Business Law 201 Spring 2009
Professor Isler
Assignment 2
Directions: Read the question carefully and answer only what is asked. No points will be awarded for extraneous discussion. You may assume that jurisdiction and venue are proper, and focus exclusively on the question asked. Please also note the following:
1. This assignment may not exceed four pages;
2. The assignment must be typed;
3. The assignment is due at the start of class on Tuesday, March10, 2009;
4. The assignment may not be e-mailed to me or the TA;
5. The assignment is worth 2.5 points; and
6. This assignment may not exceed four pages, the assignment must be typed, the assignment is due at the start of class on Tuesday, March 10, 2009, the assignment may not be e-mailed to me or the TA, and the assignment is worth 2.5 points
Question 1
A water pipe bursts, flooding a General Business Company (GBC) utility room and tripping the circuit breakers on a panel in the room. GBC contacts Hal, a licensed electrician with ten years of experience, to investigate the damage and turn the breakers "on." Hal attempts to turn on one of the breakers without testing for short circuits, which he knows should be done. Hal is electrocuted, and files a suit against GBC for damages, alleging negligence. How might GBC defend itself?
Answer
GBC might defend against this claim by asserting the defense of assumption of risk. GBC could claim that it had no duty to warn Hal of a dangerous risk of which he should have been aware. Given the common knowledge of the accepted practices in the field in which Hal practiced his trade and his level of training and experience, a court might agree that there was no need on the part of GBC to warn Hal of this danger, and that Hal voluntarily entered the risky situation, knowing the risk involved. GBC might also raise comparative negligence as a defense. All individuals are expected to exercise a reasonable degree of care in looking out for themselves. Both parties' negligence-if, indeed, GBC was negligent at all-can be computed and the liability distributed accordingly. GBC might also plead assumption of risk, claiming that Hal voluntarily entered into a risky situation, knowing the risk involved.
Question 2
Susan is the president of United Food Corporation, a wholesale grocery company. An inspection by Tim, a government agent, uncovers unsanitary conditions caused by Val, a United employee, in the United warehouse. Will, a United vice president, assures Tim that the situation will be corrected, but a later inspection reveals no such corrections. Susan knows nothing about any of this. Can United be convicted of a crime in these circumstances? Can Susan be held personally liable?
Answer
The answer to both questions is yes. A corporation may be held liable for the crime of its employee if (1) the criminal act is within the scope of the employment and the purpose of the statute defining the act as a crime is to impose liability on the corporation, (2) the crime consists of a failure to perform a specific duty imposed on corporations by law, and (3) the crime was authorized by one of the corporation's "high managerial agents." Here, all of these elements exist. The unsanitary conditions in the warehouse are within the employee's scope of employment, the crime consists of a failure to keep the warehouse clean, and the crime was authorized by a company vice president. As for the president's personal liability, if she has the authority and the responsibility to deal with the situation, she can be held personally liable. A corporate officer must have the authority and the responsibility to deal with the situation. Personally liability is imposed in such circumstances, not because the corporate officer knew about the crime or intended it, but because the officer is in a "responsible relationship" to the corporation and has the power to prevent the crime. Under this "responsible corporate officer" doctrine, a corporate officer can be held liable for an employee's violations of the law. This liability may be imposed regardless of whether the officer participated in, directed, or knew about the violation.
Question 3
Dan, a driver for EZ Delivery Company, leaves the truck's motor running in neutral and carelessly forgets to set the parking brake while he makes a delivery. The truck rolls and crashes into a nearby gas station pump, igniting a fire that spreads quickly to a construction site a block away. A burned wall collapses onto a crane, which falls on, and injures, a bystander, Flo. What must Flo show to recover damages from Dan?
Answer
To recover on the ground of negligence, Flo must show that EZ owed her a duty of care, that EZ (through Dan) breached that duty, that Flo was injured, and that EZ's breach caused that injury. There is no question that in operating the truck, Dan was acting on EZ's behalf and that his actions breached the duty of reasonable care necessary to park the truck. Also, Flo was injured by a crane falling on her, not by her own negligence. Liability turns on whether Flo can connect Dan's breach of duty to her injury. The issue of foreseeability is the test of proximate cause, the connection needed for Flo's recovery for damages. Flo must show that the chain of events was a foreseeable result of Dan's carelessness.
Question 4
Jean owns five acres of land in an area of single-family homes on mostly one-acre plots. Jean's property contains her house and three outbuildings. Among the animals housed in the outbuildings are Kennel, a dog, and Louis, a tiger. Mary, a neighbor, is jogging past Jean's property. Under what circumstance is Jean strictly liable if Kennel bites Mary? Under what circumstance is Jean strictly liable if Louis bites Mary?
Answer
The owner of a wild animal is strictly liable for any harm that the animal inflicts. Wild animals that are released or otherwise escape from confinement pose a serious risk of harm to anyone in the area. This is the basis for applying the strict liability doctrine in such cases. Thus, in this problem, Jean would be liable to Mary for Louis's bite under almost any set of circumstances-Louis's escaping or being released by a third party, Jean's forgetting to lock Louis's pen, or Mary's jogging across a corner of Jean's land, for example. Owners of domesticated animals, however, such as dogs, are strictly liable for harm caused by those animals only if the owners knew or should have known that the animals were dangerous or otherwise had a propensity to harm others. Thus, in the problem, Jean would be liable to Mary for Kennel's bite under only those circumstances-if Kennel had bitten others, for example, or had been specially trained to attack others.