business torts and crimes

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BUSINESS TORTS & CRIMES

MBA- 1V TRIMESTER (Weekend batch)

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TORT

TORT LAW IS BASED ON THE IDEA THAT EVERYONE IN OUR SOCIETY HAS CERTAIN RIGHTS

Along With Having Certain Rights, Everyone Has The Duty to Respect the Rights of Others.

The Purpose of Tort Law is to Enforce Those Rights and Duties

Business Torts

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A tort is a civil wrong committed by one individual

against another. The person who causes the injury is called a

Tortfeasor

Examples include ;• Assault and Battery• Automobile accident• Professional mal practices• Products liabilities

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Principal Objective of TORT Law

• Compensate persons who sustain harm from another conduct

• Place the cost of the compensation only on those parties who should bear it

• Prevent future harm and losses

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Law of Torts reallocates losses caused by human mis – conduct. The punishment for tortious acts usually involves restoring the injured party monetarily

In general, a Tort is committed when (1) a duty owed by one person to another (2) is breached (3) proximately causing (4) injury or damage to the owner of a legally protected interest

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Type of Torts

• Intentional Tort

• Negligence Tort

• Strict Liability Tort

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Intentional TortAn intentional tort is an act that is intentionally committed against another person with the aim of causing harm.

Some Intentional Torts includes ,

• Battery• Assault • False Imprisonment • Intentional Infliction of Emotional Distress • Trespass to Land • Conversion • Defamation• Invasion of Privacy

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Intentional Tort

Battery

Battery is the act of actually intentionally touching another's body in a harmful oroffensive manner

AssaultAn assault is intentionally causing another to fear immediate harmful or offensive bodilycontact.

False Imprisonme

nt

False imprisonment is an act of restraint resulting in confinement in a bounded area without justification

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Intentional TortIntentional Infliction of Emotional Distress

IIED is extreme and outrageous conduct that intentionally or recklessly causes severe emotional distress to another person (sexual harassment at work place, tactics employed by collection agencies to collect a debt)

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Business Torts

Intentional Tort

Trespass to Land Intentional physical invasion to

land without a legal excuse

Conversion

Conversion occurs when a person physically interferes with the possession or ownershipof another's property. If the defendant initially had permission to have the property, there is noconversion until the defendant refuses the owner's (plaintiff) demand to return the property.

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Business Torts

Intentional Tort

DefamationInjury to a person’s reputation by publication of false statement

Invasion of Privacy Appropriation --- it is the unauthorized use

of another person’s name or likeness for one’s own benefit, for example in promoting or advertising for a product

Intrusion --- unreasonable and highly offensive interference with the seclusion of another

Public disclosure of private facts--- offensive publicity given to private information about another person

False Light -- offensive publicity placing another in false light

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Negligence occurs when a party fails to demonstrate the kind of care a prudent person would take in the same situation and an injury results from the action or inaction. There are five elements necessary to prove a negligence case:

Defendant owed a duty of reasonable care. Defendant did not behave in a reasonable manner to

demonstrate care. Plaintiff suffered an injury as a result of the defendant's actions

or inactions. The injury caused actual damages. Proximate cause, defendant's actions or inactions were the

cause of injury

Negligence Tort

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Business Torts

Negligence TortElements of Negligence

Duty of Due Care

Breach Of Duty

Damages:Causation (actual cause and proximate cause)

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Strict liability is sometimes called “liability without fault” or “absolute liability.” This means that the plaintiff only needs to prove they were harmed by the defendant’s conduct; there is not need to prove the conduct was unreasonable or done with intent to harm.

It usually applies in situations involving animals, abnormally dangerous activities, product liability.

Strict Liability Tort

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Animals A person who keeps a non-domesticated or “wild” animal is

strictly liable for all damage caused by the animal, provided the damage results from the “dangerous nature” of the animal.

Abnormally Dangerous Activities strict liability to abnormally dangerous activities are often

applied to conduct involving explosives, poisons, reservoir and dam construction.

Product Liability

This area of law deals with a product that, because of a defect, causes injury. Liability can be based on negligence, warranty, or strict liability.

Defendants can include manufacturers or persons down the chain of distribution, i.e., retailers, third persons with duty to inspect, or other suppliers

Strict Liability Tort Business Torts

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BUSINESS CRIMES

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Nature of Crimes A crime is any act or omission forbidden by public

law in the interest of protecting society and made punishable by government in a judicial proceeding brought by it. Punishment for criminal conduct includes ,

Fines Imprisonment Probation Death

The defendant in a criminal case is prosecuted by the government which must prove the defendant’s guilt beyond a reasonable doubt.

Historically criminal law was primarily common law, today however criminal law is almost exclusively statutory.

Criminal Law Business Crimes

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Criminal Law

Business Crimes

Essential Elements

Physical act of the crime -- Actus reus

Mental intent to do the crime -- Mens rea

Actus reus refers to all the non mental elements of a crime , including the physical act that must be performed, the circumstances under which it is performed and the consequences of the act.

mens rea refers to the mental element of the offence that accompanies the actus reus

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Criminal Law --Classification Business Crimes

Historically crimes has been classified as

Mala in se • Those actions which are

deemed evil because of the nature of the action and are well recognized as crimes even if a person has not read the law.

• Often these are considered as more serious crimes, called as Felonies, which can result in a prison sentence or can lead to death penalty

Example : Murder , rape, arm robbery , kidnapping , embezzlement, insider trading, fraud, racketeering

Mala prohibita • crimes those are not

inherently evil in themselves, but rather are crimes because they violate a law instituted in a particular society.

• Mala prohibita crimes are usually considered less serious and are often charged as misdemeanor crimes or infractions where prison is not a possible penalty.

Example- someone unaware of certain traffic rules in a region might violate those rules without meaning to do

Serious crimes

Less Serious crimes

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Business CrimesCriminal Law --Classification

Vicarious Liabilities

Vicarious liability refers to a situation where someone is held responsible for the actions or omissions of another person. In a workplace context, an employer can be liable for the acts or omissions of its employees, provided it can be shown that they took place in the course of their employment

Many employers are unaware that they can be liable for a range of actions committed by their employees in the course of their employment - these can include bullying and harassment, violent or discriminatory acts or even libel and breach of copyright. It's also possible to take action against an employer for the behavior of third parties, such as clients and customers, provided these parties are deemed to be under the control of the employer

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Business CrimesWhite Collar Crime

White-collar crime refers to financially motivated nonviolent crime committed by business and government professionals.

It was first defined by sociologist Edwin Sutherland in 1939 as "a crime committed by a person of respectability and high social status in the course of his occupation".

Typical white-collar crimes include,

◦ fraud, ◦ bribery, ◦ Ponzi schemes, ◦ insider trading, ◦ embezzlement, ◦ cybercrime, ◦ copyright infringement, ◦ money laundering, ◦ identity theft, ◦ forgery

Famous white collar business crime :

• Enron scandal• World com scandal • Aarthur Andersen scandal• Satyam Scandal

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Business CrimesWhite Collar CrimeComputer Crime One special type of white collar crime is a

computer crime. It involves the use of computer to steal money or services, to remove personal or business information, or to tamper with information.

It falls into five general categories,1. theft of computer hardware, software, or secrets2. unautorized use of computer services3. theft of money by computer4. vandalism of computer hardware or software5. theft of computer data

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Business Crimes Crimes Against BusinessCriminal offenses against property greatly affect business, amounting to losses worth hundreds of billions of dollars each year. Following are the crimes against property

1. Larceny2. Embezzlement3. False Pretenses4. Robbery5. Burglary6. Extortion and Bribery7. Forgery8. Bad Checks

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Business Crimes Crimes Against Business

Larceny

• The crime of Larceny is the (1) trespassory (2) taking and (3) carrying away of (4) personal property (5) of another (6) within the intent to deprive the victim permanently of the goods

• Example : if Mr. A takes car of Mr. B without his permission for a joyride and then left it in a junkyard

Embezzlement

• Embezzlement is the fraudulent conversion of another’s property by one who is in lawful possession of it

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False Pretenses

• False representations of material past or present facts, known by the wrongdoer to be false, and made with the intent to defraud a victim into passing title in property to the wrongdoer.

• Example : Suppose Reba tells Alberto that a synthetic gemstone is a valuable diamond that she will give to Alberto in exchange for Alberto's truck. Alberto thinks this sounds like a good deal and transfers title of his truck to Reba. If Reba knows that the stone is a synthetic gemstone, she is guilty of false pretenses.

Robbery

• Robbery is a larceny with these additional elements (1) the property is taken directly from the victim or in the immediate presence of the victim and (2) the act is accomplished through force or threat .

• Example : A roberer threatens Sam that unless he open his employer’s locker, he would shoot Maria

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Burglary• Burglary is breaking and entering

the home of another at night with intent to commit a felony

Extortion • Extortion or blackmail is to make threats to obtain property

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Bribery • Bribery is the offer of money or

property to a public official to influence the official's decision

Forgery

• Forgery is intentional falsification of a document in order to defraud.

• Example : The most common forgery is signing of another’s name in a financial document

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Bad Checks • Checks issued with funds insufficient to cover them

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Business Crimes Defenses to Crimes

Even though a defendant is found to have committed a criminal act , he will not be convicted if he has a valid defense. The defense most relavent to white collar crimes and crimes against business include

1. Defense of property2. Duress 3. Mistake of Fact4. Entrapment

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Business Crimes Defenses to Crimes

• Individual may use reasonable force to protect themselves , other individuals and their property .

• This defense enables a person to commit , without any criminal liability what would otherwise be considered the crime of assault , battery, manslaughter or murder

Defense of Persons or Property

• A person who is threatened with immediate , serious bodily harm to himself or another unless he engages in criminal activity has the valid defense of duress. (performed under compulsion)

• Example : Ann threatens to kill Ben , if Ben does not assist her in committing larceny.

Duress

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Business Crimes Defenses to Crimes• A mistake of fact is a material error in the

facts or circumstances surrounding a contract. In addition, the mistake of fact is not made intentionally; it is simply a genuine error.

• Example : Imagine that you want to buy a house with a piece of property from Bob. Bob believes he owns the house plus the adjacent property. Both of you enter into an agreement for you to purchase the property. However, later investigation reveals that while Bob owns the house, he does not own the adjacent property. This is an example of a mistake of fact.

Mistake of Fact

• The act of government agents or officials that induces a person to commit a crime he or she is not previously disposed to commit.

• Entrapment is a defense to criminal charges when it is established that the agent or official originated the idea of the crime and induced the accused to engage in it. If the crime was promoted by a private person who has no connection to the government, it is not entrapment. A person induced by a friend to sell drugs has no legal excuse when police are informed that the person has agreed to make the sale

Entrapment

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Business Crimes Famous Business CrimesEnron Scandal (2001)

Company: Houston-based commodities, energy and service corporationWhat happened: Shareholders lost $74 billion, thousands of employees and investors lost their retirement accounts, and many employees lost their jobs.

Main players: CEO Jeff Skilling and former CEO Ken Lay.

How they did it: Kept huge debts off balance sheets.

How they got caught: Turned in by internal whistleblower Sherron Watkins; high stock prices fueled external suspicions.

Penalties: Lay died before serving time; Skilling got 24 years in prison. The company filed for bankruptcy. Arthur Andersen was found guilty of fudging Enron's accounts.

Fun fact: Fortune Magazine named Enron "America's Most Innovative Company" 6 years in a row prior to the scandal

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Business Crimes Famous Business CrimesWorldCom Scandal (2002)

Company: Telecommunications company; now MCI, Inc.

What happened: Inflated assets by as much as $11 billion, leading to 30,000 lost jobs and $180 billion in losses for investors.Main player: CEO Bernie Ebbers

How he did it: Underreported line costs by capitalizing rather than expensing and inflated revenues with fake accounting entries.How he got caught: WorldCom's internal auditing department uncovered $3.8 billion of fraud.

Penalties: CFO was fired, controller resigned, and the company filed for bankruptcy. Ebbers sentenced to 25 years for fraud, conspiracy and filing false documents with regulators.

Fun fact: Within weeks of the scandal, Congress passed the Sarbanes-Oxley Act, introducing the most sweeping set of new business regulations since the 1930s