Business Torts Outline

BUSINESS TORTS OUTLINE
 
INTRODUCTION
May not recover under the theory of tort (strict liability and negligence) for economic loss from defects that caused injury when this issue is covered under the warranties. Alloway v. GMI
Judicial decisions and statutory enactments, including the UCC protect consumers form overreaching. A tort cause of action for economic loss duplicating the one provided by the UCC is superfluous and counterproductive.
                                                               i.      If a product fails to fulfill a purchaser’s economic expectations, contract principles, particularly as implemented by the UCC, provide a more appropriate analytical framework
                                                              ii.      Contract principles more readily respond to claims for economic loss cauded by damage to product itself.   
In 2 party contracts favor rather than tort
In 2 party cases-have this notion of risk allocation-you bargain you will pay certain price for certain things. If the boat sinks you are not entitled to consequential loss, thus this cases is controlled by contract-may have to the bargaining power
Ex. Attorney Malpractice-discrepancy in bargaining power-that is why it is almost always in tort-tort feasor is in a position to take on the potential harm and prevent it depending on foreseeability.  
Economic Loss Rule-no recovery in tort for pure economic loss-core notion
if you have pure economic loss and no physical or other types of damage, no tort
3 kinds o situations that the Economic Loss Rule can be actuated-most concern with 2p and 3p
                                                               i.      Stranger-no recover under economic loss unless foreseeable
1.       toxic spill at EWR and someone is burned by the chemicals-easy cause of action in tort-compensation is purely economic
a.       always start with a tort-emotional distress, personal injury etc.
b.       then show economic loss
c.        can not be purely economic loss, must have a tort
                                                              ii.      2 party cases
1.       Channel Master Corp. v. Aluminium Limited Sales: P, a manufacturer and processor of aluminum, requires for its business a dependable supply of aluminum ingot in large quantity. D is in the business of selling that metal. 
a.       Intentional Misrepresentation: the rescission of K, as here, in tort for damages, it is sufficient to show that the D knowingly uttered a falsehood intending to deprive the P of a benefit and that the P was thereby deceived and damaged
                                                                                                                                       i.      Elements:
1.       Representation of material fact
2.       Falsity
3.       Scienter-deliberately or knowingly
4.       Deception
5.       Injury
b.       They are suing in tort because there is no K, it was an oral agreement-violates statute of frauds
c.        Alloway worries about risk allocation, is that available here-how do you bargain for the risk of fraud-hard K to imagine
2.        Ely-Norris Save Co. v. Mosler Save Co.:P seeks an injunction against selling safes with metal band around the door in the place where the P put the chamber, or falsely representing that the D’s safes contain an explosion chamber. Basically-person with patent on explosion sues person who says they have the same but do not.
a.       Rule:
                                                                                                                                       i.      While a competitor may take away all the customers of another that he can, there are means which he must not use
1.       The false use of another’s name as maker or source of his goods is deceit, of which the false use of geographical or descriptive terms is only one example
2.       But we conceive that in the end the question which arise are always 2
a.       Has the P in fact lost customers
b.       AN has he lost them by means which the law forbids? The false use of the P’s name is only an instance in which each element is clearly shown
                                                            iii.      3 party cases
1.       Imperial Ice Co. v. Rossier: Rossier and the Mathesons induced Coker to violate his contract so that they might sell ice to him at a profit-Interference with Prospective Relationships
a.       Issue: Under what circumstances may an action be maintained against D who has induced a 3rd party to violate a contract with P. R & M come along and induce Coker to Breach
b.       Holding: competition in business though carried to the extent of ruining a rival, is not ordinarily actionable, but every trader is left to conduct his business in his own way, so long as, the methods he employs do not involve wrongful conduct such as fraud, misrepresentation, intimidation, coercion, obstruction, or molestation of the rival or his servants
c.        Why do we have a COA against 3rd party and not just breacher-we value contractual stability
                                                                                                                                       i.      What if someone comes up to Coker and says, hey I will buy some ice, is this tortuous? If they lack knowledge and no intent to breach than they may be ok-no negligent interference with K-MUST HAVE KNOWLEDGE
d.       We care about allowing the market to function
                                                                                                                                       i.      Suppose what we have is not btw Imperial and Coker but a pattern of doing in some way. Someone else Ross upsets that pattern of business-COA?
1.       We care about entering to economically beneficial contracts-unless interference comes in some form then it is only wrongful-ex. coercion
2.       Doliner v. Brown: Doliner wants to buy a property, talks to Green who talks to Brown. Owner agrees on price, but do not enter into contract for sale. Brown who heard about from Green, comes along and enters into K with owner. Brown Scoops Doliner. Doliner Sues
a.       Rule:
                                                                                                                                       i.      The of businessman against businessman of D maybe invoked against an unfair method of competition or an unfair deceptive act or practice declared unlawful for scooping
                                                                                                                                      ii.      The courts are not inveted by the statute to punish every departure from the punctilio of an honor most sensitive. They need not necessarily endorse a patter of behavior because it happens to be current in the market place
b.       What if Doliner had been quicker and had a K, and brown induces him to sell to him. Yes COA-breach against seller, and Interference with K
 
FIDUCIARY DUTY
A ROUGH SPECTRUM
Contract