to be considered a corp
■​ Citizens United v. Federal Election Commission (and dissent) (2010)
○​ McCain-Feingold (BCRA) campaign finance law prohibits corporations from running TV commercials
for/against a presidential candidate for 30 days before primaries (candidates for a party)
○​ Super PACs, Secret money, No more public financing → surge in money dumped into campaigns

Securities Law and Insider Trading

■​ Security (Howey test, 33 act): (1) An investment of money​ ​ (2) In a common enterprise​
(3)With an expectation of profit​ (4) Derived from the efforts of others
○​ Bitcoin is rejected, other cryptos are still unknown, they are now commodities (easier laws than security)
○​ Laws are there to protect investors
○​ Issuer (Private placements or IPOs), Trading (99% of all securities transactions)
■​ Insider trading
○​ Derived from Rule 10b-5: Illegal to buy or sell securities on the basis of material, non-public information in
breach of a duty arising out of fiduciary relationship (or other relationship based on trust or confidence)
○​ Theories of insider trading through cases
1.​ Classical Theory (Chiarella)
▪​ Corporate insiders (w fiduciary relationship) cannot trade based on material, non-public information
2.​ Tipper/tippee (Dirks)
▪​ Tipper: Discloses MNPI either intentionally or recklessly in breach of fiduciary relationship
Receives personal benefit (or just expected), either economic or non-economic (Salman)
▪​ Tippee: Knows or should have known of this breach (look at sophistication of tippee)
Trades on this material and benefits (both liable) **quid pro quo (sth for sth)
3.​ Misappropriation Theory (O’Hagan)
▪​ Owes a duty of trust and confidence but not fiduciary duty (info from family, NDAs, history)
■​ Defense: Pre-existing plan (binding contract) to trade the security that could not be influenced by defendant