Contract and Tort Law for Computer Scientists

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Contract and Tort Law for Computer Scientists

• Christian S. Tacit,
• Barrister Solicitor
• Tel [phone]
• Email ctacit_at_tacitlaw.com

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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

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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

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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

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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

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Areas of Law of Potential Professional
Liability for Computer Scientists

• Contract Law
• Tort Law

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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

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Elements of a Contract

• Offer and acceptance
• Consideration
• An intention to create legal relations
• Legal capacity
• Legality
• Formalities

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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

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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

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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

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Legal Capacity

• Persons contracting must not be under a legal
  disability, such as being minors or being adults
  who are mentally incapacitated

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Legality

• In order to be enforceable, the purpose of a
  contract cannot be illegal or against public
  policy

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Formalities and writing

• Most contracts can be formed orally, but some
  could not
• For example
• 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

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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

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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

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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

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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

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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 pre-estimate of
  damages will not be enforced, even if it is
  called a liquidated damages clause

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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
  anothers injury

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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

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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)

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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 defendants act or
  omission and the plaintiffs loss (i.e., damages)
• Damages were reasonably foreseeable at the time
  of the breach

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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

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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

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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

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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 persons 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

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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)
• Plaintiffs 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)
• Professionals negligent misrepresentation did
  not cause damages
• Limitation period has expired

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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

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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

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Vicarious Liability

• In certain cases, one person can be liable for
  the harm cause by another
• One example relevant to professional liability is
  an employers liability for the actions or
  omissions of its employees

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Limitation Period Prior to 2004

• For claims arising before January 1, 2004,
  various limitation periods applied

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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

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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

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The Role of Insurance (continued)

• Some typical exclusions include
• Errors and omissions outside the insured partys
  area of professional practice
• Taking on an unreasonable risk relative to the
  responsibility that the common law normally
  imposes on a contract

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The Role of Insurance (continued)

• An insured party owes the following duties to its
  insurer
• To complete the insurers 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

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• THANK YOU!