Lesson 3: Professional Liability in Tort

Question 1

what is a professional?

Answer 1

anyone who holds themselves out as possessing particular knowledge or skill knowing that the general public will rely on the info or skill

Question 2

3 ways professional liability can be categorized

Answer 2

contractual relationships generating a breach of contract action; fiduciary relationships generating a breach of fiduciary duty; liability for breach of a tort, involving tort of negligent misrepresentation

Question 3

define fiduciary duty

Answer 3

high duty of care imposed on a person who stands in a special relationship of trust to another

Question 4

can liability of a fiduciary obligation arise even without negligence?

Answer 4

yes

Question 5

3 things a fiduciary must do

Answer 5

act honestly, in good faith and only in best interests of client; avoid all conflicts of interest; account for all property held or administered on behalf of beneficiary

Question 6

3 characteristics of a fiduciary relationship

Answer 6

fiduciary (often professional) undertakes to act in the best interest of the beneficiary (often client);

2) beneficiary is vulnerable to or at the mercy of the fiduciary’s control or discretion;
3) legal or practical interest of the beneficiary could be harmed by the fiduciary exercise of discretion or control

Question 7

can a relationship start as a contract and develop into a fiduciary relationship?

Answer 7

yes

Question 8

can a fiduciary duty arise if professional works for free or if there is no contract?

Answer 8

yes

Question 9

how to impose fiduciary liability in courts

Answer 9

1) determine if fiduciary liability exists

2) if professional breached the fiduciary obligations

Question 10

when a professional deliberately or carelessly causes damage to clients how can they be sued?

Answer 10

contract or tort

Question 11

in tort, what is the professional’s standard of care?

Answer 11

higher than that of a reasonable person standard

Question 12

what does the duty of care mean for a professional?

Answer 12

applies to both info the professional provides and info it neglects or omits to provide

Question 13

who does a professional owe a duty of care?

Answer 13

to client but also to third parties, other persons outside contractual relationship; anyone who was reasonably foreseeable as someone who could be affected by their advice or knowledge

Question 14

define 3rd party liability

Answer 14

liability to some other person who stands outside contractual relationshp

Question 15

define duty to account

Answer 15

duty of a person who commits a breach of trust to hand over any profits derived from the breach

Question 16

in fiduciary duty, the professional may have a duty to account

Answer 16

yes

Question 17

define fraudulent mispresentation / deceit

Answer 17

making a statement knowing it to be incorrect with the intention of causing injury to another

Question 18

define negligent misrepresentation

Answer 18

unintentional tort imposing liability for an incorrect statement made without due care for its accuracy causing harm

Question 19

5 elements of negligent misrepresentation

Answer 19

1) must be duty of care based on special relationship between representor and representee
2) representation in question must be untrue, inaccurate or misleading
3) representor must have acted negligently in making misrepresentation - fallen below standard of care
4) representee must have relied in a reasonable manner on negligent misrepresentation
5) damages resulted

Question 20

when does an auditor have a duty of care

Answer 20

if the auditor should have foreseen that the person would reasonably rely on its audit opinion

Question 21

how to manage legal risks as a professional

Answer 21

add a disclaimer of responsibility - the person cannot rely on the info

Question 22

what is the extra requirement in proving negligent misrepresentation

Answer 22

there must be a duty of care based on a special relationship between representor and representee

Question 23

define indeterminate liability

Answer 23

inability to be determined so that the magnitude of liability cannot be reasonably predicted, anticipated, or planned for

Question 24

define detrimental reliance

Answer 24

worsening of one’s situation after acting upon false information

Question 25

define privilege

Answer 25

the right of a professional to refuse to divulge info obtained in confidence from a client

Question 26

what professional relationships are obviously fiduciary?

Answer 26

doctor-patient, lawyer-client, trustees, corporate directors

Question 27

can a client sue a professional in contract, tort and fiduciary duty?

Answer 27

no, they must choose

Question 28

4 elements of fraudulent mispresentation / deceit

Answer 28

1) false representation is made by the defendant to plaintiff
2) some level of knowledge of falsehood of representation on part of defendant (through knowledge or recklessness)
3) false representation caused plaintiff to act
4) plaintiff’s actions resulted in loss

Question 29

what kind of tort is deceit/fraudulent misrepresentation

Answer 29

intentional tort