Transcript Contract and Tort Law for Computer Scientists Christian S. Tacit, Barrister & Solicitor Tel: 613-599-5345 Email: [email protected].

Contract and Tort Law for
Computer Scientists
Christian S. Tacit,
Barrister & Solicitor
Tel: 613-599-5345
Email: [email protected]
Canadian Systems of Law
• There are two systems of law that operate in
Canada – Common Law and Civil Law
• Common Law – operates in all Canadian
Provinces and territories other than Quebec and
is based on the British approach to law
• Civil Law – operates in Quebec and is based on
the European continental approach to law
The Common Law System
• “Judge made” law – legal principles develop
incrementally through successive cases
• In modern society many areas of the law are codified
into statute, rather than just being left to develop purely
through case law, but even the interpretation of those
statutes develops incrementally based on the case law
• Statutes are also used to alter the common law where it
is found not to meet current social norms
The Civil Law System
• The Quebec Civil Law system is based on
the French legal tradition
• The main source of the law is the Quebec
Civil Code and takes precedence over
interpretations arising out of individual
cases
Civil Law as a Type of Law
The term “civil law” is also used to
distinguish all areas of the law other than
criminal law
Areas of Law of Potential
Professional Liability for Computer
Scientists
• Contract Law
• Tort Law
What is a Contract?
• A contract is an exchange of promises
between two or more parties to do, or
refrain from doing, an act which is
enforceable in a court of law
• A contract is a binding legal agreement
• The law provides remedies for breaches of
contracts
Elements of a Contract
• Offer and acceptance
• Consideration
• An intention to create legal relations
• Legal capacity
• Legality
• Formalities
Offer and acceptance
• One party must make an offer and the other
party must accept that exact offer for a contract
to be formed
• The evidence on which contract formation is
assessed is objective (i.e., would a reasonable
person conclude that an offer and matching
acceptance had occurred?)
• Some contracts can be oral and others can not
Consideration
• The price of the promise – both parties to a contract
must bring something to the bargain
• Can be either conferring an advantage on another party
or incurring some kind of inconvenience or detriment
towards oneself
• A common law requirement
• Consideration must be real, but need not be adequate
• Consideration must not be from the past
Intention to be Legally Bound
• There is a presumption for commercial
agreements that parties intend to be legally
bound (unless the agreement says otherwise)
• Some types of agreements are unenforceable
as a matter of public policy
• Privity of contract – typically it is only the parties
to a contract who can enforce it
Legal Capacity
Persons contracting must not be under a
legal disability, such as being minors or
being adults who are mentally incapacitated
Legality
In order to be enforceable, the purpose of a
contract cannot be illegal or against public
policy
Formalities and writing
•
Most contracts can be formed orally, but some could not
•
For example:
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Contracts in consideration of marriage
Contracts which cannot be performed within one year
Contracts for the transfer of an interest in land
Contracts by the executor of a will to pay a debt of the estate with their
own money
 Contracts for the sale of goods above a certain value
 Contracts in which one party becomes a surety (acts as guarantor) for
another party's debt or other obligation
•
Various jurisdictions have changed some of these rules
Elements of a Compensable
Breach of Contract
• Existence of a contract
• Breach of the contract
• Damages to the plaintiff caused by the breach
• Damages resulting from the breach were
foreseeable at the time that the contract was
made
Defences to Claim of
Breach of Contract
• No contract
• No breach – either no actual breach occurred or a
breach occurred but liability is limited by a disclaimer
clause
• Limitation period has expired
• Breach did not result in damages
• Damages not foreseeable at time contract was made
Objective of Damages for
Breach of Contract
To restore the plaintiff to the position he or
she would have been in if the contract had
been performed
Damage Awards for
Breach of Contract
•
General damages – compensation for actual losses suffered that flow from
the breach and were in the contemplation of the parties when the contract
was formed
•
Consequential damages – compensation for damages that although not
naturally flowing from a breach, were within the contemplation of the parties
when the contract is formed (e.g., economic harm)
•
Aggravated damages – awarded for the manner in which the contract was
breached causing additional harm (e.g., contract breach occurs in manner
that causes mental distress)
•
Punitive damages – awarded to punish certain types of behaviour (e.g.,
fraud or bad faith)
•
Plaintiffs have a duty to mitigate their damages
Contractual Determination of
Damages
• Liquidated damages are a pre-estimate of loss
agreed in a contract should the contract be
breached
• A penalty clause that seeks to deter breaches by
requiring the payment of a steep penalty in the
event of a breach where the amount of the
penalty does not constitute a genuine preestimate of damages will not be enforced, even
if it is called a liquidated damages clause
Definition and Purpose of Tort Law
• A tort is a civil wrong other than a breach
of contract
• Tort law defines what constitutes a legal
injury and establishes the circumstances
under which one person may be held
responsible (i.e., liable) for another’s injury
Categories of Torts
• Intentional torts – torts against the person (assault,
battery, false imprisonment, intentional infliction of
mental suffering, malicious prosecution, libel and
slander, and fraud) and property torts (trespass to
property, trespass to chattels and conversion)
• Negligence – covers the full scope of human activity
(e.g., product liability, “slip and fall”, negligent
misrepresentation, professional negligence, etc.)
• Strict liability torts – nuisance
The Evolution of Tort Law
• Tort law has evolved over time based on case
law
• Additional torts have also been created by
statutes (e.g., occupiers liability, competition law)
• Perceived failures of the common law to address
the needs of society through tort law have led to
additional statutory reforms (e.g., workers’
compensation and negligence legislation)
Elements of a Negligence Claim
• Duty of care owed by defendant to the plaintiff according
to the proximity (i.e., “neighbour”) principle
• Breach of the duty of care by a failure to meet the
required standard of care, which is that of the reasonable
person in the circumstances
• Causal link between the defendant’s act or omission and
the plaintiff’s loss (i.e., damages)
• Damages were reasonably foreseeable at the time of the
breach
The Duty and Standard of Care
Owed by Professionals
Professionals have a duty to exercise the
skill, care and diligence that may
reasonably be expected of a person (i.e., a
professional person in a particular
discipline) of ordinary competence,
measured by the professional standards of
the time
Negligence and Economic Harm
• Negligence can involve compensable
harm that is purely economic in nature
• This is often, though not exclusively, the
situation in cases involving negligent
misrepresentation
Defences to Negligence Claims
• No duty of care owed – the duty of care can only arise in
circumstances involving reasonably foreseeable harm
and proximity sufficient to establish a duty of care and
where there are no policy reasons that would negate the
establishment of the duty of care
• No breach of the standard of care
• No damages were caused by a breach of the standard of
care
• Damages were not reasonably foreseeable
• Limitation period has expired
Elements of Negligent
Misrepresentation
• Duty of care exists based on a special relationship (e.g.,
professional person and lay person who may reasonably rely on the
professional person’s professional expertise)
• Professional person makes representation that is untrue, inaccurate
or misleading
• The representation is made negligently
• Person receiving the representation relies on it in a reasonable
manner
• The reliance is detrimental and damages result
Defences to Claims for Negligent
Misrepresentation
• No duty of care is owed – (e.g., plaintiff is not a member of the
class of individuals that professional knew would rely on the
misrepresentation)
• Plaintiff’s reliance is not reasonable (e.g., the representation
was part of a discussion and not a formal opinion or the
professional limited liability through a disclaimer clause)
• Professional’s negligent misrepresentation did not cause
damages
• Limitation period has expired
Objective of Damages for
Commission of Tort
To restore the plaintiff to the position he or
she would have been in if the tort had not
been committed
Damage Awards for
Commission of Tort
• General damages – compensation for non-monetary loss or harm
suffered as a result of the commission of the tort that was
foreseeable when the tort was committed (e.g., pain and suffering,
mental distress or damage to reputation)
• Special damages – compensation for the quantifiable monetary
losses suffered by the plaintiff that include direct losses (such as
amounts the plaintiff had to spend to try to mitigate problems),
consequential or economic losses (such as lost profits in a
business), and punitive damages, where applicable
• Punitive damages – awarded to punish certain types of behaviour
(e.g., fraud or bad faith)
• Plaintiffs have a duty to mitigate their damages
Vicarious Liability
• In certain cases, one person can be liable
for the harm cause by another
• One example relevant to professional
liability is an employer’s liability for the
actions or omissions of its employees
Limitation Period – Prior to 2004
• For claims arising before January 1, 2004,
various limitation periods applied
Limitation Period – After 2003
• Subject to certain exceptions set out in the Limitations
Act, 2002 (Ontario), a proceeding shall not be
commenced after the second anniversary of the day on
which a claim was discovered
• Generally speaking a claim is discovered when the
claimant knew there was damage, or when a reasonable
person ought to have known there was damage
• There is also an absolute limitation period that applies
after the 15th anniversary of the day on which the act or
omission on which the claim is based takes place
The Role of Insurance
• Professional liability insurance policies are available for
professionals
• Occurrence policies cover incidents that take place
during the policy term, whereas claims made policies
cover claims made during the policy term
• The scope of indemnification by the insurer is described
in the policy and it may or may not include legal fees
• Such policies are subject to specified deductibles and
exclusions
The Role of Insurance (continued)
Some typical exclusions include:
 Errors and omissions outside the insured
party’s area of professional practice
 Taking on an unreasonable risk relative to
the responsibility that the common law
normally imposes on a contract
The Role of Insurance (continued)
An insured party owes the following duties to its
insurer:
 To complete the insurer’s insurance application
fully and honestly
 To notify the insurer immediately when a claim is
made against the insured party
 To co-operate fully with the insurer in the
investigation and resolution of the claim
THANK YOU!