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PRDV205: Business Law and Legal Procedures

Unit 8: TORTS AND CRIMINAL LAW   In addition to the civil disputes that fall under contract law, two other branches of law have a major impact on the operation of businesses: torts law and criminal law.

Torts is a branch of law that imposes liability for civil wrongs that are not related to the violation of contracts.  Consider the following example: Your company’s delivery truck is hit by another vehicle, and you want to sue the other driver on behalf of your company for damaged goods.  But there is no previous contract that exists between you and the other driver.  In such a situation, your lawsuit will be carried out within the tort system.  Tort law allows individuals and businesses that have been wronged to receive compensation for that wrongdoing.  There are a number of different types of civil wrongs (torts), but the most commonly cited tort is negligence, which involves a breach of “duty of care.”  In order to sue on the grounds of negligence, you must be able to prove that a person or party who was responsible for something has violated that responsibility.

Like torts, criminal law deals with what happens when an individual or group of individuals commits a wrong against another individual or group of individuals.  For example, Bernie Madoff was successfully prosecuted in 2009 for securities fraud when it was revealed that his investment-management business was not actually investing but rather taking money from later investors to pay off earlier investors.  Unlike contract disputes, criminal actions pertain to the direct violation of existing laws that a legislature has determined represent a pressing societal interest and thus require prosecution by the state or federal government.  As with contract law and torts law, criminal law cases usually include two parties – the prosecution and the defense – but in US criminal trials, the defense is always representing a regional, state, or federal government.  A criminal trial also includes a judge and, in many cases, a jury of peers.

Unit 8 Time Advisory
This unit should take you approximately 3 hours to complete.

Unit8 Learning Outcomes
Upon successful completion of this unit, you should be able to: - identify the elements of an intentional tort; - identify the elements of negligence; - explain the relationship between torts and product safety; - assess the impact of crime on business; - describe the burden of proof in tort and criminal cases; and - identify white-collar and other business-related crimes.

8.1 Torts   8.1.1 Intentional Torts   - Reading: The Legal and Ethical Environment of Business: “Chapter 7, Section 1: Intentional Torts" Link: The Legal and Ethical Environment of Business: “Chapter 7, Section 1: Intentional Torts” (PDF)

 Instructions: Read Chapter 7, Section 1 of the textbook. 
Intentional torts refer to wrongful actions that have been committed
purposefully by a person or group.  As you read this section, note
the wide variety of intentional torts that the legal system
recognizes.  Some of these torts, such as battery and conversion,
also have the potential for criminal liability.  While many
intentional torts are committed by one person against another, these
torts may also include purposeful damage to real or personal
property.  

 Reading this textbook section should take approximately 30
minutes.  

 Terms of Use: This text was adapted by The Saylor Foundation under
a [Creative Commons Attribution-NonCommercial-ShareAlike 3.0
License](http://creativecommons.org/licenses/by-nc-sa/3.0/) without
attribution, as requested by the work’s original creator or
licensee.

8.1.2 Negligence   - Reading: The Legal and Ethical Environment of Business: “Chapter 7, Section 2: Negligence” Link: The Legal and Ethical Environment of Business: “Chapter 7, Section 2: Negligence” (PDF)

 Instructions: Read Chapter 7, Section 2 of the textbook.  Have you
ever been around someone who acts carelessly and ends up breaking
something?  If you become angry with and confront such a person, he
or she might answer, "I didn't do it on purpose."  But the tort
known as negligence tells us that even when a person does not
intentionally commit a wrong, he or she still may be held
accountable if he or she is found not to have exercised proper
care.  The common standard used in judging such situations is to ask
what a “reasonable” person would do in the same situation – that is,
a person exercising adequate care, skill, and judgment in similar
circumstances.  As you read, be sure to familiarize yourself with
the different elements that compose negligence.  If a particular
case meets all the elements of negligence, then it becomes necessary
for a court to determine the level of damages due to the wronged
party.  Also be sure to note the textbook's description of defenses
that can be mounted against a charge of negligence.  

 Reading this textbook section should take approximately 30
minutes.  

 Terms of Use: This text was adapted by The Saylor Foundation under
a [Creative Commons Attribution-NonCommercial-ShareAlike 3.0
License](http://creativecommons.org/licenses/by-nc-sa/3.0/) without
attribution, as requested by the work’s original creator or
licensee.

8.1.3 Strict Liability   - Reading: The Legal and Ethical Environment of Business: “Chapter 7, Section 3: Strict Liability” Link: The Legal and Ethical Environment of Business: “Chapter 7, Section 3: Strict Liability” (PDF)

 Instructions: Read Section 3 from Chapter 7 of the textbook.  The
law recognizes that some torts require holding persons liable for
their acts even when they are deemed to have exercised reasonable
care.  How could this be?  This reading outlines the various
situations in which persons are held to *strict liability*.  Do you
agree that such situations require a stricter level of
accountability?  For businesses that engage in the manufacture or
sale of goods, *product liability* has emerged as an important area
of business law.  Pay particular attention to this reading’s
discussion of product liability.  

 Note that this reading also covers the material you need to know
for subunits 8.1.3.1 and 8.1.3.2, found below. You can refer to
those subunits for additional guidance on how to approach this
reading.  

 Reading this textbook section should take approximately 30
minutes.  

 Terms of Use: This text was adapted by The Saylor Foundation under
a [Creative Commons Attribution-NonCommercial-ShareAlike 3.0
License](http://creativecommons.org/licenses/by-nc-sa/3.0/) without
attribution, as requested by the work’s original creator or
licensee.

8.1.3.1 Traditional Strict Liability   Note: This topic is covered by the Chapter 7, Section 3 textbook reading assigned under Subunit 8.1.3 (above).  For this subunit, focus on reviewing how strict liability applies to ultra-hazardous and inherently dangerous activities.  Such activities are ones to which strict liability has traditionally applied as a result of social and judicial policies, such as keeping dangerous or wild animals or transporting explosives.

8.1.3.2 Product Liability   Note: this topic is covered by the Chapter 7, Section 3 textbook reading assigned under Subunit 8.1.3 (above).  For this subunit, focus on the application of strict liability to product liability.  The concept of strict product liability represents a relatively recent and developing area of torts law.

8.2 Criminal Law   8.2.1 An Overview of Criminal Law   - Reading: The Legal and Ethical Environment of Business: “Chapter 10, Section 1: The Nature of Criminal Law, Constitutional Rights, Defenses, and Punishment” Link: The Legal and Ethical Environment of Business: “Chapter 10, Section 1: The Nature of Criminal Law, Constitutional Rights, Defenses, and Punishment” (PDF)

 Instructions: Read Chapter 10, Section 1 of the textbook.  This
section provides you with an overview of criminal law, including
constitutional protections for criminal defendants, defenses to
criminal allegations, and the nature of punishment in criminal law. 
Pay particular attention to this section’s discussion of the burden
of proof in criminal cases.  Compare this burden to the burden of
proof in civil cases, and note the apparent contradictions that
arise from different characterizations of the burden of proof. 
Following your reading, complete Exercise 2 under the “Key
Takeaways” box at the end of the section.  

 Reading this textbook section and completing the exercise should
take approximately 45 minutes.  

 Terms of Use: This text was adapted by The Saylor Foundation under
a [Creative Commons Attribution-NonCommercial-ShareAlike 3.0
License](http://creativecommons.org/licenses/by-nc-sa/3.0/) without
attribution, as requested by the work’s original creator or
licensee.

8.2.2 White-Collar Crime   - Reading: The Legal and Ethical Environment of Business: “Chapter 10, Section 2: Crime” Link: The Legal and Ethical Environment of Business: “Chapter 10, Section 2: Crime” (PDF)

 Instructions: Read Chapter 10, Section 2 of the textbook.  This
section covers the more notable types of what are known as
“white-collar” crimes in business.  It is important to note that
business-related crimes can extend beyond high-profile white-collar
crimes.  For example, property crimes may be committed by any
employee.  In addition, businesses may violate regulatory statutes
that have criminal penalties, such as environmental laws.  Be sure
to familiarize yourself with the most common criminal offenses, both
white-collar and otherwise, that occur in business settings.  

 Note that this reading also covers the material you need to know
for Subunit 8.2.3, found below.  You can refer to that subunit for
additional guidance on how to approach this reading.  

 Reading this textbook section should take approximately 45
minutes.  

 Terms of Use: This text was adapted by The Saylor Foundation under
a [Creative Commons Attribution-NonCommercial-ShareAlike 3.0
License](http://creativecommons.org/licenses/by-nc-sa/3.0/) without
attribution, as requested by the work’s original creator or
licensee.

8.2.3 Other Business-Place Crimes   Note: This topic is covered by the Chater 10, Section 2 textbook reading assigned under Subunit 8.2.2 (above).  For this subunit, concentrate on the sections of the reading that deal with cybercrime, environmental crimes, and blue-collar crimes.  It is important to note that business-related crime can involve a range of potentially illegal activities, from the illegal dumping of hazardous wastes to small-scale employee theft.